.au Domain Administration Ltd v Domain Names Australia Pty Ltd

REASONS FOR JUDGMENT 1 Two actions are being heard together. One is a representative proceeding in which .au Domain Administration Limited (.au Domain) is the representative party. The respondents in that action are Domain Names Australia Pty Ltd (DNA) and its sole director, Mr Rafferty. The second action is brought by the Australian Competition and Consumer Commission (ACCC) and is against the same respondents. Each action arises out of the same facts and in each action the applicants make similar claims. For those reasons the parties have agreed that there should be one trial. 2 The actions are concerned with the Internet and domain names. Put simply, the Internet is a worldwide system of interconnected computer networks. A domain name is essentially a unique name that identifies a particular site on the Internet. .au Domain administers domain names in Australia. DNA was established in October 2002 by Mr Rafferty. As part of its business DNA sends notices to Australian businesses inviting them to register particular domain names. For a fee it then facilitates the registration of the domain name requested by a respondent. It is the notices which are at the heart of this dispute. .au Domain and ACCC allege that notices sent in June, July and September 2003 were false or misleading in several respects. They seek declarations that DNA has contravened s 52 of the Trade Practices Act 1974 (Cth) and that Mr Rafferty was involved in those contraventions. They also seek injunctions restraining further breaches. There is a subsiduary claim that by sending the notices DNA breached s 64(2A) of the Trade Practices Act. Section 64(2A) prohibits a corporation in trade or commerce from "assert[ing] a right to payment from a person for unsolicited services unless the corporation has reasonable cause to believe that there is a right to payment". The applicants contend that the notices sent by DNA claimed the right to receive from the recipients the fee for the registration of their existing domain name. 3 To understand the issues that arise in this case it is necessary to know something about the Internet and the nature and use of domain names. The Internet can best be described as an expansive worldwide network of computers which serves to interconnect innumerable smaller linked computer networks through the global telecommunications infrastructure. The computers are linked through an Internet host that is usually a commercial organisation called an Internet Service Provider (ISP). An ISP allows subscribers to connect to the Internet through the ISP's computer which acts as a "server" of information. Each computer on the network can communicate with the others by using machine language conventions known as "Internet Protocols". 4 The most common method of communication over the Internet is through the medium of the World Wide Web (the Web). Computers linked to the Web exchange and store information by means of an Internet Protocol known as "Hypertext Markup Language" (HTML). Information is stored on the Web in various formats, including text, still images, sound and video. The Web also houses documents in the form of "web pages". Web pages are created with HTML and can contain text, images, other files and links to other web pages. A collection of web pages is referred to as a "web site". Every web page has a unique address called a "Uniform Resource Locator" (URL). An Internet user who wishes to access a web page can do so by entering the relevant URL address into a "browser" (a software program used for viewing information on the Internet). 5 A domain name forms part of the URL web address. Take, for example, the court's URL web address: . The domain name component of the address is: fedcourt.gov.au. It comprises a series of alpha-numeric characters that translate a somewhat less-decipherable string of numbers; an "Internet Protocol number" (IP number). IP numbers are essentially unique web addresses signifying the location of individual computers connected to the Internet. Computers which share a common part of an IP number are said to be in the same "domain". 6 A domain name enables people to access a web page by typing in words or letters instead of the full sequence of digits comprising an IP number. A system of databases called the "Domain Name System" (DNS) serves to cross-reference and link domain names to IP numbers. The DNS itself is hierarchical. "Top Level Domains" are, as their name suggests, at the top of the hierarchy. They comprise "generic Top Level Domains" (gTLDs) and "country code Top Level Domains" (ccTLDs). gTLDs are domain names which may, for example, end in ".com", ".net", ".org", ".gov", ".mil", ".biz" and ".info" (these abbreviations refer to "Commercial", "Network", "Organisation", "Government", "Military", "Business" and "Information" respectively and often denote the content of the web page to which they relate). ccTLDs are domain identifiers for different countries. Examples include ".au" which signifies Australia, ".nz" for New Zealand and ".uk" for the United Kingdom. At the next level are "second-level domains" (2LDs), which are further classified as "open 2LDs" and "closed 2LDs". Open 2LDs are, subject to eligibility rules, open to all sectors of the community and include domain names ending in ".com.au" and ".net.au" (for businesses and commercial entities such as companies), ".org.au" (for charities and non-profit organisations), "asn.au" (for incorporated associations, political parties, unions and clubs) and ".info.au" (which was, until recently, open to any business or individual for any purpose but is now no longer available). Closed 2LDs are restricted to defined sectors and include domain names ending in ".edu.au" (for educational institutions) and ".gov.au" (for federal, state and local government bodies). 7 There is a system for the registration of domain names. The pre-requisites for registration will differ according to the domain in which the name is sought to be registered. The Internet Corporation for Assigned Names and Numbers (ICANN) is an American non-profit organisation which has assumed responsibility for the administration of the DNS and the management of the Internet. ICANN has "delegated" the authority to administer levels of the DNS and, in particular, most ccTLDs. By a sponsorship agreement with ICANN, .au Domain, a not for profit company, is the "delegated authority" for the administration of the ".au" ccTLD in Australia. .au Domain also has the function of accrediting and licensing "Registrars". A Registrar can license ".au" domain names. A Registrar is also responsible for registering domain names and for maintaining a Registry database of registered domain names. A Registrar may appoint a "Reseller" to act as an agent for the Registrar and deal directly with the proposed "Registrant". However, a Reseller cannot effect the registration of the domain name itself. If the Registrar approves the domain name and the application for a domain name is successful, the Registry is updated and the details of the Registrant's ISP number and domain name are added to the "authoritative nameserver". This latter step ensures that other computers on the Internet can find the new domain name. 8 A Registrant of a domain name is the exclusive licence-holder of the domain name for the period of the licence. The grant of a licence does not, however, preclude another person registering a domain name in a different gTLD or 2LD. For example, where a domain name ending in ".com" has been registered, a person other than the Registrant may register that name in another domain such as ".com.au". 9 DNA plays an unusual role in the registration of domain names. It is not a Registrar. Nor is it a Reseller. DNA merely "facilitates" the registration of domain names. It does so by "entering the details of the gTLD or ccTLD to be registered onto the website of a Registrar…and…sending an electronic request to a Registrar to register that domain name". For this it charges a modest fee. 10 I have mentioned that these proceedings are about notices sent by DNA inviting recipients to register particular domain names. In all, complaint is made about four different forms of notice. Copies of two notices are, for convenience, annexed to these reasons. The other notices are substantially the same as the second annexure. 11 The first notice was sent in June 2003 to over 41,000 "Australian businesses" located in Victoria, Queensland and South Australia (the June notice). Each recipient of the June notice held an existing registered domain name ending in ".com.au". According to DNA, the notice was solely concerned with the registration of the ".com" equivalent of the recipient's existing ".com.au" domain name. In July 2003, DNA sent two forms of notice to approximately 175,000 Australian businesses who were in Victoria, the Australian Capital Territory, New South Wales, Queensland, South Australia and Western Australia (the July notice). One form of the July notice had a "payment section" (which the recipient could return to DNA with the payment amount) and the other, at least according to the form of notice attached to .au Domain's statement of claim, apparently did not have such a section. DNA says that each July notice was concerned with the registration of one or other of the following: (1) the ".net.au", ".biz", or ".info" variant of the recipient's existing ".com.au" domain name; (2) the ".com.au" or ".net.au" variant of the recipient's existing ".com" domain name; (3) the recipient's recently expired ".com.au" or ".com" domain name; or (4) a domain name ending in ".com.au" or ".com" in respect of recipients who did not hold any existing domain name or, alternatively, in respect of recipients who did not hold an existing domain name "substantially similar" to the domain name mentioned in the notice. In September 2003 DNA sent another batch of notices to approximately 418,000 Australian businesses which were located in the Australian Capital Territory, New South Wales, Queensland, Victoria, South Australia and Western Australia (the September notice). These notices were said to offer the registration of domain names ending in ".com" and ".com.au". Most of the recipients of the September notice did not hold an existing domain name or, alternatively, did not hold an existing domain name which was similar to that in the notice. However, some people who received the September notice held an existing registered domain name that was substantially similar to that in the notice; the difference being that the domain name in the notice contained a different gTLD or 2LD and, in some cases, an abbreviation of the part of the recipient's existing domain name which described the recipient's business. 12 Turning now to the claims, the whole basis of each applicant's case as regards s 52 rests on the words and layout of the notices. On the question of s 52, I am going to guide myself by the following principles. Most of them are uncontroversial: