Intellectual Property – Consumer Law – Passing off
With so many Jacksons in play, the prospects of confusion in various settings is exacerbated. The question for Justice Jackson was whether Australian consumers of art supplies were not just confused, but in fact misled or deceived by Jackson’s Art Supplies’ (JAS) sale of art products online to Australian consumers in circumstances where Jackson Drawing Supplies (JDS) had a significant bricks-and-mortar reputation for similar products in Australia dating back to the 1950’s.
Once one looks past the humorous choice to assign this matter to Justice Jackson’s docket, it becomes apparent that the focus of his Honour’s decision was not on whether the names “Jackson’s Art Supplies” and “Jacksons Drawing Supplies” were too similar. The case was really about:
- Whether Jackson’s Art Supplies, a United Kingdom based (predominantly) online retailer selling art products to Australian consumers, had represented that it was Jacksons Drawing Supplies, an old-school (limited online) Western Australian based company. Justice Jackson’s answer – it had, and was therefore liable for contraventions of the Australian Consumer Law (ACL) and the tort of passing off.
- Whether Jackson Drawing Supplies’ failure to protect its rights during a period where the UK company was growing its trade in Australia constituted delay disentitling it to broad injunctive relief. Justice Jackson’s answer – it did, and it was only entitled to far more limited relief.
This decision traverses a number of interesting ACL questions including: (1) the relevant date for assessing reputation; (2) whether a reputation in some Australian states or territories gives rise to an Australia-wide reputation; (3) the type of conduct from an overseas retailer which can constitute misrepresentations to an Australian market; (4) accessorial liability for members of a group of companies; (5) whether registering a business name, incorporating a company, obtaining a domain name licence or adding metadata to a website can itself constitute a misrepresentation; and (6) the type of delay which will result in refusal of discretionary relief.
The date for assessing reputation
It is (relatively) trite that, for the purposes of passing off and an ACL case based on confusion arising from an applicant’s existing reputation, the Court must assess the applicant’s reputation at the time at which the respondent’s impugned conduct commenced.
However, his Honour had to grapple with the difficulty that JDS had run its case on the basis that it only impugned JAS’ conduct from October 2018 (presumably to navigate delay and limitation of actions issues – as to which, see further below) despite the impugned conduct commencing earlier. The substance of the impugned conduct commenced in 2005 (or earlier), when JAS started selling products to Australian consumers using the JAS Names (“Jackson’s”, “Jackson’s Art” and “Jackson’s Art Supplies”) or, in 2013, when JAS started offering products to Australian consumers in Australian dollars. However, since JAS did not challenge JDS’ assertion that October 2018 was the relevant date, his Honour approached the question on that basis.
The question therefore remains open as to the relevant date where there is a disconnect between the date the conduct started and the date from which the applicant elects to impugn the conduct. That said, it appears from his Honour’s observations that the proper date is the former not the latter.
Whether reputation in some states or territories gives rise to an Australian wide reputation
It was accepted that JDS had a substantial reputation in the names “Jacksons” and “Jacksons Drawing Supplies” (JDS Names) for the sale of art products to customers in stores based in Western Australia and the Northern Territory (core markets). What was disputed was whether JDS had a reputation outside those core markets. JDS sought to rely on Pham Global Pty Ltd v Insight Clinical Imaging Pty Ltd [2017] FCAFC 83 as authority for the proposition that to establish a substantial reputation in one state or territory is to establish a reputation in the rest of Australia. Justice Jackson rejected that approach. His Honour found that Pham was limited to its facts in the sense that it was central to the Full Court’s views that Insight Clinical Imaging was operating in a “national industry” with particular characteristics. Unlike radiological services (the subject of Pham), his Honour found that the fact that people throughout Australia bought art supplies did not mean that the market for such products was “national”.
However, his Honour was prepared to conclude that, on the evidence, JDS had established the threshold level of awareness across Australia to support its claims. While JDS had been unable to produce any evidence showing sales outside the core markets, Justice Jackson considered google analytics data showing people visiting JDS’ website from all over Australia and considered that to be sufficient evidence of a not insignificant number of persons from across Australia who had become familiar with JDS’ business and associated it with the JDS Names.
Overseas conduct and misrepresentations to an Australian market
It was necessary to the finding of misleading or deceptive conduct in contravention of the ACL that JAS had conveyed the impression that it was an Australian business. In the context of an international website, it is interesting to look at the features which Jackson J relied on in finding that JAS had given this impression. These included:
- The Australian flag or “AUSTRALIA” appearing on each page of an Australian specific subdirectory website (JAS AU Site).
- The presence of Australian dollars as the default currency on the JAS AU Site.
- References to an Adelaide based location in relatively inconspicuous print at the bottom of the page on the JAS AU Site, on the basis that ordinary reasonable consumers would be interested in the physical location of a business because of shipping times.
- The products being dispatched in packaging which included on it a South Australian address for the supplier.
Accessorial liability for members of a group of companies
It was found that JAS, and its Australian based entity Jackson’s Art Australia Pty Ltd (JAA), acted together in the requisite sense such that they were each liable for each other’s conduct under both the ACL and as joint tortfeasors (for the ACL and passing off claims). In short, it was the actions of both JAS and JAA working “hand in glove” which were found to give rise to the relevant misrepresentations.
However, his Honour was not prepared to extend this analysis to the other Australian entities related to JAS, namely Jackson’s Art Holdings Australia Pty Limited (JAH) and Pyrmont Capital Partners Pty Ltd (PCP).
As for JAH, it was a wholly owned subsidiary of JAS with common directors and had obligations under a shareholders deed to “use all reasonable efforts to promote JAA’s business and profitability”. However, his Honour did not find this sufficient to establish accessorial liability. His Honour observed that JAH’s board met irregularly (if at all) and noted that, in general, a shareholder does not have any power to manage or otherwise direct the conduct of the company. JDS had pointed to no action taken or words uttered by JAH to make that general proposition inapplicable, and had failed to identify a specific step that JAH took or omitted to take to suggest that they were more than a passive shareholder.
A similar position was reached with respect to PCP, although by virtue of different facts.
Can business names, company names, domain names and meta data alone constitute misleading conduct?
JAS also ran a cross-claim against JDS, essentially asserting that JDS had taken certain steps in 2022 which had the effect of representing that JDS was affiliated with JAS. These included:
- applying for and obtaining registration of the business name “Jacksons Art”;
- registering domain names such as “jacksonsart.com.au”, “jacksonsartaustralia.com.au”, “jacksonsartsupplies.com.au” and redirecting these to the JDS website; and
- updating the metadata keywords of the JDS website to include “Jacksons Art Supplies”.
Justice Jackson dismissed the cross-claim. His Honour found that mere registration of a business name or a company name is not likely to mislead or deceive anyone. Further, his Honour concluded that, based on the expert evidence, redirection of the domains to the JDS website would have had no effect on the behaviour of the search engine results and so that conduct could not constitute misleading or deceptive conduct. As to the updating of metadata, his Honour held that JAS had not discharged its burden of establishing that the addition of the metadata keywords had led anyone into error, or was likely to do so.
Delay resulting in the refusal of discretionary relief
Despite JDS having been successful in establishing misleading or deceptive conduct and passing off, in a relatively rare outcome, Justice Jackson was not prepared to grant JDS the injunction it asked for. Rather, Justice Jackson proffered a solution that both parties had rejected as appropriate: his Honour would require JAS to use a form of disclaimer on the JAS AU Site which would distinguish it (and JAA) from JDS.
Justice Jackson arrived at that solution after having found that JDS had delayed in taking action to enforce and protect its rights in connection with the JDS Names while, during that same period, JAS and JAA had expended resources to grow their Australia business.
JDS had contended that, since it had only impugned the respondents’ conduct from October 2018, there had been no delay. Justice Jackson rejected that proposition and instead held that the delay was to be measured from the time when JDS was fixed with “sufficient knowledge” that JAS was promoting its art supplies business to Australian consumers using the Jacksons name. His Honour found that date to be May 2015, being the date when the Managing Director of JDS discovered that the domain name jacksonsart.com was not available, but took no steps to discover who owned it or what they were doing with it. Justice Jackson described JDS’ conduct as a “want of diligence or neglect”.
His Honour’s conclusion resulted in a finding that JDS should have acted three years before the date of the conduct it was impugning, and in circumstances where actual knowledge of the impugned conduct was not found. Justice Jackson addressed this peculiarity by saying that it was enough that, on the evidence, the essential components of JDS’ complaint were in place throughout Australia from at least 2015.
What next?
A case management hearing has been scheduled for 25 June 2025 where, no doubt, the parties will argue about the appropriate form of the words to be placed on the JAS AU Site which will sufficiently distinguish JAS (and JAA) from JDS. And, we suspect, an interesting debate on costs.
