The case of Lamont v Malishus & Ors (No 4) [2019] FCCA 3206 (Lamont v Malishus) involved an action for infringement of a registered trade mark in Australia under the Trade Marks Act 1995 (Cth) (TMA).  This case raised several issues, including, whether using a word as part of a domain name constituted “use” as a trade mark, whether the domain name was identical or deceptively similar to the trade mark; whether the goods bearing the trade mark were sold or offered for sale in Australia; and whether posting material containing the trade mark on Facebook amounted to trade mark use.  This article focuses solely on the issue of whether the goods bearing the mark were sold or offered for sale in Australia.

Trademark infringement in Australia

Section 120 of the TMA provides:

“A person infringes a registered trade mark if the person uses as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered”.^[1]

Section 120 does not expressly require the “use” to occur in Australia; the territorial scope of the Act is instead fixed by the definition of “territory” in section 4 of the TMA.^[2]  The effect being, use of a sign as a trade mark can only constitute infringement if it occurs within that territory.  This does not mean an overseas business escapes liability merely because its products are not physically sold in Australia, nor that liability depends on proof of actual sales here.  The inquiry is instead whether the conduct, viewed as a whole, is directed at, or targets the Australian market.

What is “use as a trade mark”?

Australian authority on this question holds that a trade mark is used as a trade mark when it operates as a “badge of origin” indicating a connection in the course of trade between goods and a trader.^[3]

In the case of Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718 (Ward Group) Merkel J stated the core principle:

“A trade mark is used when the mark has been used in Australia in an advertisement or offering for sale of the goods, even prior to any actual trade or dealing in the goods under that mark.”^[4]

No sale needs to occur, advertising or offering for sale is enough, provided the mark is being used as a badge of origin and is not being used descriptively.  For that proposition Merkel J cited cases including Moorgate Tobacco Co Limited v Philip Morris Limited (No 2) (1984) 156 CLR 414 (Moorgate Tobacco) and Malibu Boats West Inc v Cantonese (2000) FCA 1141 (Malibu).

The territorial test: was the use “in Australia”?

Because of the internationalisation of business through the internet, “use” occurs online.  Therefore, the question for the Court is: when publications or representations are made to the world at large, and not directly to persons or subscribers in a particular jurisdiction, how can it be determined if a trademark registered in Australia has been infringed?

Merkel J addressed this issue in Ward Group at paragraph 43:

“… the use of a trade mark on the Internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded.”

But

“… if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction then there is likely to be a use in that jurisdiction when the mark is downloaded.  Of course, once the website intends to make and makes a specific use of the mark in relation to a particular person or persons in a jurisdiction there will be little difficulty in concluding that the website proprietor used the mark in that jurisdiction when the mark is downloaded.”^[5]

[Bold is our emphasis]

Intended target market

Whether that use of a trade mark occurs “in Australia” turns on whether the use was intended or directed at the Australian market, not on the mere technical accessibility of a website from Australia.^[6]

In Ward Group, Merkel J summarised the Court’s position on this question applying a principle from a line of cases on the where a statement is “made and received,”^[7]

“When such publications or statements are made to the world at large, and not to persons or subscribers in a particular jurisdiction, there is some difficulty in regarding them as having been made by a website in a particular jurisdiction.  However, where the publication or statement is directed or targeted at persons or subscribers in a particular jurisdiction there is no difficulty in treating them as having been made and received in that jurisdiction.”^[8]

When is a website targeting Australian consumers?

In Ward Group, the website in question displayed the price in British pounds but a US dollar amount appeared in brackets, presumably as an indication of the conversion price.  The checkout section also contained a heading “Select Shipping Destination” and provided a “drop down” country box containing a list of various countries, including Australia, for the consumer to select.^[9] 

However, the mere appearance of “Australia” in a shipping drop-down list, or an Australian-dollar price conversion shown alongside other currencies, was not held to be targeting the Australian market, Merkel J said at paragraph 37 that:

“…I am not satisfied that those circumstances indicated a specific intention that the particular goods in question were being marketed to consumers in Australia in a manner that would differ from the way in which those, and other, goods were being offered to consumers around the world.  Rather, the circumstances indicate no more than that the website proprietors expected that there may be potential consumers in Australia, in the same way as they expected that there may be potential customers elsewhere in the world, that might be interested in purchasing any of the products advertised on their websites.”^[10]

Can trap purchases constitute consent to infringement?

In Ward Group, the only Australian sales were “trap purchases” made by the applicant’s solicitors. 

Section 123 of the TMA states:

Services to which registered trade mark has been applied by or with consent of registered owner

“In spite of section 120, a person who uses a registered trade mark in relation to services that are similar to services in respect of which the trade mark is registered does not infringe the trade mark if the trade mark has been applied in relation to the services by, or with the consent of, the registered owner of the trade mark”.

Merkel J applied section 123 of the TMA to the facts:

“It follows that I am satisfied that the use of the mark by the website proprietors in the course of the trap purchases is conduct which falls within s9 of the TMA and that, as that conduct has been consented to by the Ward Group, that use was not an infringing use under s120(1) by reason of 123(1) of the TMA.  Thus, the TMA infringement claims against the website proprietors must also fail.”

Application of the facts in Lamont v Malishus

The respondents, Mr Jurcic and Mr Selwyn, gave evidence that their business (conducted informally as the “J S Malishus Partnership”), always intended to target North America and New Zealand, and that any Australian-based activity (ordering labels, swing tags and garments from local suppliers) was incidental and never intended for sale to Australian consumers.^[11]  The Court rejected this characterisation, for five (5) reasons, per Manousaridis J at paragraph 72:

1. Website conduct: The respondents operated www.malishus.com, which represented without qualification that clothing was available for purchase by credit card or PayPal; the Court found “the probabilities are that at least some sales were made” through the site.
2. Sworn admissions: Mr Jurcic’s own affidavit described the brand as having been “actively marketed through online and social media channels,” operating “an active ecommerce website … used in a commercial capacity” an admission the Court treated as conclusive of commercial use.
3. Scale of stock: The J S Malishus Partnership had acquired non-trivial quantities of branded stock, thousands of woven labels, swing tags, T-shirts worth over $10,000, and 255 singlets which the Court found made the claim that none were sold commercially “implausible“.
4. Public representations: The Court found: “evidence that Mr Jurcic and Mr Selwyn were offering for sale clothing bearing a trade mark that used the word “Malishus”  Specifically, the Court noted a Facebook post announcement: “our first ever sale,” and LinkedIn profiles placed the business in “Melbourne Area, Australia,” and later posts offered “Free Shipping Any Where” without excluding Australia together “capable of supporting” an inference that goods were available to Australian customers.
5. Absence of contrary records: The Court noted the respondent “produced no documentary evidence that relates to the purchase of any apparel, or the disposal of the apparel the J S Malishus Partnership acquired”.  The Court drew an adverse inference from this fact stating “I am not prepared to find that this omission is due to their being no relevant documents which it would have been in the power of Mr Jurcic to adduce, had he so chosen, or that his not adducing any such documentary evidence is due to his not being legally qualified“.

On basis of the combined evidence, the Court found that the respondents did sell apparel within Australia bearing a sign that included the word “Malishus,” in the course of the J S Malishus Partnership, and that this constituted use of that sign as a trade mark.

Summary of the factors considered in determining “use in Australia”

The decision in Lamont v Malishus followed with principles in Ward Group, and highlights the application of the “use as a trade mark” test as opposed to actual “sale of trade‑marked goods“.  A clear comparison emerges with the same test producing materially different outcomes on different facts.

In Ward Group the website’s interface incidentally listed Australia as a shipping destination, but the conduct behind it was genuinely indiscriminate worldwide marketing with no sale traceable to anything other than the trade mark owner’s own engineered purchase.  In Lamont v Malishus, by contrast, there was no need for any engineered purchase, the respondents’ own conduct (unqualified sales representations, sworn admissions of commercial operation, commercial-scale stock, and public statements locating the business in Australia) supplied the evidence of targeting the Australian market directly.  

Key takeaways about use as a trade mark

“Use as a trade mark” does not require a completed sale, advertising or offering goods or services for sale suffices.  Whether that use occurs “in Australia” turns on whether the use was intended or directed at the Australian market, not on the mere technical accessibility of a website from Australia.  Courts will infer targeting from the totality of conduct rather than any single piece of website functionality or language viewed in isolation.

Factors found insufficient to establish targeting (Ward Group):

• Australia appearing as one option among many in a shipping “drop down” country box, alongside numerous other countries;
• An Australian-dollar price shown only as an indicative currency conversion alongside British pounds, Euros and US dollars;
• Advertising targeting potential purchasers anywhere in the world at large with nothing to single out the Australian market; and
• A sale resulting only from a “trap purchase” engineered by the trade mark owner’s own solicitors, rather than by any conduct of the respondent directed at Australia.

Factors found sufficient to establish use and targeting (Lamont v Malishus):

• Unqualified representations that goods could be purchased and paid for by credit card or PayPal, without noting geographic restriction, from which the Court found probably resulted in sales being made;
• The respondent’s own sworn admissions describing an “active ecommerce website” used “in a commercial capacity;
• The scale of stock acquired indicating commercial use (contrary to the claim of non-commercial use);
• Public statements on Facebook and LinkedIn locating the business in Australia, announcing sales, and offering shipping “Any Where” without excluding Australia;
• The absence of documentary records in relation to Australian activities, where equivalent records existed for other jurisdictions.

Links and further references

Legislation

Trade Marks Act 1995 (Cth)

Cases

Lamont v Malishus & Ors (No 4) [2019] FCCA 3206

Malibu Boats West Inc v Cantonese (2000) FCA 1141

Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718

Moorgate Tobacco Co Limited v Philip Morris Limited (No 2) (1984) 156 CLR 414

Coca‑Cola Co v All‑Fect Distributors Ltd [1999] FCA 172

Further information

If you need advice on trade mark infringement, contact us for a confidential and obligation‑free discussion.

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[1] Trade Marks Act 1995(Cth) s120.

[2]Trade Marks Act 1995(Cth) s4 (territorial capture extends to; Christmas Island, Cocos(Keeling) Islands; Norfolk Island & Australian maritime and airspace zone), quoted in Lamont v Malishus & Ors (No 4) [2019] FCCA 3206 para [82].

[3] Coca‑Cola Co v All‑Fect Distributors Ltd [1999] FCA 1721 para [19].

[4] Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718 para [36].

[5] Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718 para [43].

[6] Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718 para [43].

[7] Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718 para [40].

[8] Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718 para [40].

[9] Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718 para [22].

[10]Ward Group Pty Ltd v Brodie & Stone Plc [2005] FCA 4718 para [37].

[11] Lamont v Malishus & Ors (No 4) [2019] FCCA 3206 para [72].

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