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Hotel internet marketer wins legal fight with Thredbo Alpine Village

July 29, 2014 Headline News, Travel Law No Comments Email Email

In a legal decision with ramifications for the online marketing industry, the Federal Court of Australia has refused to allow Thredbo Alpine Village to stop a hotel internet marketer from using the place name Thredbo in its domain names, websites and social media sites to market accommodation in Thredbo.

The decision is Kosciuszko Thredbo Pty Limited v ThredboNet Marketing Pty Limited [2014] FCAFC 87 (21 July 2014).

Why was there a dispute?

The dispute was between a small holiday accommodation provider and a long established ski resort owner.

ThredboNet provides accommodation at Thredbo, a ski resort and village in the Snowy Mountains of New South Wales. It markets the accommodation on the internet, and owns domain names such as www.thredboreservations.com.au or www.thredbo.com and has a Facebook page entitled “Thredbo Reservations”.

Kosciuszko Thredbo (an Amalgamated Holdings company) is the owner and operator of the ski resort, the “Thredbo Alpine Village”, which was established in 1957. It holds a 99 year lease over all of the land at Thredbo, at the foot of the Thredbo River Valley. The Thredbo Alpine Village http://www.tourismlegal.com.au/consists of the Thredbo Resort, the Thredbo Alpine Hotel, a ski school, a leisure centre, a childcare centre, and it provides the services and infrastructure. It compares itself to Disneyland because it occupies “a unique position of control over the resort”.

KT owns the “Thredbo Alpine Village” business name and trade mark, and uses its domain names including www.thredbo.com.au which it uses in its marketing.

Thredbo Alpine Village argued that it had acquired a distinctive right to use the place name Thredbo in its marketing because of its long established operation and reputation.

Why did Thredbo Alpine Village fail to stop ThredboNet from using the place name Thredbo?

Two reasons were given why ThredboNet should be prevented from using the word Thredbo in its domain names, websites and Facebook page. The first was that ThredboNet were likely to mislead the public into thinking that they looking at its website. The second was that ThredboNet was in breach of its sub-lease if it used the word Thredbo.

Misleading conduct / passing off

It is a breach of the Australian Consumer Law to display a website which is deceptively similar in ‘get-up’ and appearance to a competitor’s website. In this case, the websites were not similar except for the use of the word Thredbo.

KT argued that the word Thredbo was more than a geographic place name, its close association with Thredbo Alpine Village had given it a secondary meaning as part of a “complete branded entity”.

The Federal Court examined a Google screenshots of the searches for Thredbo, and Thredbo reservations and concluded that they showed a variety of links to traders other than ThredboNet and Thredbo Alpine Village, which used Thredbo as part of their name. This negated the argument that the word Thredbo was distinctive to the Thredbo Alpine Village business.

ThredboNet had also placed a disclaimer on its home page, which stated: “Please note this is NOT the official website of … Thredbo Alpine Village … and is not approved, endorsed or sponsored by them.” The Federal Court considered that this disclaimer was effective to dispel any confusion between the websites.

The Federal Court considered that “the ordinary reasonable consumer looking for holiday accommodation at a resort such as Thredbo would be careful about making a selection of the provider, the accommodation and the price.” That is, online consumers are not easily misled because they are likely to click on several results in a web search.

Therefore, the Federal Court decided that the consumer would not be likely to be misled by the ThredboNet domain names, websites and Facebook page into thinking they were dealing with Thredbo Alpine Village.

The sub-lease covenant

The sub-lease of the accommodation leased by ThredboNet contained a covenant that “The Sublessee must not use … the word ‘Thredbo’ in connection with any business carried on by the Sublessee” with the exception of allowing “members of the public to occupy the Premises”.

The Federal Court decided that KT had failed to make out its argument that the use of the word Thredbo “was not in the same class as the name of a suburb but was more … like the brand name of a shopping centre developer.” The Federal Court pointed out the absurdity that if the clause were read literally, it would not allow the address to be advertised. Therefore, the covenant was not effective to prevent ThredboNet from using the word Thredbo in its marketing. In any event, the covenant was void as an unreasonable restraint of trade.

What lessons are there to be learned?

Hotel internet marketers are using the internet to market hotels and resorts and by doing so, are digitally disrupting the holiday accommodation industry. Think of digital disruptors such as expedia.com.au, booking.com.au, stayz.com.au, tripadvisor.com.au, trivago.com.au, au.hotels.com and wotif.com.

This legal decision means that hotel internet marketers are free to prominently display the place name when marketing accommodation, even if there is a dominant accommodation provider in that place.

Geographic place names are hard to protect. An effective internet marketing strategy is needed.

Kosciuszko Thredbo has paid the price for its complacency in pursuing its internet marketing strategy. Instead of relying upon www.thredbo.com.au , it needed to have registered a large number of domain names (URLs), Facebook and other social media pages to cover the field for the use of the name Thredbo.

Written by : Anthony J Cordato

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