Dangerous Domains: the Federal Court warns on the dangers of using descriptive trade marks

The recent decision by Bromberg J in REA Group Ltd v Real Estate 1 Ltd has provided yet another salutary warning against the use of descriptive trademarks - especially where the trade mark doubles up as a domain name.

The fact that REA’s success was so tightly awarded was due to REA’s right to enforce their registered trade mark sends a clear signal that any commercial advantage of a descriptive name carries a hefty price – not only in terms of the mass advertising required to establish the distinctive association, but also in the vulnerability that hangs over enforcing exclusive use.

REA Group Ltd v Real Estate 1 Ltd involved a dispute between two operators of property portals – internet websites that list property for sale or lease on the market.

The applicant, REA, operated two well-known property portals: ‘realestate.com.au’ and ‘realcommercial.com.au’. The respondent operated ‘realestate1.com.au’ and ‘commercial1.com.au’ which were described in the judgment as the “relatively insignificant” competitor portals.

REA argued that the use of “realesate1.com.au” and “commercial1.com.au” by the respondent was:

  • in contravention of Section 52 of the Trade Practices Act 1974 (Cth) because it was likely to mislead or deceive consumers searching for property on the internet; and
  • in contravention of Section 120 of the Trade Marks Act 1995 (Cth) because it infringed on REA’s registered trademarks: “realesate.com.au” and “realcommercial.com.au”

Although there were many different issues relating to the above claims, of particular importance and peculiarity to these domain names was the fact that the words “real estate” and “.com.au” were descriptive in character. “Real Estate” is comprised of ordinary words of the English language and “.com.au” which when decoded from IT jargon simply designates a commercial entity in a domain name country-coded to Australia.

The Court did not consider the addition of “com.au” capable of making the name “realestate1.com.au” distinctive. As such, the domain name will not on its own suggest to an internet searcher with no prior knowledge an association with the business of REA.

Bromberg J went on to say:

“Before going on to consider whether a not insignificant proportion of the ‘ordinary’ or ‘reasonable’ members of the relevant class were likely to have been misled or deceived, it is necessary to say something about the distinctiveness of the REA domain names……and whether these names have acquired a secondary meaning.”

Indeed, the success of REA’s claim hinged on whether it could establish that its names had acquired a secondary meaning so as to become distinctive of its business. Only then could it be said that consumers may have been led to mistakenly believe that “realestate1.com.au” was a reference to the business of “realesate.com.au.” To overcome this, REA led evidence to show extensive promotion of its brand through various advertising mediums which had made it well recognised.

In response Bromberg J said:

“I consider that the nature and extent of the advertising of the term (realestate.com.au) in connection with REA’s residential portal, makes it likely that when ‘realestate.com.au’ is displayed as a trading or domain name for that portal, it is recognised as such by a significant number of Australian consumers who use property portals.”

Interestingly, the counterpart “realcommercial.com.au” was held to be more adapted to distinguish. It was on the question of causation and the degree of differentiation that was required to avoid deception that REA’s claim began to stumble. This seemingly subtle variation of the distinctiveness point above, turned out crucial in its own right. The point essentially arises in a situation of a competitor relying on a minute difference in name as a defence to misleading and deception. Bromberg quoted Stephen J’s judgment in Hornsby Building Information Centre v Sydney Building Information Centre where His Honour identified that although a descriptive name holds commercial advantage the price to be paid is that minor alterations to this name by a competitor can be sufficient defence against claims of passing off and misleading and deceptive conduct. Thus, in Hornsby it was held that any deception that arose was not from the competitor’s conduct, but the lack of distinctiveness in the trading name itself. The case of Hornsby remains strong authority given its endorsement by the High Court in Campomar Sociedad Limitada v Nike International Ltd.

In considering the difference that the “1” made between the competing domain names, Bromberg J held that consumers were sufficiently discerning not to be misled into thinking that the numeral “1” signalled an affiliation to REA’s business. His Honour did accept though that many consumers might fail to notice the “1” and enter the portal they were not seeking to enter, yet in light of the Hornsby decision this would not be attributed to any improper conduct of the respondent.

Having failed to establish its Trade Practices Act claim, REA needed to rely on the fact that it had registered its domain names as trademarks. REA did succeed in enforcing its trade mark rights.  Bromberg J observed that registration of such descriptive trademarks created an unfair monopoly over these standard terms of trade of the property market.

Reproduced with thanks to Carroll & O’Dea Lawyers.


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