ISP cooperative proposes scheme to combat online copyright infringement

Posted by Kate Vaughan

Late last month, the Communications Alliance (CommsAlliance) and five large Australian internet service providers (ISPs), including iiNet, announced plans to assist copyright holders in combatting internet piracy.  This announcement conveniently preceded an appeal before the High Court last week - the iiNet case - concerning precisely this issue.

Image courtesy of renjith krishnan

In iiNet, the High Court is considering the Full Federal Court's decision from earlier this year that ISP iiNet cannot be held liable for copyright infringement for the downloading of films and TV shows by its subscribers.  The Full Federal Court had held that, despite iiNet's failure to send warnings to suspected infringing subscribers (as requested by the consortium of film and television studios), that failure was not unreasonable in light of evidentiary deficiencies in the notices received from the studios requesting that action be taken against them.

New Zealand and France have recently introduced 'three strike' policies targeting individuals who infringe copyright in the manner at issue in the iiNet proceedings.  In New Zealand, once an ISP has issued three notices to an individual user alleging that the user may be infringing copyright (and if the individual continues to infringe), the copyright owner is entitled to take action in the New Zealand Copyright Tribunal (see our previous blog post discussing the New Zealand scheme).

The CommsAlliance and the five ISPs have proposed a similar scheme for Australia.

The three notice scheme

Under the proposed scheme (Scheme), copyright owners will be able to assert their rights directly against alleged infringers through a copyright infringement action.  The action would become available following three stages of warnings to infringing users by the ISP.

Where a copyright owner detects a suspected infringement of its copyright occurring via an ISP, the copyright owner is expected to notify the ISP.  If the ISP is able to identify the suspected infringing user, it will then be obliged to issue infringement warning notices in three stages to that user (for as long as the infringement persists), namely:

• an Education Notice, setting out that the user may have infringed copyright and that failure to act on the Notice may result in further action;
• up to three Warning Notices over a 12 month period; and
• finally, a Discovery Notice, informing the user that they have failed to address the matters set out in the previous notices.

Unlike the French scheme, ISPs will not be obliged to terminate a user's internet account or impose any punitive sanctions at any time during the three warning stages.  This part of the proposal is consistent with iiNet arguments about reasonableness asserted last week in the High Court.  More specifically, on day two of the High Court appeal last week, iiNet maintained that terminating user accounts was (and is) not commercially reasonable.

However, following issue of the final Discovery Notice by the ISP to a user, the copyright owner may apply for a court order to obtain the user's contact details.  If the ISP is served with a preliminary discovery order or subpoena, they will be required to disclose the user's contact details to the copyright owner, and the copyright owner will itself be able to commence proceedings.

Users will be able to appeal any notices they receive (and an independent 'Copyright Industry Panel' will be established to give effect to the appeals process).

It is proposed that the Scheme will be trialled on residential landline customers for 18 months.  After the 18 month trial, an independent evaluation of results will be conducted to determine the Scheme's effectiveness in significantly changing user behaviour.

User education and awareness are key themes under the proposal.  In particular, the Scheme will aim to stop infringements after the issue of the initial 'Education Notice'.

The role of ISPs in addressing infringement

ISPs will not be required to monitor user connections or activities under the proposal.  Instead, the onus will continue to rest on copyright owners to detect infringement and assert their rights (by notifying the ISPs of suspected infringement).  However, where an ISP is able to identify a suspected copyright infringer, it will be required to assist a copyright owner by issuing up to the three stages of infringement notices (as outlined above).

There are two other key components to the Scheme:

(a) copyright owners will be required to indemnify the ISPs for actions they take in operating the Scheme if the ISPs act in accordance with the Scheme rules (which are yet to be settled); and

(b) unless the notifications of suspected infringement by copyright holders comply with an agreed format, there will be no obligation for ISPs to send infringement notices to users.

The format of notification by copyright owners is yet to be finalised.  However, a notification will at least need to include an outline of the works protected by copyright; details of the alleged infringement(s); and the suspected infringer's IP address.  Each notification will also need to contain sufficient detail about the copyright owner to enable the ISP to audit the validity of the copyright claimed and its ownership.

Interestingly, under the Scheme, ISPs will not be obliged to process or audit more than 100 copyright infringement notifications in any calendar month during the 18 month trial period.

Fair enough?

The Scheme has been criticised by content groups.  More specifically, the Australian Content Industry Group (ACIG)[1] has asserted that a continued onus on copyright holders to identify and prosecute infringement fails to strike an appropriate balance between ISPs and copyright owners in addressing internet piracy.  (Conversely, iiNet argued in the High Court last week that it is unable to proactively monitor its customers' internet activities for infringement due to the privacy-related provisions under the Telecommunications Act 1997.)

Similarly, the Australian Federation Against Copyright Theft (AFACT) has raised doubts about the effectiveness of the Scheme, on the basis that it will rely on notices rather than sanctioning users (although research out of France and Canada suggests the majority of infringers change their behaviour after receiving notices under the regimes operating in those jurisdictions).

The imminent iiNet decision ...

It's perhaps unsurprising that CommsAlliance and the ISPs chose to go public with the Scheme in the week before iiNet was heard in the High Court.  If the High Court finds that iiNet should have done (and must in the future do) more to assist copyright owners in protecting their IP, the proposal may be moot.  Through the Scheme, CommsAlliance and the ISPs are sending a clear message about what they considers the role of ISPs to be in combatting piracy in the digital age.

The High Court is expected to hand down its decision in mid-2012.

Partner: Paul Kallenbach

[1] Representing organisations including the Australian Record Industry Association (ARIA), Microsoft, the Business Software Alliance (BSA), Music Industry Piracy Investigations (MIPI) and the Interactive Games and Entertainment Association (IGEA).

The Royal Children's Hospital [2011] APO 94 - a lighter shade of Gray?

Posted by Sarah Doyle

Following the much debated Federal Court decision in University of Western Australia v Gray (No 20) [2008] FCA 498, the ownership of inventions in the context of the employer-employee relationship was considered again earlier this month. This time the Australian Patent Office considered an application filed by the Royal Children's Hospital (RCH) for a direction under section 32 of the Patent Act 1900 (Cth) concerning two patent applications filed by one of its employees, Dr Alexander.

Dr Alexander was Head of Virology at RCH when he developed two inventions the subject of the patent applications. The first invention related to improvements in the medium used to inoculate and grow viruses in culture. The second invention related to improvements in the design of a microtitre tray (a standard tool used in clinical diagnostic testing).

RCH accepted that Dr Alexander was not employed in a sufficiently senior management position to attract a fiduciary duty to forward the interests of RCH, which might otherwise have enabled RCH to argue that, in applying for the patent applications in his own name, Dr Alexander was forwarding his own interests ahead of RCH's interests in breach of that fiduciary duty.

RCH therefore relied on the common law principle that inventions developed by employees 'in the course of their employment' belong to their employer as an implied term of their employment contract, to assert rightful ownership of any patents granted in respect of Dr Alexander's inventions.

UWA v Gray confirmed that, in employment categories where the implied term applies, whether an invention is developed in the course of an employee's employment depends on whether the employee has a 'duty to invent', in the sense that it is part of the employee's engagement to 'utilise his or her inventive faculty in an agreed way or for an agreed purpose, and for the benefit of, or to further the purposes of, the employer'. Put another way, the invention would need to be 'the product of work which the employee was paid to perform'.

As Head of Virology at RCH, Dr Alexander was responsible for the quality and efficiency of the viral diagnostic work performed at RCH. He did not have any express duty to invent under his employment contract and his day to day duties did not involve any pure research. However, Dr Alexander's duty statement specifically highlighted a job requirement of 'identifying potential areas for improvement in the diagnostic service', and he accepted that he had a role in improving the clinical testing procedures at RCH.

The APO considered that this prima facie provided both a duty to invent and an agreed purpose as required by Gray.

The APO then went on to consider whether, as the Federal Court decided in relation to Dr Gray in UWA v Gray, there were sufficient negating factors which were inconsistent with, and went against, the implication of employer ownership of employee inventions that were developed in the course of, and as a product of, what the employee was actually employed to do.

One of the negating factors emphasised by the Federal Court in UWA v Gray was that Dr Gray was not bound by confidentiality obligations preventing him from freely publishing the results of his experiments, even though this would have had the potential to destroy patentability.

Dr Alexander sought to rely on the fact that RCH had similarly failed to impose on him a duty of confidentiality which would ordinarily be required in an industrial setting. However, the APO did not consider this to be determinative in a public hospital environment. This was because hospitals do not need to commercialise an invention to benefit from it. Conversely, hospitals have a large public interest role which is served by disclosing and sharing new methods and techniques including, in the present case, to ensure the proper diagnosis of viral pathogens for the treatment and management of diseases.

The APO also pointed out that in UWA v Gray, Dr Gray's lack of confidentiality obligations was merely one of a number of negating factors. Also critical to the decision in that case were that:

(i) Dr Gray was free to select what lines of research he would undertake and in what fields, without regard to furthering any commercial interest or other benefit of UWA; and

(ii) Dr Gray was expected to solicit funding for his research from sources outside of UWA.

In contrast, the APO found that while Dr Alexander had limited discretion with his lines of research, his research as a whole was confined to, and focused on, improving the viral diagnostic techniques used at the hospital. Such research was directly related to the purposes of, and directly benefited, RCH. Dr Alexander was also not expected to (and did not) obtain any external funding for his research.

Therefore, the APO held there were insufficient factors to negate Dr Alexander's prima facie duty to invent. However, the APO found that the agreed purposes of this duty were limited both by Dr Alexander's specific job requirement to identify 'potential areas of improvement' and by the limited support provided by RCH for Dr Alexander's research (including RCH's refusal of funding requests for laboratory equipment where benefits were untested). This meant that Dr Alexander only had a duty to invent in circumstances where there was a clear motivation arising in the course of his employment, which were found to be broadly limited to situations:

(i) where there was a recognised problem which he would have been reasonably expected to resolve; and

(ii) where he was otherwise motivated to pursue a particular avenue of research in the reasonable expectation of identifying potential improvements (and not just where an invention might possibly result).

Turning to whether the two inventions the subject of the patent applications challenged by RCH were developed within the ambit of this limited duty, the APO held that:

(i) the first invention relating to improvements in the medium used to inoculate and grow viruses was an avenue of research which Dr Alexander would be expected to investigate further in the reasonable expectation of identifying potential improvements in the course of his role as Head Virologist;

but that

(ii) the second invention relating to improvements to an existing device which was already effective in design and not in need of any trouble-shooting was outside the scope of research avenues that Dr Alexander would reasonably be expected to pursue in the reasonable expectation of identifying improvements.

This is a victory of sorts for both RCH and Dr Alexander and demonstrates that while the legal principles may be clear, the application of those principles may lead to very different conclusions depending on the particular facts of the case.

For employers, this reinforces the need to include clear IP assignment provisions in all employment contracts which are more prescriptive than a restatement of the common law principle – 'that the employer will own all IP developed by an employee in the course of his or her employment' - which are still common place in employment contracts.

Partner: Kylie Diwell

Update on reforms to Australia's patent laws

Posted by Dennis Schubauer

Patent law has been the subject of a number of reports and proposals for reform, particularly in relation to gene technology, including:  

• the Senate Community Affairs References Committee's Gene Patents Report – calling for increased patentability standards, particularly regarding gene patents;
• the 2011 Advisory Council on Intellectual Property's Patentable Subject Matter Report (the ACIP Report) – recommending that, among other things, the Patents Act 1990 (Cth) is amended (i) to include a statement of objectives, (ii) to define the requirements for patentable subject matter; and (iii) to replace the current exclusions to patentability with a morality exclusion;
• the 2004 Australian Law Reform Commission's Report No 99, Genes and Ingenuity: Gene Patenting and Human Health (the ALRC Report) – calling for improved patent law and practice, and greater monitoring and education regarding gene patents and licensing; and
• IP Australia's review of the patent system.

In addition, there is currently before Parliament: 

• the Intellectual Property Laws Amendment (Raising the Bar) Bill 2011 (the IP Bill); and
• the Patent Amendment (Human Genes and Biological Materials) Bill 2010 (the Genes Bill).

On 23 November 2011 the Australian Government issued a consolidated response to these reports, clarifying how it intends to deal with the various proposals.

In the Government's view, most of the recommendations are addressed by the IP Bill, which broadly seeks to:

• extend the information that can invalidate the inventiveness of a patent (eg. common general knowledge outside Australia is relevant if it would be 'understood and appreciated' as relevant (without the current 'ascertained' requirement));
• raise the standard of information a patent specification must include to support the invention;
• raise the burden of proof to a 'balance of probabilities' threshold for all patentability criteria; and
• expand the grounds on which the Commissioner can challenge a patent or patent application.

Significantly, the Government accepts that the Patents Act:

• in principle, should not be amended to exclude genetic material and technologies from patentable subject matter; and
• should not exclude methods of diagnostic, therapeutic or surgical treatment from patentable subject matter (Recommendations 7-1(a) and (b) of the ALRC Report).

Further, the Government accepts that patent applications directed to genetic materials and technologies should be assessed against the same criteria as patent applications in other fields (Recommendation 6-1 of the ALRC Report).  This indicates that the Government will not support those seeking to specifically excluded genes and genetic material from patentability, eg. the Genes Bill, which remains pending following an unfavourable Senate Inquiry.

The Government also commented favourably on initiatives by IP Australia to increase the transparency of the patent system (eg, improvements to the 'AusPat' search tool and the creation of the 'eDossier' tool which provides access to prosecution documents) and to improve the training of patent examiners (eg, spending $5,900 per examiner on training in 2010). These initiatives are viewed as reinforcing the objectives of the IP Bill and consistent with a number of the recommendations.

The only recommendations that require substantive further drafting are those of the ACIP Report noted above. While the ACIP Report proposed some straightforward drafting solutions, the Government's desire that the proposals receive a 'considered and comprehensive public consultation process' will likely mean that there are no conclusive developments in the near future.

In the meantime, the IP Bill has had its first reading in the Senate; and the Government's view that the IP Bill addresses a number of the calls for reform will likely assist the passage of the IP Bill through Parliament.

Partner: John Fairbairn

Copyright in pharma product information - revisited

On 18 November 2011 the Federal Court delivered a further judgment in the long running dispute between Sanofi-Aventis and Apotex relating to generic Arava® (leflunomide) (Sanofi-Aventis Australia Pty Ltd v Apotex Pty Ltd (No 4) [2011] FCA).  The dispute included an interesting application of the vexed dichotomy in copyright law between information and its embodiment, encapsulated in the maxim that copyright protects the form of expression of an idea or information and not the idea or information itself.

At key issue in dispute was the effect of the Therapeutic Good Legislation Amendment (Copyright) Act 2011 (Cth) (Amendment Act), which commenced May 2011.  Jagot J had previously found that Apotex had infringed copyright in Sanofi-Aventis' product information document (PI) by reproducing it in its PI for generic leflunomide-containing products: Sanofi-Aventis Australia Pty Ltd & Ors v Apotex Pty Ltd (2011) 92 IPR 320.

'Product information' is defined in the Therapeutic Goods Act 1989 (Cth) (TG Act) to mean 'information relating to the safe and effective use of goods, including information regarding the usefulness and limitations of goods'.  Generally, a PI must be submitted to the Therapeutic Goods Administration (TGA) before a new drug, or generic version thereof, is approved or can be lawfully marketed or supplied in Australia.

Litigation, document production and storing data in the cloud

Posted by Sandra Draganich

Image courtesy of lennysan

Litigation issues are often not given the consideration they deserve when negotiating the terms of cloud service provider agreements.  Perhaps this is because negotiation is often undertaken by commercial managers and technical staff to the exclusion of the legal team, or because no-one likes to think they'll end up in litigation.  Even when the legal team is involved, the focus tends to be on regulatory compliance, privacy and data security issues, rather than dispute resolution or litigation.

The recent introduction of civil dispute legislation at the Federal level (the Civil Dispute Resolution Act 2011 (Cth)) and Victoria (Civil Procedure Act 2010 (Vic))  - with similar legislation expected to be introduced in other Australian jurisdictions - provides a timely reminder of the importance of considering the impact that storing data in a cloud might have on any litigation in which the owner of the data is involved.

The legislation aims to encourage the early resolution of disputes and, to that end, the early identification of the real issues in dispute.

At the Federal level, the Civil Dispute Resolution Act obliges an applicant to inform the Court (via the filing of a 'genuine steps statement' when proceedings are issued) of the steps taken to resolve the dispute.   The Act provides, as an example of what might constitute a 'genuine step', the provision of documents to the other person to enable them to understand the issues involved and how the dispute might be resolved.

In Victoria, the Civil Procedure Act applies when proceedings are on foot, and obliges parties to a proceeding to comply with certain 'overarching obligations', including an obligation to disclose critical documents at the earliest reasonable time after the relevant party becomes aware of their existence.

What this means, on a practical level, is that a litigant needs to ensure that it has ready access to its documents, including those stored in the cloud: being able to access and retrieve data quickly and in an admissible form will best position a party to pursue, or defend, any claim, as well as meet any disclosure or discovery obligations it needs to meet should litigation ensue.

Of course, quick access to documents is generally desirable should a person be involved in litigation, irrespective of the application of the recent legislation. For example, notices to produce might be issued on short notice, or a party might be involved in litigation with an expedited timetable so that discovery might need to be completed within a short timeframe.   If documents are stored in the cloud, the party's ability to comply at short notice might be impeded, absent any contractual 'safeguards' with the cloud service provider.

Cloud computing arrangements, while various in nature, typically involve the cloud service provider receiving, processing, holding and storing client data at a location separate from the client (and sometimes overseas).   As the client generally does not have possession of the data or documents (but does have 'control' of the data or documents in the sense of a legally enforceable right to call for production), several key issues arise when litigation looms, including data access, retrieval and integrity.   These issues need to be carefully considered at the time of negotiating a cloud service provider agreement.

Data access and retrieval

The timely retrieval of data will be pivotal in determining a client's ability to pursue or defend any litigation, or comply with any subpoenas to produce (failing which the client will be in contempt of court).

For this reason, provider agreements should expressly address service levels, data availability and turnaround times for requests for access to or the return of data.  As soon as proceedings are issued, the client should think about what data might need to be reviewed (and retrieved), and make an early request from the cloud service provider for the retrieval of the data.  Enquiries should also be made of the cloud service provider before agreeing to any discovery timetable as this will be relevant to the client's ability to comply with any timetable set by a court.  If possible, a contractual indemnity should be obtained from the service provider, so that it is obliged to indemnify its client in respect of any loss occasioned as a result of delays (such as costs associated with a court hearing in relation to non-compliance with a discovery timetable).

Integrity

A client might wish to ensure that its data is stored separately from that of others (eg, if privacy or confidentiality issues are of concern), and that only designated people or groups have access to the data. The issue of ownership might be particularly important if the cloud service provider becomes insolvent.

Contractual protections should also include prohibitions against altering or modifying the data (other than as agreed), as this might raise questions about ownership (including of intellectual property rights) in relation to the modified version of data and, importantly, the integrity and therefore admissibility of the data should the client become involved in litigation and the data is required to be produced to the court or tendered in evidence.

In this regard, whilst the Uniform Evidence Acts contain provisions directed towards facilitating the admissibility of electronic data or documents, it might be prudent to impose a contractual obligation on the cloud service provider to provide all necessary assistance in relation to legal proceedings in which the client is involved, including an obligation to provide evidence as to the manner in which the data has been stored and retrieved should data integrity become an issue on a challenge to admissibility.

Other matters

Cloud service provider agreements should also address the client's rights and obligations in the event that the agreement is terminated by either party, where the agreement naturally comes to an end, or where the cloud provider becomes insolvent.

The location of the data and the cloud provider are also very important.  A client should be mindful of the potential application of foreign laws, for example the application of foreign insolvency laws on the insolvency of the cloud service provider, or the application of general laws of the jurisdiction entitling a third party to access data within its jurisdiction (eg, the USA PATRIOT Act).

Other jurisdictional issues relate to the proper law of the service agreement; the service of proceedings should the client wish to issue proceedings against the cloud service provider for breach of the service agreement; and the enforcement of any judgment in the client's favour should it succeed in any proceedings.

Some more general issues relating to the use of the cloud are canvassed in AGIMO's paper, 'Negotiating the cloud - legal issues in cloud computing agreements', released earlier this month.

Partner: Paul Kallenbach

Website users beware – accessing a website with fine print may form a binding contract and copying its content may infringe copyright

A recent decision of the Supreme Court of British Columbia found that visitors to publicly available websites can be bound by its terms and conditions, even where users did not explicitly accept them. The decision has broad implications, particularly for automated website indexing.

Background to the Dispute

Century 21 Canada Limited Partnership (Century 21 Canada) developed and operates a publically accessible website (Century 21 website) designed to promote its business to potential users by featuring property listings belonging to Century 21 brokers and agents from British Columbia and across Canada.

Zoocasa Inc. (Zoocasa) operated a website that collated property listings from various real estate websites using automated software programs. It provided users with relevant results in response to their search queries (such as location, price and number of bedrooms), including photographs of properties offered for sale, property descriptions and other property details on the Century 21 website.

Century 21 Canada informed Zoocasa that they did not consent to their activities in indexing and copying material from their website. It then placed Terms of Use on their website home page, forbidding the copying or reuse of its property listings. The Terms of Use were at the bottom of the home page and were not drawn to the attention of users in any active way. The Terms stated that 'by accessing or using the Website You agree to be bound by these Terms of Use without limitation or qualification'. The website did not require users to acknowledge reading and agreeing to them. Century 21 Canada also immediately notified Zoocasa of the existence of the Terms of Use and that they considered Zoocasa to be in breach of those Terms and infringing Century 21 Canada's copyright.

Zoocasa continued to access Century 21 Canada's website to index and copy material without consent. As a result, Century 21 Canada commenced proceedings seeking an injunction and damages for Zoocasa's conduct. The issue for the Court was whether Zoocasa's acts in accessing the Century 21 website were sufficient to result in the formation of an agreement.

Contract claims

Zoocasa argued that there was no valid offer, acceptance or consideration for the creation of a contract, particularly as users did not have to expressly agree to anything and the website was freely available for anyone to access. Zoocasa also argued that, as a matter of public policy, it would be detrimental to the operation of the Internet if merely accessing a website that contained terms and conditions would serve as acceptance sufficient to form a binding contract, where the user did not expressly agree to such acceptance.

Punnett J was unconvinced by this argument. In its view, not all information on the web is available without restrictions and contract law is available to protect such restricted information. The Court considered how the law has adapted to changing methods of contracting through the recognised 'ticket' cases, such as buying a car park or concert ticket, where a machine is involved in the contractual process. In these cases, the machine is the mechanism by which the customer enters into a contract upon the receipt of a ticket. Applying these principles, Punnett J found that a publicly available website does not necessarily give a right of access free of any contractual terms.

The Court found that the user's act of accessing the website beyond the initial screen page constituted agreement to the contractual terms of the website. As a result, Zoocasa had agreed, simply by accessing Century 21's website, to observe Century 21's Terms of Use. In making this finding, the Court noted that the type of user of the site will be taken into account in determining whether a valid contract exists. For example, whether the user is (i) an individual consumer or a commercial entity or (ii) a one-time user or a frequent user.

The Court concluded that Zoocasa breached the contract with Century 21 Canada. Interestingly, the Court only awarded $1,000 in damages, stating that Zoocasa's conduct was not 'particularly egregious'.

Copyright infringement claims

There was also claims for copyright infringement made on behalf of Century 21 Canada and two real estate salespersons who were the authors of the sales listings. They argued that the photographs and property descriptions (the Works) created for its online property listings were protected by copyright and Zoocasa infringed that copyright by indexing and copying them on the Zoocasa website. Punnett J found that the Works were entitled to copyright protection due to the level of skill and judgment required to produce them. Punnett J held that Zoocasa had copied a substantial part of the property descriptions and the entire photographs and as such, Zoocasa had infringed copyright.

The Court granted Century 21 Canada a permanent injunction, restraining Zoocasa from accessing the Century 21 website in contravention of the Terms of Use posted on that website.

Implications of the decision

The critical consideration as to whether the sort of agreement at issue in this case (often referred to as 'browse wrap' agreements) is enforceable is whether the user is aware of the terms and conditions. If so, then the browse wrap agreement could be binding and enforceable. Importantly, there is no need for the user to take steps to indicate his or her acceptance of the terms eg. by ticking 'I agree'. Whether or not the user can be taken to have accepted the terms in such circumstances will depend on factors such as:

(i) what notice the user has respecting what they are agreeing to, including the prominence the site gives to the terms and conditions

(ii) whether the user is an individual consumer or a commercial entity and in addition a one-time user or a frequent user of the site.

As the Judge stated, '[a]t the root of this lawsuit is the legitimacy of indexing publically available websites'. A website operator seeking to prevent a competitor from scraping its site can potentially use contractual terms to do so.

Partner: John Fairbairn

Woolworths has a successful victory over disputed domain name wooliesonline.com.au

The WIPO Arbitration and Mediation Centre Administrative Panel has decided in favour of Woolworths Limited (Woolworths), finding that the domain name wooliesonline.com.au (the Domain Name) is confusingly similar to Woolworths' trade mark WOOLLIES.

Background to the Dispute

In 2008, Woolworths obtained registration in Australia of the WOOLLIES trade mark (the Mark) for a variety of goods and services, including online wholesaling and retailing of products. The Mark is known as a colloquialism to the supermarket trade name, Woolworths.

In March 2011, Save Cash Pty Ltd (Save Cash) registered the Domain Name. In July 2011, the Domain Name linked to a web page containing sponsored advertising links, including links to Woolworths and its competitor, Coles.

Woolworths subsequently filed a complaint to the Arbitration and Mediation Centre.

Parties' Arguments

To succeed in its claim under the .au Dispute Resolution Policy and the Rules for .au Dispute Resolution Policy, Woolworths had to establish that:
(i) the Domain Name was identical or confusingly similar to its Mark;
(ii) Save Cash had no rights or legitimate interests in respect of the Domain Name; and
(iii) the Domain Name was registered or subsequently used in bad faith.

In arguing satisfaction of the second limb (which went to legitimacy), Woolworths argued that Save Cash is not known by the Domain Name, appeared to be running a car sales business and the Domain Name was not being used in good faith in the offer of goods and services.

In respect of the third limb (bad faith), Woolworths asserted that the Domain Name had clearly been registered in bad faith, as Save Cash had no rights or legitimate interests in the Domain Name and Woolworths had not consented to its use of the WOOLLIES mark. Further, Woolworths' strong reputation was such that Save Cash must have been aware of Woolworths and its mark or must have known that the Domain Name would have benefited from being so similar to the Mark.

Save Cash in turn argued that it intended to develop the Domain Name to market goods and services that incorporate woollen products and other associated lines, and not to sell food or other items which Woolworths sells. They further claimed that the Domain Name did not infringe the Mark as it was not offering or selling food or anything that would fall within the goods or services in respect of which the Mark was registered. Save Cash also argued that it was lawful to use a trade mark within a domain name provided the website contained a disclaimer dissociating it from the trade mark owner or offered a completely different product or service.

Panel Findings

The Panel considered that the Domain Name comprises the WOOLLIES Mark together with the word 'online', which describes one of the services for which the Mark is registered. In that respect, the Domain Name did not detract from the distinctiveness of Woolworths' well-known Mark and was found to be confusingly similar.

In finding that Save Cash had no rights or legitimate interests in the Domain Name, the Panel stated that:
(i) Save Cash failed to provide evidence of its plans to use the Domain Name in any of the ways it claimed;
(ii) Save Cash was not commonly known by the Domain Name or the word Woollies; and
(iii) the Mark is so well-known that it is inconceivable that the Domain Name could be used in a way that would not mislead Internet users.

The Panel also found that Save Cash had registered and subsequently used the Domain Name in bad faith. The Panel considered that, as the Domain Name contains the distinctive Mark with a descriptive word, it gave an impression that users would be led to a website where Woolworths' products were available to buy online and created a likelihood of confusion that the Domain Name was endorsed by or affiliated with Woolworths. The Panel held that Save Cash must have been fully aware of this potential affiliation and used the Domain Name in an attempt to attract Internet users for commercial gain.

Impact of the Decision

As Woolworths had satisfied all the elements, the Panel ordered the Domain Name to be transferred to Woolworths. The decision is confirmation that domain name dispute resolution policies can be effectively utilised to prevent trade mark misuse within domain names and that the addition of certain words to a trade mark ('online' in this case) may not obviate the likelihood of confusion.

Partner: Lynne Peach