Trade mark infringement: a “Malishus” use in domain names

Trade mark disputes concerning domain names often involve “cybersquatters” registering or acquiring a domain name containing a well-known trade mark with the intent of extorting the trade mark owner for money.  Cybersquatting is a malicious act.

But what if someone registers a domain name outside of Australia for their business, where the domain name corresponds to someone else’s registered trade mark in Australia?  Will this constitute an infringement even where the domain name in question is not specifically directed at Australia but is accessible in Australia? The recent decision in Lamont v Malishus & Ors (No 4) [2019] FCCA 3206 found that this can still be a trade mark infringement and, in fact, can be considered “Malishus”.

What happened?

Mr Lamont, the applicant in this case, owns four registered trade marks in Australia containing the word “Malishus”. The first of these was registered on 3 August 2006.  These trade marks were registered across a number of categories including for clothing, headgear and footwear, music, and apparel.

Mr Lamont has a series of business ventures trading under the name ‘Malishus Industries’.  According to their website, Malishus Industries is “the home of tough brands for tough sports & activities”.  Mr Lamont was the registrant of the domain names <www.malishuskoncept.com.au>, <www.malishusclothing.com.au>, and <www.malishusindustries.com.au>.

Mr Lamont claimed that Malishus Ltd (a New Zealand company), its two directors and another shareholder (collectively, the “respondents”), had infringed his trade marks by:

  • registering and using the domain names <www.malishus.com>, <www.malishusbrands.com>, <www.malishus.co.nz> and <www.malishus.com.au>;
  • selling or offering for sale in Australia apparel to which trade marks that included the word “Malishus” were applied; and
  • posting advertising material on Facebook which included the word “Malishus” in connection with clothing.

The respondents admitted many of the facts which Mr Lamont alleged.  They even admitted they were aware of Mr Lamont’s registered trade marks.  However, they denied that they had directed their activities towards Australia, claiming that their business was focused on markets outside of Australia in which the respondents did hold the relevant trade marks (such as New Zealand, the United States and the United Kingdom).  An interesting argument considering the respondents lived in Victoria!

What’s the issue?

A key issue in this case was whether the registration of a domain name containing a trade mark amounts to trade mark infringement under the Trade Marks Act 1995 (Cth) (“TM Act”), where the domain name in question is not specifically directed at Australia but is accessible in Australia.

Citing Sports Warehouse, Inc v Fry Consulting Pty Ltd [2010] FCA 664, the court held that a domain could function as a trade mark if it is used “as a sign to distinguish the goods or services of one trader in the course of trade from the goods or services of another trade” and the public is “likely to understand a domain name … as a sign for the online [goods] identified by the [sign] as available at the webpage to which it carries the user.”

Mr Lamont claimed that he had attained a substantial reputation among the public in Australia and abroad for the provision of music performance and music, and apparel by selling clothing, footwear, and headgear.  The respondents did not agree.

The court found that the respondents’ domain names (except <malishus.com.au> which had never been used) functioned as trade marks which were substantially identical or deceptively similar with Mr Lamont’s registered marks, as each domain name resolved to a website on which consumers could purchase apparel marked with the work “Malishus”.

The court also found that despite being unable to secure a payment gateway through an Australian bank, the respondents intended or directed or targeted the domain name <www.malishus.com> to consumers in Australia.  This was because the website that the domain name connect to “represented without qualification that the clothing displayed on the website was available to purchase in Australia.”

In contrast, the court noted that the <www.malishus.co.nz> domain was specifically directed solely to consumers in New Zealand and not in Australia for a number of reasons including, among other things, the use of .co.nz.

Other findings

The court observed that much of the online advertising material used by the respondents did not make it clear that the products were not available in Australia.  Statements made in the online advertising material, such as “free shipping anywhere”, were capable of supporting an inference that the apparel was available to Australia.  Given the amount of apparel sold by the respondents, and the lack of documentation about where sales occurred, the court found that the respondents had sold some infringing apparel in Australia.

Further, the promotional material on Facebook which used the word “Malishus” constituted the use of that word as a trade mark.  The audience to which these Facebook posts were directed included people in Australia, as the posts were not qualified in this regard. Because of this, the posts also infringed Mr Lamont’s registered marks.

But was it “Malishus”?

Under section 126(2) the TM Act, courts can award additional damages under a number of circumstances including where an infringement is found to be flagrant or there is a need to deter similar infringements of the registered mark.

The court awarded Mr Lamont nominal damages of $10 for the infringement. However, the court also found that the infringement was somewhat “Malishus”.  Using its discretion under section 126(2), Mr Lamont was awarded additional damages of $32,686.75, due to the respondents’ flagrant conduct.  The court also found that the respondents appeared to not have been fully deterred by Mr Lamont commencing a proceeding against them.

In addition to damages, the court also granted the following remedies:

  • an injunction restraining the respondent directors from using the word “Malishus” in Australia in relation to apparel, headgear or footwear including in social media or other promotional material;
  • cancellation of the registration of the Australian business name “Malishus” and the .com and .com.au domains with the word “Malishus”; and
  • removal of the word “Malishus” from articles in the respondents’ possession in Australia, or destruction of the articles in Australia.

Tips for businesses

It is difficult to limit the geographical reach of a website.  Businesses with an online presence should ensure that they are not unintentionally targeting a wider market than intended.  (Targeting might look like shipping to that country, pricing in the currency of that country or sending targeted advertisements to consumers located in that country.)

The flip-side of this wide geographic reach is that Australian businesses may be able to seek protection of their Australian trade marks against international businesses, where it can be inferred that those businesses have electronic advertising directed, at least in part, at Australian consumers.

This article was prepared by summer clerk Martin Doyle with solicitor Kai Nash.