Zipping Around the Kerb – How Not to Use Your Competitor’s Trade Mark

Takeaway tips

• Although using a competitor’s trade mark as a means of comparison to your own product may not be an infringement of trade mark, it will be an infringement if you objectively indicate that you are the origin of the goods associated with your competitor’s trade mark.
• Use of  words substantially identical with,  or deceptively similar to, a competitor’s trade mark in a registered domain name is an infringement of trade mark.
• Once trade mark infringement has been established, any disclaimers of association or any attempt to distinguish a product from the trade mark become immaterial to avoid liability.

Introduction

In Edgetec International  Pty Ltd v Zippykerb (NSW) Pty Ltd,¹   the Federal Court of  Australia examined circumstances in which trade mark infringement can occur when using a competitor’s registered trade mark on a website and in a domain  name.

Although this case does not change the position regarding infringement of copyright, it demonstrates a broadening of the circumstances in which trade mark owners may enforce their rights against infringement of their trade marks.

Background

Edgetec International  Pty Ltd (Edgetec), trading as Kwik Kerb, and Zippykerb (NSW) Pty Ltd (Zippykerb) are competitors in the concrete edging business in Australia.  Edgetec sells franchises for concrete edging business, and Zippykerb sells equipment, training and marketing materials relating to concrete edging businesses.

Edgetec,  the registered  owner of  the trade mark “Kwik  Kerb”, claimed that its trade mark was being infringed by Zippykerb by:

• Zippykerb’s  registration of  the domain names www.kwikkerbing.com, www.kwikkerber.com.au and www.kwikkerber.com  (Domain Names)
• the website redirection of the Domain Names to Zippykerb’s website, www.zippykerb.com (Website) and
• use of the word “Kwik  Kerb” (and variations of “Kwik Kerb”) on the Website.

Throughout the Website, Zippykerb uses the phrase “Kwik  Kerber” to describe its products, such as “the original kwik kerber” and “we are the original inventors of the worldwide ZIPPYKERB Kwik Kerber Continuous Concrete Edging”. In addition, Zippykerb used the “Kwik Kerb” mark to compare the price of its product with that of Kwik Kerb’s product,  such as “Zippykerb is a better deal than Kwik Kerb”.

However, at the bottom of the Website, Zippykerb attempts to distinguish itself from Edgetec, with statements such as “TO BE CLEAR: We are NOT Kwik Kerb” and “We do not want to be associated with Kwik Kerb in any way”.

Trade mark infringement

An action for trade mark infringement must satisfy three elements.² The offending  sign or words must be:

• substantially identical with, or deceptively similar to, the trade mark
• used as a trade mark and
• used in relation to goods or services in respect of which the trade mark is registered.

Zippykerb’s arguments

Zippykerb  argued that it did not infringe Edgetec’s trade mark, as:

• the words used by Zippykerb were not substantially  identical with, or deceptively  similar to, Edgetec’s registered trade mark
• the words “Kwik”,  “Kerber” and “Kerbing” are words used in everyday English language
• the words are used to describe  the goods and services being offered by Zippykerb and
• the manner in which the words  are used was not likely  to  deceive or  cause confusion between Zippykerb’s  goods and Edgetec’s  goods,  as it is stated directly  on the Website that Zippykerb  is not Kwik Kerb.

Federal Court decision

Element 1: Substantially identical with

The test  as to whether  a trade mark and  a sign are substantially  identical  requires a side-by-side  comparison of the two.³

Applying the test, the court found that the words “Kwik Kerber” and “Kwik Kerbing” were substantially identical to  Edgetec’s  registered  trade mark “Kwik Kerb”. Taking into account that the first eight letters are identical in all respects, the court considered that the addition of “er” or “ing” did not significantly affect the total impression of the resemblance between the two.

The court also found that the Domain Names were substantially identical with Edgetec’s trade mark. The Domain Names still conveyed the same overall impression of resemblance, notwithstanding the lack of capitalisation of the letter “k” at the beginning of each word, and the fact that the two words were combined, not separated.⁴

Element 2: Use as a trade mark

The threshold question of “use as a trade mark” is whether Zippykerb had used substantially identical signs or words (the variations of “Kwik Kerb”) as a “badge of origin” to indicate that it was the origin of the goods and services represented by those words.⁵  This requires an objective assessment of the purpose and nature of the use of the sign, by reference to what a member of the public could be expected to understand by its use.

The court held that Zippykerb had satisfied the test in relation to its use of the variations of “Kwik Kerb” in the Domain Names to redirect users to its website. The court considered that the use of a domain name to redirect potential customers to a website displaying one’s goods and services is analogous to using those words as a sign on the front of a shop to indicate the goods or services that are sold within. As a  result, the use of “Kwik Kerber” and “Kwik Kerbing” was as a badge of origin to indicate that Zippykerb was the origin of the Kwik Kerb products.

The court noted that on the Website,  there was no attempt to use those words descriptively in relation to Zippykerb’s goods and services, as Zippykerb claimed in its defence. For example, Zippykerb did not use the words “Kwik Kerb”, “Kwik Kerber” or “Kwik Kerbing” to tell potential customers that its Zippykerb product is a quick (or “kwik”) means of creating concrete kerbing. Instead, it plainly used the coined words to signify that it is the origin of the goods and services of the sign “Kwik Kerb”.

It was found that where the “Kwik Kerb” mark was used on the Website to distinguish Zippykerb from Kwik Kerb, or compare the price of Zippykerb’s product with Kwik Kerb ’s product, they were not trade mark uses. However, this did not act to reverse the trade mark usage of “Kwik Kerb” that occurred elsewhere on the Website.

Element 3: Use in relation to goods or services in respect of which the trade mark is registered

As direct competitors and both dealing with goods in the concrete edging business, Zippykerb did not dispute the third element.

Disclaimers of association

Once the three elements have been satisfied and trade mark infringement has been established, the court held that it is immaterial  whether there are statements on the website stating that the goods and services offered are not those of the holder of the registered trade mark.

As a  result, even though Zippykerb attempted to distinguish itself from Kwik  Kerb, its use of explicit disclaimers of any association with the Kwik  Kerb product on the Website and in the Domain Name was not enough to avoid the finding of infringement. Accordingly,  the court granted the permanent injunction sought by Edgetec.

Conclusion

While using a  competitor’s  trade mark to make a comparison with your own product may not be a trade mark infringement, it is a trade mark infringement  if you use words that are substantially identical with, or deceptively similar  to, the trade mark as a “badge of origin” to indicate that you are the origin of the goods and services represented by the trade mark.

This case demonstrates that trade mark owners are able to enforce their rights where a registered domain name is substantially identical with, or deceptively similar to, their trade mark. Further, disclaimers of association are ineffectual to avoid liability once trade mark infringement has been otherwise established.

Footnotes

1. Edgetec  International Pty Ltd v Zippykerb (NSW)  Pty Ltd (2012) 98 IPR 1; [2012] FCA 281; BC201206591.
2. Section 120(1) of the Trade Marks Act 1995 (Cth).
3. Shell Co of Australia Ltd v Esso Standard Oil (Aust) Ltd (1963) 109 CLR 407; [1963] ALR 634; (1963) 37 ALJR 82; BC6300320.
4. See Solahart  Industries  Pty Ltd v Solar Shop Pty Ltd (2011) 281 ALR 544; 92 IPR 165; [2011] FCA 700; BC201104339 for trade mark infringement in relation to a domain name that was deceptively similar to a competitor’s trade mark.
5. Mantra Group Pty Ltd v Tailly Pty Ltd (No 2) (2010) 183 FCR 450; 267 ALR 347; [2010] FCA 291; BC201001870;  s 17 of the Trade Marks Act 1995 (Cth).

This article was first published in the Lexis Nexis Internet Law Bulletin Vol 16 No 2 -2013.