FEDERAL COURT OF AUSTRALIA Insurance News Pty Ltd (ACN 128 480 973) v JEM Nominees Pty Ltd (ACN 005 304 049) trading as Insurance News Australia [2008] FCA 1966 TRADE PRACTICES – misleading or deceptive conduct – where parties offer online insurance news services - whether domain name inherently descriptive or distinctive – if name found descriptive whether name had acquired a secondary distinctive meaning Trade Practices Act 1974 (Cth) ss 52, 53 Brookfield Communications Inc v West Coast Entertainment Corporation 174 F3d 1036 (1999) cited connect.com.au Pty Ltd v GoConnect Australia Pty Ltd (2000) 178 ALR 348 followed Dodds Family Investments Pty Ltd & Anor v Lane Industries Pty Ltd & Ors (2003) 26 IPR 261 referred to Finance Express v Nowcom Corporation 564 FSupp2d 1160 (2008) cited Hornsby Building Information Centre Pty Ltd v Sydney Building Information (1978) 140 CLR 216 applied Prime Publishers Inc v American-Republican Inc 160 FSupp2d 266 (2001) cited Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCAFC 181 cited INSURANCE NEWS PTY LTD, MCMULLAN CONWAY COMMUNICATIONS PTY LTD, MCMULLAN CONWAY PTY LTD, TERENCE PATRICK MCMULLAN and NAOMI CONWAY v JEM NOMINEES PTY LTD (ACN 005 304 049) TRADING AS INSURANCE NEWS AUSTRALIA VID 725 of 2008 MARSHALL J 19 DECEMBER 2008 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 725 of 2008 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: INSURANCE NEWS PTY LTD (ACN 128 480 973) First Appellant MCMULLAN CONWAY COMMUNICATIONS PTY LTD (ACN 084 309 295) Second Appellant MCMULLAN CONWAY PTY LTD (ACN 007 047 020) Third Appellant TERENCE PATRICK MCMULLAN Fourth Appellant NAOMI CONWAY Fifth Appellant AND: JEM NOMINEES PTY LTD (ACN 005 304 049) TRADING AS INSURANCE NEWS AUSTRALIA Respondent JUDGE: MARSHALL J DATE OF ORDER: 19 DECEMBER 2008 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal is allowed. 2. Orders 1, 3, and 4 of the orders of the Federal Magistrate Court of 1 September 2008 are set aside. 3. The respondent pay the appellants' costs of the appeal and of the proceeding below. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VID 725 of 2008 ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA BETWEEN: INSURANCE NEWS PTY LTD (ACN 128 480 973) First Appellant MCMULLAN CONWAY COMMUNICATIONS PTY LTD (ACN 084 309 295) Second Appellant MCMULLAN CONWAY PTY LTD (ACN 007 047 020) Third Appellant TERENCE PATRICK MCMULLAN Fourth Appellant NAOMI CONWAY Fifth Appellant AND: JEM NOMINEES PTY LTD (ACN 005 304 049) TRADING AS INSURANCE NEWS AUSTRALIA Respondent JUDGE: MARSHALL J DATE: 19 DECEMBER 2008 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 The appellants, who I will collectively refer to as the "McMullan interests", operate a website on the internet which provides articles about developments in the insurance industry. The domain name for the website is InsuranceNEWS.com.au. The respondent ("JEM") also operates a website which provides articles on developments in the insurance industry. The domain name for its website is "InsuranceNewsAustralia.com". 2 In the Court below, JEM obtained an order restraining the McMullan interests from using the domain name "InsuranceNEWS.com.au". The Federal Magistrate held that the two domain names were "so similar that they are likely to mislead or deceive". He considered that JEM had made out its case under s 52 of the Trade Practices Act 1974 (Cth) ("the Act"). 3 The essential issue for resolution on the appeal is whether it was open to his Honour to make an order against the McMullan interests under the Act on the evidence before the Court below. In that regard, the Court is required to examine whether the Federal Magistrate failed to determine whether JEM's website had an inherently descriptive or distinctive name and, if descriptive, whether the name had acquired a secondary distinctive meaning through extensive use. findings of fact below 4 Identification of the facts found by the primary judge is critical to the resolution of the appeal, as much of the debate between counsel centred on what the Federal Magistrate did or did not find as a fact or facts before him. 5 Apart from identifying the names of the two relevant websites, his Honour observed that the McMullan interests' service is free and is reliant on advertising income. JEM, on the other hand, provides insurance news stories to subscribers by email in accordance with a password-protected log on service. It relies on subscriptions rather than advertising revenue. 6 His Honour described the physical characteristics of the two websites as follows: (i) Colours JEM's website had an orange coloured background with some deep red colouring and a small map of Australia in "solid red". The McMullan interests' website has a thin orange line across the top of the page but no other colour background. The word "NEWS" in the domain name is coloured bright orange. Each article is accompanied by a large coloured banner provided by an advertiser. (ii) Similarity His Honour found at [11] that, apart from the similarity of domain names and content, the two websites are not "strikingly similar", but the nature of the material provided and the layout used "leads to some degree of similarity, such that the casual observer may not notice the difference unless regularly accessing the material." Names 7 At [13], the Federal Magistrate noted that "au" is a country code referable to Australia and that "com" signifies "a company or similar". He then said that the domain names are "remarkably similar" and likely to cause confusion. the nature of the respective business 8 At [39], the Federal Magistrate accepted that JEM is a high quality independent service which is reasonably well known in the industry although perhaps chiefly to the "older members" of it. JEM has a loyal subscriber base, with a relatively small turnover or "churn" rate amongst subscribers. The conclusions below 9 At [63] to [66] of the judgment below, the Federal Magistrate made the following conclusions of fact: · most of the members of the group of users of the two websites would be seeking access to information; · care would need to be taken to ensure the correct website is typed in on a user's computer; · the almost identical domain names is the main source of confusion such that "(a) potential reader who had seen reference in the print media is likely to be misled or deceived by the (McMullan) site when attempting to visit the [JEM] site"; · "readers who have not carefully saved the web address are just as likely to go to the wrong site and not realise it is run by a different company"; · the McMullan interests could have named their site in another way while still using the words "insurance news" so that it was not almost identical to JEM's website name; · the names are so similar as to be likely to mislead or deceive; · even if the names are entirely descriptive (as to which no precise finding is made), the similarity of the names together with the appearance of the websites is misleading and deceptive. References to "descriptive" naTURe of words in the websites' NAMES 10 At [17], by reference to the High Court's judgment in Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Pty Ltd (1978) 140 CLR 216, his Honour noted, correctly, that "…a party is not able to obtain a monopoly over a name which is not distinctive but rather descriptive." 11 At [63], his Honour referred to the names of the websites as using "common words". At [64] he referred to "the descriptive nature of the words". 12 Although there is no precise finding to this effect the Federal Magistrate appears to accept that the words "insurance" and "news" and "Australia" were words which are "descriptive" rather than "distinctive". It would be surprising if any other result ensued because they are self-evidently descriptive words. Although more than one descriptive word is combined, each component retains its descriptive significance in relation to the services at issue; the combination results in a composite that is itself descriptive: see Brookfield Communications Inc v West Coast Entertainment Corporation 174 F3d 1036 (1999); Finance Express v Nowcom Corporation 564 FSupp2d 1160 (2008). 13 Moreover, the Federal Magistrate's comparison of the two domain names by substituting "company" for "com" and "Australia" for "au" is misplaced. The ".com" top-level domain signifies the sites' commercial nature, and the ".au" signifies where the domain is registered: see connect.com.au Pty Ltd v GoConnect Australia Pty Ltd (2000) 178 ALR 348; Prime Publishers Inc v American-Republican Inc 160 FSupp2d 266 (2001). The Federal Magistrate's commentary about the similarity in capitalisation of the website names is also not significant as web addresses are not capital-sensitive. 14 Significantly, I cannot see that his Honour made any finding about whether the words which comprise JEM's web address had acquired a secondary distinctive meaning through extensive use. That is because he appeared to consider that it did not matter whether they had or had not. It was sufficient, according to his Honour, in order to grant the relief sought by JEM, to find that the names were similar and the websites had a similar appearance. That is despite his earlier acknowledgement that a party does not obtain a monopoly over a name which is merely descriptive. 15 At [40], his Honour referred to JEM's businesses having "a good will that is worthy of protection". That is not a finding that its domain name has acquired a distinctive meaning by extensive use. It is merely an acknowledgement of the existence of an ongoing business. Nor is evidence concerning the number of 'hits', referred to at [47] of the reasons for judgment below, evidence that the domain name had acquired a distinctive meaning through excessive use. 16 JEM changed its website name to its current name in June 2004. There was no evidence in the Court below that its name had acquired a distinctive meaning through extensive use. As counsel for the McMullan interests observed in the absence of evidence supporting a finding of distinctive use and, in the absence of such a finding, JEM's claim could not properly succeed in the Court below. 17 In connect.com.au Pty Ltd, Emmett J observed at [57] that for a descriptive name to become distinctive, "a very substantial amount of use in the relevant market would be necessary for it to acquire any secondary meaning". At [58] his Honour said: …where a descriptive trade name is used there will always be the possibility of confusion…[and] where a descriptive trade name is used it will be difficult for that name to become distinctive of a particular business. Application to like businesses would not ordinarily mislead the public: see Hornsby Building Information Centre Pty Ltd v Sydney Building Information Centre Ltd (1978) 140 CLR 216. 18 At [60] Emmett J earlier said: "There is a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name. Because it is descriptive it is equally applicable to any business of a like kind. Its very descriptiveness ensures that it is not distinctive of any particular business and hence its application to other like businesses will not ordinarily mislead the public." See also the discussion at [61] regarding possible confusion by the public where "descriptive words are used by two traders as part of their respective trade names", even where the trade names include differentiating words. 19 Similar observations have been made by Stephen J at 228 in the Hornsby Building case and by a Full Court of this Court in Dodds Family Investments Pty Ltd & Anor v Lane Industries Pty Ltd & Ors (2003) 26 IPR 261. 20 At 228 - 229 in the Hornsby Building case, Stephen J (with whom Jacobs J agreed) referred to the use of descriptive words in a business name as not entitling a claim for a monopoly in these words. At 229, his Honour referred to the concept stressed by Emmett J in connect.com.au Pty Ltd that "(t)here is a price to be paid for the advantages flowing from the possession of an eloquently descriptive trade name". See also Barwick CJ at 221 (with whom Aickin J agreed). 21 I also note that in Dodds Family Investments at 269, the Full Court said: The causative connection is reputation, an association in the minds of consumers between the originator's designation and its goods or services. Merely descriptive words will not ordinarily effect such an association: per Gummow, French, Hill JJ. confusion 22 Although the Federal Magistrate, at [65], considered the names of the two websites and the get-up of those sites in combination provided the requisite confusion, this finding is at odds with his Honour's earlier observation at [11] that the two sites are not strikingly similar. So much is evident, at least, when it is remembered that one site is a free service and another a subscriber based service – thereby lessening possible confusion. As described by the Federal Magistrate the appearance of the two websites is not sufficiently similar to give rise to confusion on the basis of appearance alone or in combination with the names. The fact that some interested people may be confused between the two sites is an insufficient basis to establish a reasonable likelihood of an appreciable or relevant confusion. That is especially so where there is no finding as to whether the number of possible confused people was significant or otherwise. See Hansen Beverage Company v Bickfords (Australia) Pty Ltd [2008] FCAFC 181. Conclusion 23 Having regard to the foregoing it is apparent that JEM's claim under the Act should not have succeeded. The lack of a finding about whether the words – insurance, news and Australia - had acquired a distinctive meaning through extensive use is fatal to JEM's ability to maintain the orders it secured below. His Honour did not deal with the claim made by JEM under the tort of "passing off". Rather, his Honour found it unnecessary due to his finding that the respondents succeeded under the TPA. It may be likely that no such claim could be established. In any event, the parties consider, and I agree, that no different result would ensue concerning the passing off claim. The appeal should be allowed, the operative orders below set aside and the appellants should have their costs of the appeal and of the proceeding below. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. Associate: Dated: 19 December 2008 Solicitor for the Appellants: Mahoneys Solicitors Counsel for the Appellants: Mr G McGowan SC with Mr P Ehrlich Solicitor for the Respondent: Davis Lawyers Counsel for the Respondent: Ms S Gatford Date of Hearing: 17 December 2008 Date of Judgment: 19 December 2008