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trade practices and consumer protection
This
page considers action under the Trade Practices Act, fair
trading, trademark and common law in Australia regarding
domain names.
It covers -
introduction
Australia does not have legislation specific to the internet
- for example there is no counterpart of the US AntiCybersquatting
Protection Act (ACPA)
- and has not sought to develop a discrete lex informatica
embracing all aspects of online activity.
A range of federal and state/territory statute and common
law embodies competition policy and consumer protection
in relation to to the operation of the DNS, including
-
- relationships
between auDA, registrars and resellers
- problematical
offers to registrants by scammers
- breaches
of intellectual property rights
That
law includes the federal Trade Practices Act (TPA) and
state/territory Fair Trading
enactments. It also includes the federal Trademark
Act. It is underpinned by the Corporations Act, by
telecommunications legislation and by contract law (which
for example provides the foundation for the auDRP).
In considering trade practices and consumer protection
in relation to auDA and the dot-au space we can identify
four areas of contention -
- the
status of auDA as a not-for-profit and non-government
entity administering a national resource
- questions
about the behaviour of the dot-au domain name industry
and its relationship with auDA as administrator
- the
activity of scammers, including false and misleading
offers to registrants (eg domain name slamming)
and incidents where offenders have simply taken the
money and run
- disagreements
about perceived/substantive rights to domain names,
breaches of trademarks and offences such as passing
off
Selected
cases are highlighted below.
legal frameworks
The preceding page of this profile noted that the auDRP
was not the only mechanism for resolving disputes about
domain names. Both the federal Trade Practices Act
(the primary consumer protection and competition
policy enactment) and common law offer avenues for dealing
with disagreements about registration and use of names.
Section 52
of the Trade Practices Act 1974 (Cth) prescribes
a norm of conduct, with corporations obligated not to
engage in conduct that is misleading or deceptive or likely
to mislead or deceive. Courts have discretion in granting
injunctions where where satisfied that a person is either
in breach of that code of conduct or is proposing to engage
in conduct that would be in breach. Under s 79 it is taken
to be a breach of s 52 if a person procures another to
contravene s 52 or is in any way knowingly concerned in
such a contravention.
Section 53 also prescribes a standard of conduct, prohibiting
representation by a corporation that it has an affiliation
it does not have or that goods and services have sponsorship
or approval they do not have.
The Australian legal framework for consumer protection
and trade practices is explored in more detail in the
Consumers guide elsewhere
on this site. That guide features pointers to Australian
consumer advocacy groups, government agencies and industry
codes.
studies
There have been no major studies specific to trade practices
and consumer protection aspects of auDA and dot-au.
Works of value for understanding the Australian regime
include Stephen Corones' Competition Law in Australia
(Pyrmont: Lawbook Co 2004) and Russell Miller's Miller's
Annotated Trade Practices Act (Pyrmont: Lawbook Co
2006). For discussions of particular cases see Competition
Law: Cases and Materials (Chatswood: Butterworths
2006) by John Duns, Mark Davison & Caron Beaton-Wells,
Consumer Protection and Product Liability Law: Commentary
and Materials (Pyrmont: Lawbook Co 2002) by Corones
& Philip Clarke.
For remedies see Class Actions in Australia (Pyrmont:
Lawbook Co 2005) by Damian Graves & Ken Adams and
Remedies Under The Trade Practices Act (Oxford:
Oxford Uni Press 2006) by David Wright.
auDA's operation
What is the basis of auDA in terms of competition policy
and consumer protection law?
Preceding pages have noted that auDA is implicitly a QANGO.
It is not explicitly referred to in the federal Trade
Practices Act or state/territory fair trading legislation;
the TPA does not specifically authorise its activity or
exempt auDA, the registry and registrars. The ACCC has
been represented on auDA advisory panels but is not a
member of the auDA board. auDA's annual reports and codes
of practice are not formally approved by the ACCC. The
Telecommunications Legislation Amendment Act 2000
(aka the 'Safety Net Act') does not formally confer power
on auDA for administration of a national resource.
scams
Legitimate participants in the industry have been plagued
by a succession of scammers, which have attracted inquiries
by federal/state consumer protection bodies such as the
Australian Competition & Consumer Commission and successful
court action by auDA.
Typically the scammers - some of which are alleged to
have illicitly harvested contact details from databases
maintained by auDA or its predecessors - conduct large-scale
print and electronic mailouts to Australian registrants,
with what appear to be legitimate invoices for renewal
of existing registrations (at what might be considered
an excessive cost
and/or for an arguably inappropriate
period such as ten years). Several of the enterprises
have operated in New Zealand and elsewhere, attracting
criticism by regulatory agencies and consumer groups.
Details of revenue and profitability are unclear but it
appears that costs may be significantly offset by responses,
with some of the scammers perhaps having gained up to
$0.5m over the past three years - enough to pay for elite
legal representation, pay legal penalties and fund a new
round of mailouts under a new corporate name.
Action by auDA and other
parties to educate current/potential registrants appears
to be having some effect. Given the immaturity of the
industry that education and regulatory compliance activity
by auDA has resulted in vilification by some participants
on the DNS list and, more broadly, in naive suggestions
by some industry figures that Australia Post could simply
refuse to deliver print mailouts.
Disagreements about industry practice has started to receive
attention outside the industry.
In April 2004 Justice Finkelstein in the Federal Court
of Australia for example delivered judgement in separate
proceedings by auDA and the ACCC against Domain Names
Australia Pty Ltd (DNA) and an individual, finding that
notices sent by DNA in July and September 2003 to around
593,000 recipients constituted conduct that was misleading
or deceptive or likely to mislead or deceive in contravention
of section 52 of the Trade Practices Act 1974.
A DNA representative commented
to the Melbourne Age that
I
strongly believe that the mail-outs are not misleading
or deceptive. We believe strongly in customer satisfaction
and we do what it takes to ensure the consumer is happy
and is a repeat customer. I believe that the content
in each mail out is clear and concise.
The
comment followed action by lawyers for Nominet UK, auDA's
UK counterpart, to seize documents and reports that the
New Zealand Commerce Commission had intercepted and returned
over $500,000 in cheque and credit card payments.
In August 2004 the full Federal Court dismissed an appeal
by DNA and awarded costs to auDA.
selected cases
CSR v RCA
CSR Limited v Resource Capital Australia Pty Limited
[2003] FCA 279 (4 April 2003) | here
In this case resources group CSR Limited sought an injunction
against Resource Capital Australia Pty Limited (RCA) and
Marcus Stephen Boland restraining them from using as part
of a domain name or otherwise the letters or names "csr"
or "csrsugar".
Justice Hill of the Federal Court ordered that RCA, Boland,
their servants, agents or otherwise be restrained from
using
as part of a domain name or otherwise the "CSR"
or "CSR Sugar" names, any trade mark including
the name "CSR" or "CSR Sugar" or
any other name, word or mark substantially identical
with or misleadingly, deceptively or confusingly similar
thereto.
RCA
was ordered to take all necessary steps within 7 days
to transfer the csrsugar.com domain name to CSR and within
14 days to deliver up
any
business stationery, business cards, artwork, packaging
design or other document bearing either of the names
or marks "CSR" or "CSR Sugar" or
any other name or mark which includes the name "CSR".
The
Court directed that a copy of the judgment be forwarded
to Melbourne IT
with the suggestion that when dealing with Resource
Capital Australia Pty Limited or Mr Boland or any company
in which Mr Boland is a director, it require from him
a statutory declaration both that at the time he seeks
registration he is unaware of any trade mark or business
or company name identical with or substantially similar
to the domain name he seeks to register and does not
hope or intend to transfer or agree to transfer that
domain name to another person.
Hoath
Hoath & 1 Or v Connect Internet Services & 5 Ors
[2006] NSWSC 158 (22 March 2006) | here
In the Hoath case plaintiff Mark Hoath had registered
the Dragon Net business name and dragon.net.au domain
name in 1995. In 2000 he allowed associates to use that
domain as part of a new venture in the finance sector.
The expectation was that he would be rewarded with a share
in that business. Unfortunately, disagreements arose -
resulting in action
in the NSW Supreme Court - as the business went bad and
Hoath sought to retrieve the names.
The judgement describes "a tussle" between plaintiff
and defendants for control of the domain name, with recurrent
re-delegations. Justice White found that by using the
dragon.net.au domain the defendants had committed the
tort of passing off, breaching sections 52 and 75B of
the Trade Practices Act.
They were restrained from using the 'Dragon Net' business
name and domain name and ordered to re-delegate the domain
name to Hoath, who was entitled to damages under the Act.
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