Internet - The Gutnick decision and its implications for Australian trade mark law

by Jim Dwyer and Marina Lloyd Jones

Dow Jones & Company Inc v Gutnick [2002] HCA 56

The question whether the registration or use of a domain name may amount to trade mark infringement is one that has been given little judicial consideration in Australia, and which therefore requires an awareness of the Internet's impact in other realms of the law. The Australian High Court decision in Dow Jones & Company Inc v Gutnick1 provides a much-needed signpost indicating the manner in which Australian courts will treat communication over the Internet for the purposes of trade mark law.

The decision

The Gutnick decision makes the Australian High Court the highest appellate court in any country to consider the issue of jurisdiction for the purposes of publication of defamatory material on the Internet. The decision effectively determined that in cases of defamation, material is 'published', and defamation therefore occurs, at the place where that material is viewed (or downloaded) rather than where it is posted (or uploaded) onto the Internet.

The proceedings were initiated by Joseph Gutnick, a prominent Victorian businessman, regarding an allegedly defamatory article that appeared in Barron's, a magazine published by Dow Jones. The magazine was also available on a subscription website, which had a number of Australian subscribers. Gutnick commenced proceedings in the Supreme Court of Victoria, complaining of publication in Victoria only, and offered an undertaking not to sue in any other jurisdiction. Dow Jones argued that the online version was not published in Victoria but in New Jersey, the site at which material was uploaded from the web server each time a copy of the material was requested. They alleged that downloading was an independent action, akin to 'self-publishing', for which they could not properly be held responsible.

The plaintiff insisted that downloading was an intended and natural consequence of the defendant's control of the entire process of publication, from procuring subscribers to its website, to composing the article and placing it on its web server. The plaintiff's argument, ultimately accepted by Justice Hedigan, and eventually the High Court, was that actionable publication does not occur unless and until a defamatory meaning is conveyed to a hearer or reader, in other words where the subscriber 'downloads' the article onto their computer screen.

Dow Jones' argument - taming the potential for multi-jurisdictional liability by updating defamation law

Dow Jones had argued that the Internet was such a unique mode of human communication that it required an entire reassessment of the law of defamation, so that material was deemed to have been published when it was placed on the Internet, rather than where it was accessed and read. This rule of 'single publication', which effectively called for the placement of an artificial limitation on defamation law's concept of publication, would restrict the act of defamation to one jurisdiction.

In promoting this argument, Dow Jones relied primarily on public policy grounds raised by the unprecedented reach of the Internet. They alleged that, if the plaintiff's argument were to succeed, online publishers would be exposed to potential liability in multiple jurisdictions and would require an awareness of defamation law in each of those jurisdictions. This, it was argued, would 'chill' free speech and terrify publishers into silence. Dow Jones also alleged that litigants would begin 'forum shopping' to find the jurisdiction most favourable to their case (as would have been alleged in the Gutnick case, where Victorian defamation law is far more plaintiff-friendly than the laws on defamation in the United States).

Gutnick's argument - incorporating the Internet into defamation law's well-settled boundaries

Mr Gutnick successfully argued that the traditional formulation of publication occurring where material is communicated to, or comprehended by, the recipient should not be disrupted and that the law should remain media-neutral. Mr Gutnick submitted that the Internet, though a new and different medium, was merely part of the continuous cycle of technological development, and should be treated the same way as any other form of mass media. Well-established rules of defamation law required that publication of material occurred where information was comprehended, in this case where it was downloaded.

Mr Gutnick also relied upon policy grounds to substantiate his argument. He argued that Dow Jones' suggested reformulation would mean that online publishers would locate their operations in jurisdictions like the US, where defamation laws favour defendants. Australian people whose reputation was damaged in Australia would be deprived of any recourse under Australian law.

The High Court's approach - what does it mean for Internet publishing?

Dow Jones' argument was unanimously rejected by the High Court, which adopted the approach that any communication occurring on the Internet will be treated in the same manner as other, more traditional, forms of communication. The decision is of undeniable importance for all publishers operating in or outside of Australia. If material that may be defamatory is placed on the Internet, publication will be deemed to have taken place at every point at which the material is downloaded, that is, seen or read. Online publishers will need to carefully consider whether the material they place online may be defamatory in any jurisdiction where it may be downloaded.

Although a number of observers have panicked about the potential scope of the Gutnick decision, it is essential to remember that there are a number of practical factors containing the number of jurisdictions in which an action may be brought:

  • The relevant web site in Gutnick was restricted to paying subscribers, who were allowed access only after entering a password. This meant that the number of people downloading the material, and hence the number of jurisdictions in which publication could occur, was significantly less than if the material were freely available. The case may later be determined to apply only to this more restricted environment.


  • The expense and complexity of conducting litigation means that plaintiffs will select a jurisdiction in which their case is most likely to succeed. For example, Mr Gutnick's choice of Victoria to bring his action would have been motivated by the fact that Victorian defamation law is more plaintiff-friendly than that of the American jurisdictions.


  • Many difficulties arise in attempting to enforce judgments in other countries. Plaintiffs are more likely to initiate proceedings only where a judgment can be executed against the defendant's assets in that jurisdiction.


  • Plaintiffs wishing to sue for defamation must have a reputation capable of being damaged in the specific jurisdiction in which they wish to bring their action. This factor limits significantly the number of jurisdictions that online publishers may need to consider when placing material on the Internet. As the High Court suggested in its judgment, online publishers are likely to know where liability for any defamation may occur by reference to where that person lives or conducts business.


  • Despite these considerations, the Gutnick decision does suggest that there is a potential for multiple defamation actions to be brought in relation to one occasion of publication. This is particularly the case where the person identified has a global reputation and limits their action in each jurisdiction to damage in that jurisdiction only.

    The High Court's approach - what does it mean for trade mark law?

    Trade mark infringement on the Internet - the current law

    Although no Australian court has handed down a final judgment that has addressed the question of infringement of registered trade marks on the Internet, an interlocutory injunction was recently granted in the Federal Court of Australia restraining the defendant from using a domain name including the plaintiff's trade mark.2 Other proceedings involving similar issues have been brought in the Federal Court for passing off and for misleading and deceptive conduct under the Trade Practices Act 1974 (Cth).

    Traditional instances of trade mark infringement are associated with the advertising and offering for sale of goods and supply of services to potential purchasers in the same jurisdiction. However, the nature of the Internet is such that the goods of a trader from any country in the world can theoretically be available for sale in Australia through the trader's website. Plaintiffs claiming infringement of their trade marks registered in Australia must be aware that the offending trade mark use may very possibly have occurred on a website owned and maintained by a company in a foreign jurisdiction.

    The Federal Court Rules

    Where a foreign defendant has no assets in, or other obvious connection with, Australia, a plaintiff alleging trade mark infringement may only serve originating process outside jurisdiction where the proceeding is founded on:

  • a cause of action arising in the Commonwealth;

  • a tort committed in the Commonwealth;

  • damage suffered wholly or partly in the Commonwealth, which is caused by a tortious act or omission, wherever occurring; or

  • a breach, wherever occurring, of an Act, and is brought in respect of, or for the recovery of, damage suffered wholly or partly in the Commonwealth.3


  • For the purposes of service of process and jurisdiction, trade mark infringement is treated as a tort-based wrong.

    Breach of an Act or tort committed in Australia

    To successfully argue that a breach of an Act or a tort is committed in Australia, a plaintiff must show that, although the offending material has been displayed on a foreign website, the trade mark has been used in Australia. Although a representation will be deemed to have taken place wherever a message is received and acted upon4 (as is the case for 'publication'), it is only if a statement is directed from abroad at recipients in the forum, and intended to be acted upon there, that the tort has been committed in the forum.5

    Therefore, for a foreign defendant operating a foreign website to infringe an Australian plaintiff's trade mark, it would have to be established that the offending use of the sign was directed to potential Australian purchasers and that the defendant anticipated or reasonably knew that the material would be received by those potential purchasers in Australia.6 To the extent that the foreign defendant makes it possible for an Australian consumer to purchase through its website (by providing an international toll-free number, for example), the content of the site can be said to be directed at Australian consumers. Proof, such as the fact that the foreign defendant has in the past exported to or received orders from Australia, would be relevant in satisfying these jurisdictional requirements.

    In Gutnick, Justice Hedigan in the Supreme Court of Victoria rejected Dow Jones' attempt to draw a distinction between 'the apparently passive role played by a person placing material on a web server from which the would-be reader had to actively seek the material by use of a web browser and the (comparatively) active role played by a publisher of a widely circulated newspaper or a widely disseminated radio or television broadcast'7. In so doing, he demonstrated that an Internet publisher who places material on the Internet will be responsible for the effects of downloading.

    Damage suffered in Australia

    Alternatively, the Australian plaintiff could rely on damage suffered wholly or partly in the Commonwealth. A plaintiff must point, therefore, to some form of damage it has in fact suffered in Australia as a result of the foreign defendant using its registered trade marks, such as loss of sales. Gutnick suggests that Internet publishers may be responsible in any forum in which damage occurs, regardless of whether or not they may therefore be liable in a multitude of jurisdictions.

    Conclusion

    Although not directly relevant to trade mark law, the Gutnick case represents an important reminder that Australian courts are willing to hold publishers of material on the Internet responsible for the effects of their actions wherever damage occurs, regardless of the possibility of suits in multiple jurisdictions. The High Court has adopted the approach that any communication occurring on the Internet will be treated in the same manner as other, more traditional, forms of communication. Dow Jones had attempted to argue that the Internet presented such unchartered territory that it required an entire rethink of defamation law in its application to material communicated over the Internet. However, on the High Court's approach in Gutnick, foreign defendants who infringe Australian trade marks via the Internet, such as through the registration of a domain name containing another person's trade mark, may be liable despite the fact that the material was posted in a foreign jurisdiction.

    Footnotes
    1. [2002] HCA 56 (10 December 2002)
    2. Buchanan Group Pty Ltd v Sorgetti [2002] FCA 1646 (19 December 2002) per Heerey J
    3. Order 8 Rule 1, Federal Court Rules
    4. Diamond v Bank of London and Montreal Ltd [1979] 1 QB 333
    5. Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at [61]-[63]
    6. Sydbank Soenderjylland A/S v Bannerton Holdings [1996] ATPR 41525 and 7. Aims Computer Systems Pty Ltd v IPC Corp (Australia) Pty Ltd (Fed C of A, Lehane J, 20 September 1996, unreported)
    8. Gleeson CJ, McHugh, Gummow and Hayne JJ at para [19]



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