Veda Advantage Ltd v Malouf Group Enterprises Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Veda Advantage Limited v Malouf Group Enterprises Pty Limited
[2016] FCA 255

File number: NSD 1101 of 2014
Judge: KATZMANN J
Date of judgment: 21 March 2016
Catchwords:

INTELLECTUAL PROPERTY — Trade marks —alleged infringement of registered trade marks by unauthorised use of the marks as keywords and in sponsored link advertisements in Google AdWords program — whether use as a trade mark — whether alleged infringer used the marks in respect of services in respect of which the trade marks were registered — whether alleged infringer used the marks in good faith to indicate the intended purpose of the services — whether use of the marks not likely to deceive or cause confusion

CONSUMER LAW — Misleading or deceptive conduct — whether use of registered trade marks by unauthorised user misleading or deceptive contrary to s 18 of Australian Consumer Law

CONSUMER LAW — False or misleading representations — whether false or misleading representations concerning affiliation with business of trade mark owner contrary to s 29(1)(h) of Australian Consumer Law — whether false or misleading representations with respect to the price of services contrary to s 29(1)(i)

Legislation:

Australian Securities and Investments Commission Act 2001 (Cth), s 12DA
Competition and Consumer Act 2010 (Cth), Sch 2, ss 18, 29(1)(h), 29(1)(i), 131A(1)
Corporations Act 2001 (Cth), ss 766A, 911A(1)

Privacy Act 1988 (Cth), ss 20R

Trade Marks Act 1995 (Cth), s 120(1)
Trade Marks Act 2002 (NZ), s 89(2)
Trade Practices Act 1974 (Cth), ss 51AF, 52
Cases cited:

Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2015] FCA 554

Aldi Stores Ltd Partnership v Frito Lay Trading Company GmbH (2002) 190 ALR 185; [2001] FCA 1874

Australian Competition and Consumer Commission v Coles Supermarkets Australia Pty Ltd [2014] FCA 634

Australian Competition and Consumer Commission v Dukemaster Pty Ltd [2009] FCA 682

Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR 503

Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640

Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2011] FCA 1254

Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd (2011) 197 FCR 498

Britt Allcroft (Thomas) LLC v Miller (t/as The Thomas Shop) (2000) 49 IPR 7; [2000] FCA 699

Campomar Sociedad Limitada v Nike International Ltd (2002) 202 CLR 45

Cassidy v Medical Benefits Fund of Australia (No 2) [2002] FCA 1097

Caterpillar Loader Hire (Holdings) Pty Ltd v Caterpillar Tractor Co (1983) 77 FLR 139; [1983] FCA 145

Clark Equipment Co v Registrar of Trade Marks (1964) 111 CLR 511

Coca Cola Company v All Fect Distributors Ltd (1999) 96 FCR 107

Colorado Group Ltd v Strandbags Group Pty Ltd (2007) 164 FCR 506

Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd [2011] FCA 1319

Cosmetic Warriors Ltd v amazon.co.uk Ltd [2014] ECC 28; [2014] EWHC 181 (Ch)

E & J Gallo Winery v Lion Nathan Australia Pty Ltd

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Details
Case
[2016] FCA 255
Decision Date

CaseChat Overview and Summary

Veda Advantage Ltd initiated legal proceedings against Malouf Group Enterprises Pty Ltd in the Federal Court of Australia, alleging that Malouf had infringed its registered trade marks by using the marks "Veda" and "VedaReport" in sponsored link advertisements via the Google AdWords program. The case involved multiple legal issues, including whether Malouf's use of the marks constituted trade mark infringement, whether it was misleading or deceptive conduct under the Australian Consumer Law (ACL), and whether Malouf made false or misleading representations concerning affiliation with Veda or misrepresented the price of services. The court had to determine if Malouf's use of the marks in the sponsored link advertisements was in respect of services in which the trade marks were registered, if it was likely to deceive or cause confusion, and if Malouf used the marks in good faith to indicate the intended purpose of the services.

The court found that Malouf did infringe the Veda Trade Marks by using the sign "Veda" in its sponsored link advertisements for its Clean Your Credit business in October 2014. The court held that the use of the term "The Veda Report Centre" and "The Veda-Report Centre" in the sponsored link advertisements was substantially identical or deceptively similar to the Veda Trade Marks in relation to services in which those marks were registered. However, the court dismissed the trade mark infringement claim in all other respects. Additionally, the court found that Malouf contravened sections 18 and 29(1)(h) of the ACL by using the terms "The Veda Report Centre" and "The Veda-Report Centre" in its sponsored link advertisements, but found no other contraventions of the ACL.

The court ordered that the parties should bring in short minutes of order reflecting these reasons within 14 days and listed the matter for further directions to set a timetable for the trial of the remaining issues.

Orders

Orders of the court

1. Within 14 days the applicant file short minutes of order giving effect to these reasons.

2. The matter be listed for further directions at 9.15 am on 4 April 2016.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Most of the evidence was uncontroversial. A number of facts were agreed. The dispute largely turned on the inferences to be drawn from the material. Unless otherwise indicated, I accept the evidence.BACKGROUNDThe Veda business The Veda business originated in 1967 with the establishment of the first consumer credit bureau in Australia: the Credit Reference Association of New South Wales, a public company limited by guarantee, which on 21 February 2007 became Veda Advantage Information Services and Solutions Limited (Veda Solutions). Veda Solutions is a wholly owned subsidiary of Veda Advantage and the holding company for a series of entities through which the Veda business is run. Veda is a data analytics business. Indeed, it is the leading data analytics company in Australasia. It is known in the industry as a “credit bureau” and under the Privacy Act 1988 (Cth) (Privacy Act) as a “credit reporting body”. It collects, analyses, and discloses information about individuals and corporations for the purpose of providing information about the creditworthiness of an individual or corporation. Its core service is the provision of credit reports (Veda credit reports) to credit providers, such as banks and other lending institutions (referred to in evidence as its “business to business” services and by the acronym B2B). It also provides services to individual consumers (referred to in evidence by the acronym B2C or “business to consumer” services). A credit report is a report on the credit history of an individual or a corporation compiled by a credit reporting body which includes information in respect of loan inquiries, credit providers, serious debts and credit infringements, commercial credit, and information drawn from public records including bankruptcy data and judgments. Veda credit reports are commonly referred to as “Veda files” or “Veda reports”. Veda is the major credit reporting organisation in Australia. As at 30 June 2014 it held credit information on approximately 20 million individuals and 5.7 million commercial entities. Other credit reporting bodies with which Veda competes include Dun & Bradstreet, Experian Credit Services Australia and Tasmanian Collection Service. Business customers are provided with consumer credit scores under or by reference to the sign “VedaScore”. Veda has a web-based portal, accessible to subscribers, branded “VedaCheck”. Its products and services are marketed to business customers by face to face meetings, “customer events”, and direct distribution of promotional material. Marketing to individuals occurs through the Veda website ( Before September 2011 it occurred through the Veda Advantage website ( Marketing to individuals also occurs through the use of the Google search engine (using the Google AdWords program), referred to as “search engine marketing”; advertising on third party websites, television and radio; through emails, brochures and flyers; and in print and online articles. From time to time the Veda business also engages in “search engine optimisation” to ensure that it appears first in the organic results. I shall explain what all this means later in these reasons.

Evidence

Evidence Before The Court

At no time have these websites stated that Malouf is affiliated with any of the Veda businesses. Nor have they carried a disclaimer to the effect that the businesses are not affiliated or associated with Veda. THE EXPERT EVIDENCE Mr Watt’s evidence provides a picture of the use of the internet to find information, which is of some importance in this case. As he explained in his first affidavit (source references omitted):29People want access to information fast and in real time. The Internet provides this vehicle. People are spending more time online. Consumers view four screens: television, desktop computers, tablets and smart phones. These facts highlight the importance and prominence of online inbound marketing strategies:(a)85% of the Australian population are online …;(b)93% of Internet traffic in Australia is generated by search engines …;(c)Online advertising expenditure in Australia in the past year to 30 June has leapt 14.6 per cent to $3.6bn…30The actual and estimated proportionate spend ratios of Online advertising compared to traditional forms of marketing is consistent with my observation of the practices of the key clients we work for at roi.com.au and their proportionate spend on online advertising becoming increasingly a larger percentage of their overall marketing spend. 31In my experience, consumers today access Google or other search engines similarly to how they once accessed White Pages and Yellow Pages: to gain a website address, phone number, address etc… Mr Watt discussed at some length search engine marketing and the Google AdWords program. He explained the process of choosing keywords for the Google AdWords campaign at [41] of his first affidavit:When keywords for the AdWord campaign are selected, the advertiser can specifically choose 5 types of keyword settings. These are known as “match type” settings – how the search term used by the searcher must “match” the keyword selected by the advertiser in order for the sponsored link advertisement to qualify as a possible advertisement to be returned as a sponsored link in response to a search. The match types are “exact match”, “phrase match”, “broad match”, “broad match modifier” and “negative match”. An exact match allows an advertisement to appear only when a search term is entered which matches or closely matches the keyword. A negative match enables advertisers to prevent their advertisements being displayed when a particular search term is employed. A phrase match allows an advertisement to appear when the search term includes the exact phrase selected by the advertiser or close variations of it. A broad match allows an advertisement to appear when a search term includes the keyword or a variation of the keyword, including synonyms and misspellings. Finally, a broad match modifier allows an advertisement to appear when the search term includes the keyword or a variation of it in any order, but with no synonyms. A summary of match types with examples of each was included in Veda’s pleading and is reproduced at the beginning of Schedule A to these reasons.

Decision

Reasons for decision

The fourth ACL case must be dismissed.CONCLUSION I am satisfied that Malouf infringed the Veda Trade Marks by using the sign “Veda” as a trade mark in its sponsored link advertisements featuring the text “The Veda Report Centre” and “The Veda-Report Centre” for its Clean Your Credit business in October 2014 when that sign was substantially identical with, or deceptively similar, to the Veda Trade Marks in relation to services in respect of which those marks are registered. In all other respects, however, the trade mark infringement claim has not been made out. I am also satisfied that Malouf contravened ss 18 and 29(1)(h) of the ACL by its use of the terms “The Veda Report Centre” and “The Veda-Report Centre” in its sponsored link advertisements, but not otherwise. The parties should bring in short minutes of order reflecting these reasons within 14 days. I will list the matter for directions to set a timetable for the trial of the remaining issues.

Ratio Decidendi

Legal Principle Established

Malouf uses the Google AdWords program to advertise, promote and direct consumers to its websites. The operation of the Google AdWords program The Google search engine allows internet users to search for web pages on particular topics by entering terms into a search field and clicking on a button marked “Google Search”. It displays two types of search results: “organic search results” and “sponsored links”.Organic results Organic search results are links to web pages, which are ranked in order of relevance to the search terms entered by the user. The Google search engine always displays organic search results and organic search results are always displayed free of charge. A search term incorporating the word “veda” will return organic results in which the Veda website appears first. The organic entry for Veda appears thus: Searchers understand that Google provides accurate organic results in response to their searches. Businesses may maximise their exposure via organic results by a process known as search engine optimisation. This involves altering the code, content and design of a website to improve the priority of its listing in the organic search results. Search engine optimisation, like sponsored link advertising, is a form of search engine marketing. Sponsored links Sponsored links are advertisements, which Google’s AdWords program allows advertisers to create, change, and monitor. They are triggered by keywords privately supplied by the advertiser to Google. When a word or phrase, which includes or corresponds with one or more of the keywords, is entered in the Google search engine, the search results page will display those sponsored links. I discuss the process in detail below when I deal with the expert evidence given by Mr Watt. A sponsored link appears in hypertext accompanied by a yellow tag in which the word “Ad” appears in white. Clicking on the link takes the searcher to the advertiser’s website. A person who has conducted a search and chosen to examine the link in an advertisement can always click on the “back” button on his or her browser and return to the original search results. A sponsored link consists of three elements: a headline which incorporates a link to a web page (in blue text); the address of the web page to which the headline links (in green text); and some brief advertising text (in black text). The following is an example of a sponsored link from one of Malouf’s competitors generated by a Google search for Veda: Sponsored links do not replace the organic search results, but are listed separately from them, appearing either above or below or to the far right of them or on successive pages. As such, when “veda” is used as a search term a Google search will produce both advertisements and organic results. This is how the search page appears on a desktop or smaller device other than a mobile phone: On a mobile phone, however, the appearance of the display may be different as was demonstrated by a search for “contact veda”: