November 4, 2014
First published 27 October 2014
In this digital age, businesses, and particularly start-ups, are turning more frequently to digital marketing, owing to its relatively cheap cost, DIY options, potentially superior accountability and ability to reach a much wider audience than traditional print or media alternatives. What’s more, the marketplace is dynamic, with new innovations popping up almost daily providing more and more ways to raise brand awareness, and also providing new business opportunities for innovators and advisors looking to enter that space of itself.
However, as with anything, such a rapid rate of development brings not only opportunities, but also risks, and not only by reason of shady opportunistic market participants, but also from innocent bystanders, and when virtually all businesses depend on an online presence and strategy to some extent, there is the potential to get stung. Some recent disputes illustrate both types of risks arising in practice.
Using Competitors Names in Your SEO Efforts
The case of Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd  FCAFC 75 (“Lift Shop v Easy Living”) was an appeal from an earlier decision of the Federal Court. Both parties are Sydney-based businesses supplying home lifts or elevators; both essentially being “lift shops”. The Appellant, “Lift Shop”, had registered its composite trademark (pictured) (composite because of the combination of a number of elements; in this case including words or phrases and an image or design), and the Respondent, “Easy Living”, included in its search engine optimisation (“SEO”) strategy a composite title consisting of more than one website tags, as follows:
‘Easy Living | Home Elevators | Lift Shop …’
Lift Shop alleged that Easy Living’s use of the term “Lift Shop” in its title, metatags and search engine key words, and the consequent result that Easy Living’s site regularly appeared on the first page of Google searches for “lift shop”, amounted to an infringement of Lifts Shop’s trademark and misleading and deceptive conduct in contravention of s 18 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)).
The Court held, at first instance and on appeal, that there was no such infringement or contravention on the part of Easy Living, and ordered Lift Shop to pay Easy Living’s legal costs relating to the dispute.
Domain Names & Trademarks
In other news, while the digital world and online community was buzzing over ICANN’s recent expansion of domain name offerings beyond the traditional “.com”, “.net” and “.org” and into virtually “.anything”, at least one opportunistic company was snapping up new domain names at lighting speed and in titanic quantities. Apparently, Yoyo.email has registered over 4,000 “.email” domain names, including “footlocker.email”, “dunkindonuts.email”, “eharmony.email” and “sheraton.email”.
Needless to say, the company is now reportedly facing several Uniform Domain Name Dispute Resolution Policy (“UDRP”) and / or Uniform Rapid Suspension (“URS”) system cases from major trademark holders seeking the cancellation or suspension of the domain names. While some allege Yoyo.email is simply a cyber-squatter – with or without commercial extortive intentions – the company has at least succeeded in one case on the basis that it plans to offer a service certifying that emails sent to given recipients have actually been delivered.
Similarly, legendary luxury carmaker Porsche has just lost a URS case to the owner of “Porsche.social”, with the panel concluding that the planned free online community for Porsche enthusiasts should be entitled to prevail.
Using these examples, we look at how SEO strategies and domain names interact with registered trademarks, taking the position of a trademark owner seeking to protect their brand, and of a new start-up seeking to be innovative without stepping on toes.
What’s in a Name? The Implications of Domain Selection
Perhaps the starting point is recognising that, unlike in some other jurisdictions, such as the U.S.A. and Canada, the registration of a domain name does not of itself provide any proprietary rights in that name in Australia. Rather, the registered holder of a domain name has a license to use the domain for a specified period of time. The license is also conditional, in that, for example, registration must have occurred in good faith and must not contravene a trademark (in some cases even an unregistered trademark), and there are restrictions and prohibitions on the transfer of the license itself. Domain names can be revoked or suspended by the regulator in each jurisdiction for a breach of relevant conditions.
In Australia, in order to register a ccTLD (“country code Top Level Domain Name”, i.e. “.com.au” or “.net.au”), there must be at least some close and substantial connection to the registrant, on the basis of the details of registration of an actual sole trader, company or other registered business entity applying for the domain name.
Generally, it requires the registration of a business name. However, a business name does not necessarily confer any proprietary intellectual property right either. To make matters worse, there is no hierarchy of rights with domain names, and the registration of a trademark does not necessarily do anything more than the registration of a business name does when it comes to establishing a claim to or right in a domain name.
Further still, the restrictions relating to the registration of gTLDs (“generic Top Level Domain Names”) are considerably more lax. In all cases, the domain name registrar is not obliged to conduct any checks to determine whether a proposed domain name is similar to an existing company or business name or trademark, much like local intellectual property administrators such as IP Australia.
It follows that an established business may find itself in a situation where it has a registered trademark, business name, company name and / or domain name, and a domain name including within it that fundamental name is registered, thereby carrying the risk that the established business will see a noticeable decline in website traffic, and possibly also in revenues. In some cases, this may be innocent and inadvertent.
At the other, extreme end of the spectrum is cybersquatting – where a party with no legitimate commercial interest in a name registers a domain name similar to the trademark or trading name of another business for profit. Sometimes, this comes in the form of a slightly misspelled domain name, and other times, almost identical domain names are registered, albeit with different extensions.
Generally, cybersquatters will monetise the websites hosted at the domain names, through advertising or strategic redirections, and in some cases, they attempt to extort the legitimate party by offering resale of the domain for an inflated price, usually knowing that the price, while inflated, will still be cheaper than prosecuting an infringement.
Although cybersquatting is expressly prohibited by statute in some jurisdictions, such as the U.S.A., the means of redress are more indirect in Australia. Given the comments above regarding business names, company names and domain names, and the relative lack of protection they provide of themselves here, redress will in most cases come down to the nature and extent of any trademarks in existence.
Trademarks & Domains- Usage & Infringement
A trademark provides exclusive rights to use and authorise the use of the mark, which can be a word or phrase, an image or a composite consisting of several elements of either kind. In Australia, they are defined as ‘a sign used, or intended to be used, to distinguish goods or services dealt with or provided in the course of trade by a person from goods or services so dealt with or provided by any other person’.
Trademarks are specific to the goods or services to which they relate, meaning in some cases, businesses operating in different industries can use exactly identical trademarks, particularly where the mark is just a word or phrase, depending of course on the extent of recognition already gained by the particular mark and the likely outcome its use elsewhere would have. In addition, the scope of trademarks are further narrowed, as the following are grounds for the opposition and rejection of trademarks:
- if the mark is not capable of distinguishing the applicant’s goods or services in respect of which the trademark is sought to be registered from the goods or services of other persons;
- if, because of some connotation that the trademark has, the use of the trademark in relation to those goods or services would be likely to deceive or cause confusion;
- the proposed trademark is identical with, or deceptively similar to, a registered trademark or another trademark the subject of an earlier registration application;
- another person first used an identical or deceptively similar trademark in respect of similar or closely related goods or services before the registration application, and has consistently done so since that first use;
- another trademark had already acquired a reputation in Australia in respect of the goods or services and because of that reputation, the registration of the other trademark would be likely to deceive or cause confusion;
- the applicant does not intend to use, or authorise the use of, the trademark in Australia in relation to the goods and services specified; or
- the application has been made in bad faith.
As such, the only way to truly own a domain name is to have the actual domain name itself trademarked, but given the wide nature of the above, more often than not a domain name is liable to be rejected or successfully opposed as a trademark, and the registration of a domain name as a trademark does not of itself confer a right to registration of that domain name. A distinction should be drawn here between registering a trademark, such as the word “Porsche”, from a domain name, such as “www.porsche.social”.
Notwithstanding, while a domain name may not always be capable of registration of itself, the use of a trademark within a domain name can amount to a trademark infringement. It should also be noted that here, we are talking not only about registered trademarks, but also unregistered trademarks, that are protected at common law, and sometimes also even vis-à-vis registered trademarks, for example where there has been consistent use in the course of trade since prior to the registration of an identical or deceptively similar mark.
To make matters even more complicated, the prior use of a domain name, together with a business or company name, if the same and consistent, could itself go towards establishing an unregistered trademark, and therefore some extent of protection.
To return to the Porsche example, the name “Porsche” is obviously a registered trademark in many countries. Those registrations would obviously relate to classes of goods or services in connection with motor vehicles. The proposed website to be hosted at the domain “Porsche.social” is stated to be a free website for Porsche enthusiasts, and is therefore, on one view, an infringement of the Porsche trademark, in that the word “Porsche” in the domain name is identical to the registered trademark of the carmaker, and the website itself relates directly to the very same goods or services.
However, in terms of trademark disputes, a domain name will not be taken to be an infringement if the use of the trademark does not actually, or is not likely to, deceive or cause confusion (among other things). In addition, in order to constitute an infringement, the trademark must be used by the alleged infringer as a trademark, or rather a badge or indicator of origin of the goods or services of the alleged infringer.
Owing to multiple bilateral and multilateral treaties in place regulating intellectual property, these conditions are virtually synonymous in most major trading nations.
Moreover, in terms of domain name disputes, under the UDRP and URS systems, the rules are slightly different, and in order to succeed on an application for cancellation, suspension or transfer, a trademark owner must establish not only that the domain name is identical or confusingly similar to their mark, but also that the registered owner does not have any particular rights or legitimate interests in the domain name, and that the domain name has been registered and is being used in bad faith.
In the case of “Porsche.social”, the trademark “Porsche” was not being used as a trademark at all, but rather its use could clearly be seen to have acknowledged and perhaps even promoted the registered holder. Indeed, the website’s promoters were not even selling goods or services, but were in a sense promoting those of Porsche. In addition, the site was apparently not monetised at all, given that it allowed for free access and did not contain advertising, so it could hardly be said that there was any element of bad faith. It is for these reasons that it was entitled to prevail.
To top it all off, the website’s promoters also promised to display disclaimers on the website to the effect that it is not affiliated with or authorised by the carmaker. However, had these circumstances been different, the promoters of “Porsche.social” may have found themselves in some serious trouble.
To expand on the two-tiered good faith requirement, the following are considered examples of bad faith for the purposes of a UDRP / URS dispute:
- the domain name was registered for the purpose of selling, renting or otherwise transferring the domain name registration to another for a price exceeding the cost of registration;
- the domain name was registered in order to prevent the owner of a company or business name or trademark from registering that name or trademark in a domain name;
- the domain name was registered intentionally to disrupt the business activities of another; or
- the domain name was registered intentionally to deceive people into believing some kind of affiliation exists with the holders of an actual company or business name or trademark for commercial gain.
Although Yoyo.email was successful in defending a recent case brought by eHarmony, this was apparently only on the basis that it had commenced proceedings (then still pending) in the U.S. District Court seeking declaration that its business model is legitimate and lawful. However, in a number of other cases, there have been certain admissions or facts that tend to indicate that Yoyo.email’s model is actually directly in line with the grounds listed above. For example, at least in the case of “PlayInnovation.email”, the panel found sufficient evidence to substantiate the fact that the domain name had been offered for resale, and that there had been intentional attempts to attract internet users to the website by creating confusion as to affiliation, sponsorship or endorsement, in both cases for commercial gain.
From the above, we have seen how the use of a domain name might not amount to a trademark infringement, but only a give rise to a successful UDRP / URS application. Given that this process, at least when compared to litigation, is relatively toothless in that it is limited to a dealing in the domain name itself and does not carry additional risks such as a potential award of damages and the same costs implications, one might be forgiven for assuming that strategic cybersquatting or like behavior is a risk worth taking. However, it should be noted that some of the same conduct, while perhaps not capable of constituting a trademark infringement, may still be actionable under other statutes or at common law. The following are some examples:
- Misleading and deceptive conduct: as mentioned above. Specifically, a person must not, in trade or commerce, engage in conduct that is misleading or deceptive, or that is likely to mislead or deceive. For example, assume “Porsche.social” did not provide the same disclaimers and offered for sale, or provided links to others offering for sale, used or replica Porsche vehicles without full clear disclosure.
- Passing off: where one person passes of its goods or services as being, or as being associated with, those of another, by way of a false representation, calculated to deceive and that causes or is likely to cause actual damage. For example, assume Yoyo.email registered the domain name “dunkingdonuts” and arranged those words in a manner similar to the Dunkin’ Donuts composite trademark, then offered deceptively similar donuts for sale via the website.
- Other actions, such as interference with contractual relations or deceit (fraudulent misrepresentations), depending of course on the particular circumstances and their severity.
While we will articulate the implications of the above more precisely below, the important lesson for now is that the use of certain words, phrases or marks as domain names can land even the most bona fide entrepreneurs in deep trouble, and the holders of registered and unregistered trademarks do have means to recourse. Although, this lesson does not end with domain names, as SEO strategies are perhaps equally effected.
Optimism vs Overzealousness – Pitfalls in SEO Strategies
To return to the case of Lift Shop v Easy Living, recall the discussion above regarding trademarks, and especially the fact that, in order to make out an infringement, the trademark must be used by the alleged infringer as a trademark, or rather a badge or indicator of origin of the goods or services of the alleged infringer. In addition, just as a domain name must be used in a manner that actually does, or is likely to, deceive or cause confusion, the same applies to the use of a trademark as a metatag or otherwise in an SEO strategy.
This case is different from the others discussed above in several material respects. The first and most obvious is that the term “lift shop” was a generic term with universal application to potentially any business selling goods or services relating to elevators, and yet Lift Shop had managed to register a trademark consisting of both words as a phrase.
The second is that Easy Living did not seek to use the trademark as a domain name, or a company or business name, or even the title of its website, but rather only as the third element of its title and in metatags and search engine keywords. The third, yet equally important, aspect of the case is that Easy Living only used the trademark in a descriptive sense, to illustrate the function that its business carried out, but not to distinguish its goods or services from those of other “lift shops”.
Notwithstanding the above, some components of the “danger zones” discussed above were met in the circumstances of this case, such as the fact that Easy Living’s actions did apparently divert traffic away from Lift Shop’s site, and it could easily be argued that the trademark was used with the intention of disrupting the business activities of Lift Shop, and perhaps even the industry at large. However, those danger zones relate only to the UDRP / URS rules, but not trademark disputes.
In terms of the trademark dispute, while the phrase “lift shop” was deceptively similar to the trademark, and the same goods or services were involved, because of the general connotation of the term and the fact that it was clearly used merely descriptively, it could not be said that Easy Living had infringed the trademark.
Specifically, Easy Living’s badge or indicator of origin was “Easy Living”, not “lift shop”, as was made clear by the appearance of that term as the first tier of its search result title. In addition, other businesses in the industry were using the term “lift shop” descriptively (although this is not a determinative factor).
Further, it was also found to be clear, on an objective view, that Easy Living’s intention was to not to deceive or confuse, but rather compete with Lift Shop as an alternative, at that this would be sufficient clear to internet users (although such an intention will not be determinative either).
Similarly, on one view, it could be said that, given the particular nature of Lift Shop’s trademark and its pre-existing reputation within the industry, for example, gave rise to a claim that it was misleading and deceptive conduct. However, the Court also found that, owing to the same general connotation, the fact that it was clear that consumers would see Easy Living as a competitor to Lift Shop, and that therefore, Easy Living was not trying to create any association or affiliation with Lift Shop or its goods or services, the use of the phrase was not misleading or deceptive.
Given the particular facts in issue in this case, and the reasons given for judgment, had Lift Shop’s trademark contained different words or a different phrase, the outcome could have been much different the further away that variation took the phrase from the general connotation found. Similarly, perhaps if Easy Living had used the phrase as its first title in search results, or had it been a duopolistic or oligopolistic industry and a slightly different phrase, it may have been a very different story.
Easy Lifting – Some Helpful Conclusions
In light of the above, here are some generally applicable pointers to take away:
- Registered trademarks will generally take precedence over unregistered trademarks, domain names, company or business names – register your trademark as soon as possible.
- Unregistered trademarks can still create enforceable rights as against applicants for registered trademarks or subsequent domain, company or business name registrants – do your due diligence before applying for registration of any of these. The IP Australia website has links to domestic and international databases, and Google searches are always an option for market research.
- Choose something unique – once you have determined that your word or phrase has not been registered in your class of goods or services, make sure the domain name, company and / or business name is still free and not too similar to others in your space.
- Don’t stop at one – once you have selected a unique name or phrase for your brand, register it as a trademark, register the business name and register the domain name(s).
- Always think as if you are going to be huge – register trademarks and domain names in each country you trade in, and in as many variants as possible.
- Remember to actively use your marks and names and defend your rights in a timely manner to ensure they are upheld.
- Steer clear of general connotations – base your marks, names and slogans on something truly unique, and limit use to descriptive purposes only in a manner that clearly avoids confusion.
- Avoid dealing in marks or names for anything other than legitimate business purposes, and only in line with the above.
For more information or specific advice on intellectual property or other issues faced by start-ups, feel free to contact the author.