International online trade mark infringement - risking a big 'net' loss

The recent boom in online retail has provided a great number of opportunities for both retailers and consumers.  The internet allows retailers to cheaply and easily target new markets and customers, which can lead to rapid brand expansion.  However, website owners and online retailers must ensure that website content is carefully worded to minimise the prospect of being unwittingly exposed to the trade mark laws of a foreign country.

The Federal Court of Australia has recently dealt with such a situation in the matter of International Hair Cosmetics Group Pty Ltd v International Hair Cosmetics Limited [2011] FCA 339, a case concerning a website owner, based in the UK.  The dispute was between two companies that both owned and had the rights to use the trade mark “AFFINAGE” for hair products in their native countries, being in the UK and Australia respectively.

Facts of the case

In particular, the matter focused on the UK company’s website www.affinage.com, on which it used the trade mark “AFFINAGE”.  The Australian company alleged that the UK company was, by using the trade mark on the website, infringing the Australian company’s rights to exclusively use the trade mark in Australia.  This is despite the fact that the UK company and its website were not located in Australia, and did not allow users to purchase any products on the website.

The outcome

In its decision, the Court confirmed that the owner of an international website will not engage in infringing conduct simply by using an Australian trade mark registration on its website or in its name, even if Australian users visit the website.  However, trade mark infringement may occur if the website specifically targets Australian users, even to simply advertise but not sell products.

In the case, the Court formed the view that the UK website had indeed targeted Australian consumers, including by:

• Having a drop down box which allowed visitors to designate where they were located (specifically “UK, “US” or “Australia”), and then to receive relevant information based on their selection. 

• Referring to international sales of the “AFFINAGE” brand on the website, including sales in Australia.

• Referring Australian users to an Australia distributor of hair care products (even though the distributor’s products did not bear the “AFFINAGE” trade mark).

The Court found that, due to the fact that Australian consumers were clearly targeted by the UK website, the UK company had attempted to project its goods into Australia and accordingly used the “AFFINAGE” trade mark in Australia.  As the Australian trade mark owner had the exclusive right to use “AFFINAGE” in Australia, the UK website owner was found to have infringed the Australian trade mark. 

Implications

Many countries around the world have similar trade mark laws to Australia, and have adopted similar tests to determine whether an international website has used a trade mark in that jurisdiction.  Therefore, just as in the “AFFINAGE” case, Australian website owners must be careful not to expose themselves to possible claims of infringement in unintended jurisdictions.  Even where a website only attempts to build brand recognition but does not offer goods for sale in a particular jurisdiction there may still be a basis to argue that trade mark infringement has occurred. 

For instance, based on the reasoning in the “AFFINAGE” case it seems clear that an Australian website that allows foreign users to purchase goods online, would most likely be found to be trading in that foreign jurisdiction and subject to the local trade mark laws. However, even an Australian website which does not allow for foreign sales could still be found to be operating in another jurisdiction if, for instance, the website:

• Contains specific information for users of a certain country.

• Displays information in a foreign language.

• Has a foreign currency converter, or displays prices in foreign currencies.

• Refers to a foreign distributor.

While taking action to enforce rights in a cross border context is not straightforward, such disputes that often involve valuable brands are matters that most businesses will want to avoid.  Website owners should consider the content of their website, and make sure that nothing on the website could be construed, in the eyes of an over zealous foreign trade mark owner, as an attempt to target customers in their country.