NPP Australia Limited v Ripple Labs, Inc

THAWLEY J: 1 This proceeding was commenced on 20 August 2020, when the applicant, NPP Australia Limited (NPPA), applied ex parte for urgent orders seeking, amongst other things, short service of the originating process and affidavits and orders for service out of the jurisdiction together with substituted service on the respondent, Ripple Labs, Inc. 2 The duty judge on that occasion, Burley J, made various orders for reasons which may be found in NPP Australia Limited v Ripple Labs, Inc [2020] FCA 1237 (NPP Australia No 1). One of the orders was for NPPA's application for interlocutory relief to be listed for a case management hearing on 26 August 2020. The matter came before me on that day as duty judge. On NPPA's undertaking as to damages, Ripple gave an undertaking to the Court, without admissions, to block access to the website at www.payid.org (and subdomains thereof) to Australian IP addresses with effect from 5 pm on 28 August 2020, and to give NPPA 14 days' notice in writing of any lifting of those blocks. 3 In its Originating Application, NPPA had applied for more expansive interlocutory relief than reflected in Ripple's undertaking, namely: 1. An interlocutory injunction restraining the Respondent and any officer, employee, agent or related body corporate of the Respondent, from advertising, promoting, providing or offering to provide electronic payment services in Australia under or by reference to the words "PAY ID" or "PayID" or any similar mark, sign or brand using or incorporating the words "PAY ID" or "PayID", in relation to electronic payment services, without the licence or authortity [sic] of the Applicant, until the determination of this proceeding. 2. An interlocutory injunction restraining the Respondent and any officer, employee, agent or related body corporate of the Respondent, from: (a) aiding, abetting, counselling, procuring or inducing any person to engage in the conduct described in paragraph 1 above in this claim for interlocutory relief; (b) being knowingly concerned in, or party to, the conduct referred to in paragraph 1 above or any person in this claim for interlocutory relief; and/or (c) acting in concert with any person with a common design to carry out the acts referred to in paragraphs 1 above in this claim for interlocutory relief, until the determination of this proceeding. 3. An order requiring the Respondent to inform the Applicant of the name and contact details of any person to whom it has provided electronic payment services in Australia under or by reference to the words "PAY ID" or "PayID" or any similar mark, sign or brand using or incorporating the words "PAY ID" or "PayID", in relation to electronic payment services, without the licence or authority of the Applicant. 4 NPPA was content not to argue for the interlocutory relief on 26 August 2020, but wanted its application for the relief sought in paragraphs 1 and 2 to be heard as soon as reasonably practicable. NPPA was content for argument as to the balance of the interlocutory relief to be argued in a slightly more leisurely way. 5 Although Ripple contended on 26 August 2020 that it would be appropriate for paragraphs 1 and 2 to be argued next week, the result of that would have been further delay in determining NPPA's claim for urgent interlocutory relief and for a third duty judge to have to read and consider substantial material filed on the interlocutory application. In the circumstances, I listed the interlocutory application, so far as it concerned paragraphs 1 and 2, for hearing before me today. I took the view that this would give Ripple some time to prepare, although Ripple indicated that the application might proceed in substance on an ex parte basis. As events have transpired, the application has not been heard on an ex parte basis. 6 NPPA indicated this morning that it now only seeks the following orders: 1. The Respondent (whether by itself, its officers, employees or agents) be restrained from advertising, promoting, providing or offering to provide electronic payment services in Australia under or by reference to the words "PAY ID" or "PayID" or any similar mark, sign or brand using or incorporating the words "PAY ID" or "PayID", in relation to electronic services, without the licence or authority or the Applicant, until the determination of this proceeding or until further order. 2. Costs be reserved. 7 For its part, Ripple has proposed that, on the applicant's undertaking as to damages, it give by its counsel and without admissions the following undertaking: The Respondent will not (whether by itself or by its officers, employees, or agents) advertise, promote, or offer to provide electronic payment services in Australia, or provide electronic payment services directed to Australia under or by reference to the words "PAY ID" or "PayID" or any similar mark, sign or brand using or incorporating the words "PAY ID" or "PayID", in relation to electronic payment services, without the licence or authority of the Applicant, until the determination of this proceeding or until further order. 8 The background facts have been set out in NPP Australia No 1 at [2] to [14] and are repeated here for convenience: [2] The evidence of Mr Lovney supports the concise statement and indicates that NPPA is a joint venture public company mutually owned by the Reserve Bank of Australia and 12 authorised deposit-taking institutions (ADIs): ANZ Bank, ASL, Bendigo & Adelaide Bank, Commonwealth Bank, Citibank, Cuscal HSBC, Indue, ING Bank, Macquarie Bank, NAB and Westpac. NPPA was incorporated in 2014 as a vehicle for the development and operation of the New Payments Platform (NPP), a new national payments infrastructure for Australia. [3] The NPP infrastructure enables customers of different financial institutions in Australia to make and receive essentially real-time payments, 24 hours a day, 7 days a week. With the NPP, real-time payments can be directed to either a BSB and account number or via an addressing service to an account proxy/alias, which can be something easy to remember. There are currently four types of account proxies available: phone number, email address, an Australian Business Number (ABN) or an Organisation Identifier. [4] PayID is the brand, name and trade mark used by NPPA to identify both the NPP's Addressing Service and the account proxies/aliases that form part of the Addressing Service. [5] Customers can create their own PayID with their financial institution as an address or identifier for NPP payments and have that PayID linked to a specific bank account. Payments directed to that Pay ID are then routed to that linked account. Every PayID is verified and registered by the relevant financial institution, such that only one PayID can be linked to one bank account at any given time. Accordingly, there is a 1:1 mapping between the payee's PayID and their BSB and account number. [6] Mr Lovney gives evidence that NPPA developed PayID Brand Standards, NPP Regulations and an Addressing Service Protocol to licence and govern the authorised use of PayID and the NPP. NPPA is the registered owner of the PayID Registered Trade Mark: [7] The priority date for the PayID Registered Trade Mark is 8 March 2017. It is registered in respect of services in class 36 of the trade marks register, being electronic payment services; financial database services. [8] Mr Lovney gives evidence that the NPP and PayID brand were launched to the Australian public on 13 February 2018 and that an AU $3.3 million advertising campaign accompanied it. NPPA has promoted and endeavoured to establish a reputation both domestically and internationally in the PayID brand via, amongst other things, promotional activity on the NPPA website (https://nppa.com.au) and PayID website (www.payid.com.au), as well as via participating financial institutions and presentations at a premier global financial services conference known as Sibos in 2018, held in Sydney, where there were over 7,500 delegates. [9] Furthermore Mr Lovney gives evidence that as at August 2020 there are over 90 participating financial institutions supporting the NPP-enabled payments. He gives evidence of there being five million PayIDs that have been registered by Australian consumers, government agencies and businesses with their Australian ADIs, which are held as records in the NPPA's PayID Addressing Service. As of the week commencing 3 August 2020, just under 10 per cent of payments made on the NPP are made using PayID, which amounts to more than 1 million payments per week using PayID. In the wake of the COVID-19 pandemic the use of the NPP has been growing rapidly. [10] Mr Lovney also gives evidence about the activities of Ripple. Ripple is a US-based technology company which has created the Ripple payment protocol and exchange network. Ripple was founded in 2012 and is based in San Francisco, California, with 9 global offices. Mr Lovney refers to the Wikipedia page for the Ripple payment protocol as at 12 August 2020 which: states that the Ripple payment protocol is a real-time gross settlement system, currency exchange and remittance network built on a distributed open source protocol; states what currency it supports, namely tokens representing fiat currency (which is currency issued by the central bank), cryptocurrency, commodities or other units of value; and explains how it works, that is, via a common shared ledger employing a native cryptocurrency known as XRP. It is managed by a network of servers that could belong to anyone and payments are irreversible. [11] On 19 June 2020, Mr Lovney became aware of the launch by Ripple of a PayID branded service with 40 partners, forming what is referred to as the Open Payments Coalition (OPC). He was notified of this by an email received early in the morning from NPPA's General Counsel that attached an article from the Fortune magazine which refers to Ripple's PayID branded service. Mr Lovney gives evidence of correspondence that followed the receipt of that email. [12] He gives evidence also of Australian companies who have formed part of the OPC who have collaborated with Ripple in the supply of its services and who appear to have assumed, incorrectly, that the Ripple PayID service is affiliated with that supplied by NPPA. [13] Mr Collins gives evidence of conducting inquiries into Ripple's conduct, and annexes information made available on a website apparently operated by Ripple at https://payid.org/. He identifies various usages by it of the word PAYID, apparently as a trade mark or sign, in relation to an electronic payment service which is similar to that offered by NPPA, and which is apparently supplied by or affiliated with services offered by Ripple. Mr Collins gives evidence in the following terms: [24] As a result of these inquiries and based upon over thirty years' experience in conducting intellectual property litigation, I am of the view that Ripple has taken steps to launch and has launched an electronic payment service under and by reference to the trade mark "PayID" and is using the trade mark "PayID" as a badge of origin, to distinguish its "PayID" branded electronic payment services from the electronic payment services from those of other traders. [25] I am further of the view that Ripple has used the "PayID" trade mark in Australia, because of its partnership with three Australian companies who are members of the OPC and who in turn have advertised and promoted the Ripple Pay ID-branded service to their Australian customers. These companies are FlashFX, BTC Markets and Independent Reserve (Ripple's Australian OPC Partners). It is clear to me that Ripple is targeting Australian consumers, including by partnering with three Australian companies in order to advertise, promote and offer electronic payment services offered by Ripple under the mark "PayID". For the reasons set out below, I am of the view that there is evidence that each of these companies incorrectly believed there was an association between services offered by the NPPA under the PayID trade mark and those offered by Ripple in using the PayID trade mark, when there is no such association. Mr Lovney annexes company searches for each of Ripple's Australian OPC Partners, each of which evidences that they are Australian companies. I set out details of correspondence sent by Clayton Utz to each of Ripple's Australian OPC Partners below. [26] On 3 August 2020, Ms Chapman instructed me to write to each of Ripple's Australian OPC partners, FlashFX, BTC Markets and Independent Reserve, to ensure their awareness of NPPA's rights and reputation in the PayID brand and PayID Registered Trade Mark. [14] In its concise statement NPPA claims the following relief against Ripple: [22] NPPA's primary legal claims against Ripple in the Originating Application are for: (a) infringement pursuant to subs 120(1) and/or (2) of the Trade Marks Act 1995 (Cth); and (b) contraventions of ss 18 and 29(1)(g) and (h) of the Australian Consumer Law; and/or (c) contraventions of ss 12DA and 12D8(1)(e) and 12D8(1)(f) of the Australian Securities and Investments Commission Act 2001 (Cth); and (d) passing off; and (e) associated claims for aiding and abetting the allegedly infringing conduct; and (f) associated declarations and injunctions and also damages or an account of profits. 9 The principles applicable to the grant of interlocutory relief may be briefly stated. There are two main inquiries. The first is whether the applicant has a prima facie case in the sense of "a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial"; this does not necessarily mean that the applicants must establish that they are more probable than not to succeed at trial: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [65] (Gummow and Hayne JJ) and [19] (Gleeson CJ and Crennan J). 10 The second main inquiry is whether the inconvenience or injury the applicant would be likely to suffer if an injunction were refused outweighs the injury the respondent would suffer if the injunction were granted: O'Neill at [65], citing Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618. 11 Consideration of the two main inquiries are interrelated because "an apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even" and "[a] more doubtful claim (which nevertheless raises 'a serious question to be tried') may still attract interlocutory relief if there is a marked balance of convenience in favour of it": Bullock v The Federated Furnishing Trades Society of Australasia (No 1) (1985) 5 FCR 464 at 472 per Woodward J (Smithers and Sweeney JJ agreeing at 467 and 469 respectively). 12 It is also relevant to inquire whether the applicant will suffer irreparable harm for which damages are not an adequate remedy. This is sometimes expressed as a third requirement, additional to the two main inquiries - see, for example: Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153 (Mason ACJ); O'Neill at [19] (Gleeson CJ and Crennan J). It is sometimes expressed as a component of the second inquiry, namely where the balance of convenience lies. It seems to me that damages is not an adequate remedy in the present case. At the core of the applicant's case is the contention that Australian consumers will be misled and exposed to various risks. 13 A fourth matter relevant to whether the discretion should be exercised is that interlocutory relief should be sought promptly. Whilst there has been some delay on the part of NPPA, the delay is not such that I would refuse interlocutory relief on that basis. 14 As I understand the position of the parties, it is not in dispute that the grant of interlocutory relief would otherwise be appropriate, although Ripple says that its undertaking would be sufficient. Notwithstanding that position, it is appropriate to record that: (1) NPPA has identified a sufficiently strong prima facie case for the grant of interlocutory relief. The evidence of Mr Lovney and Mr Collins establishes a prima facie case that the conduct of Ripple is in breach of s 120 of the Trade Marks Act 1995 (Cth) and/or s 18 of the Australian Consumer Law, being Sch 2 to the Competition and Consumer Act 2010 (Cth). The material in evidence is capable of supporting a conclusion that Ripple has used and authorised others to use the PayID word as a trade mark in Australia in connection with the supply of electronic payment services in circumstances where it was not authorised to do so by NPPA. (2) The balance of convenience also favours the grant of interlocutory relief. As noted above, the evidence as it currently stands indicates that three Australian companies advertised and promoted the Ripple Pay ID-branded service to their Australian customers and may have incorrectly believed that there was an association between the services offered by the NPPA under the PayID trade mark and those offered by Ripple in using the PayID trade mark, when there was in fact no such association. In my view, the use by Ripple of the PayID word as a trade mark in Australia has the potential to cause substantial confusion amongst Australian consumers in the sense that those consumers would assume the underlying service was that provided by NPPA through the NPP infrastructure. The evidence as it stands on this application allows for a conclusion to be drawn that Ripple's service is not as safe as that provided by the NPPA and that consumers could be adversely affected. 15 The principal dispute between the parties is whether, first, an order should be made or an undertaking would be sufficient; and secondly, whether the order proposed by NPPA is preferable in form to that provided by Ripple. The apparent difficulty arises where an Australian user might access services provided from a server in the US without Ripple knowing that access was being granted to an Australian user. Ripple's concern is that, on the formulation of the order proposed by NPPA, Ripple might be argued to be providing the electronic payment services in Australia even though it had blocked access to its site for Australian users and without knowing that an Australian user was accessing its site. In this regard, Ripple referred to the decision of Merkel J in Ward Group Pty Ltd v Brodie (2005) 143 FCR 479 at [43], where his Honour stated: In summary, the use of a trade mark on the internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded. However, as explained above, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction then there is likely to be a use in that jurisdiction when the mark is downloaded. Of course, once the website intends to make and makes a specific use of the mark in relation to a particular person or persons in a jurisdiction there will be little difficulty in concluding that the website proprietor used the mark in that jurisdiction when the mark is downloaded. 16 It seems to me to be preferable to avoid such an argument, and in those circumstances, leaving aside whether an order or an undertaking should be made, the form of it should be the form proposed by Ripple. 17 In my view it is also appropriate that there be an order in those terms rather than an undertaking. NPPA applied for urgent interlocutory relief and, having regard to the principles applicable to the grant of interlocutory relief and the other matters outlined, it is appropriate to make an order rather than to accept Ripple's without admissions undertaking. 18 I make the following order: (1) The respondent will not (whether by itself or by its officers, employees, or agents) advertise, promote, or offer to provide electronic payment services in Australia, or provide electronic payment services directed to Australia, under or by reference to the words "PAY ID" or "PayID" or any similar mark, sign or brand using or incorporating the words "PAY ID" or "PayID", in relation to electronic payment services, without the licence or authority of the applicant, until the determination of this proceeding or until further order. (2) Costs be reserved. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.