Seven Network Ltd v News Interactive Pty Ltd

Federal Court of Australia|2004-08-12|Before: Tamberlin J

REASONS FOR JUDGMENT 1 This amended application is brought by the applicants (collectively referred to as "Seven"), seeking orders against the respondents (collectively referred to as "News"), pursuant to s 80 of the Trade Practices Act 1974 (Cth) ("the Act") and/or s 23 of the Federal Court of Australia Act 1976 ("the FCA"), to restrain News from engaging in conduct in contravention of ss 52, 53(c) and/or 53(d) of the Act arising from misleading representations made on websites at the internet addresses http://foxsports.news.com.au/olympics ("the Olympics website") and http://foxsports.news.com.au. Seven seeks to restrain News from displaying on these websites a banner, other visual representation in substantially similar form to the banner, and the use of the words "Athens Olympics", and representations of an "Olympic" torch in close proximity to the names and business-related logos of News. Seven wishes to protect its investment in securing rights as the official broadcaster in Australia of the Olympic Games. It has paid a substantial sum to secure these rights. During the hearing a figure of AUD 150 million was mentioned. There is no dispute as to Seven's standing to bring this proceeding. 2 The web page for the Olympics website is illustrated below. 3 The matter was brought on yesterday as an urgent interlocutory matter, having regard to the fact that the Athens 2004 Olympic Games begin tomorrow. The parties agreed to have the matter heard on a final basis in order to obtain a prompt and complete resolution of the dispute. 4 Essentially, Seven contends that the use of the banner, and the use of a count-down display appearing on the web pages and associated links, constitute representations to the effect that News is authorised to broadcast the Athens Olympic Games, or sponsors the Athens Olympic Games, the International Olympic Committee ("IOC"), the Australian Olympic Committee ("AOC") and/or the Athens Organising Committee for the Olympic Games ("ATHOC"). These representations are said to be false because there is in fact no relevant connection between News, and any of those bodies, which might be described as the "official Olympic bodies". Fox has not been authorised to broadcast the Games. Identical allegations are made, based on the above provisions of the Act, that the representations on the News websites give the impression that the official Olympic bodies have approved the websites, and that this is false. In addition, there is an allegation of a false representation of affiliation between the official Olympic bodies and Fox Sports and other News publications. It is also alleged that the Olympic banner display constitutes a representation to the effect that the Athens Olympic Games will be broadcast on the Fox Sports Pay Television Service, and that this is also false. It is further alleged that the Olympics website and web link pages, separately or together, constitute a representation to the effect that the Athens Olympic Games will be broadcast on the Fox Sports Pay Television Service. Accordingly, it is said that News has engaged in misleading or deceptive conduct and in addition have breached ss 53(c) and (d) of the Act. It is on this basis that Seven seeks restraining orders and damages.

background 5 The background material, facts and arguments are not in dispute. On or about 12 January 1996, Seven Network Limited ("the Seven Network") entered into Heads of Agreement with the IOC, which conferred exclusive broadcast rights in respect of the 2002, 2004, 2006, and 2008 Olympic Games. There was an amendment to this agreement on 16 December 2003. 6 Pursuant to the Heads of Agreement the IOC granted the Seven Network exclusive rights to broadcast the Olympic Games by television, radio and the internet, and the right to create an IOC-approved logo which used the Olympic Rings as an integral part of the promotional material for its broadcasts. 7 On 15 April 2004, Seven Network (Operations) Limited ("Operations"), the IOC, and the ATHOC entered into an agreement ("the Athens Agreement") setting out the terms of the IOC/ATHOC/Channel 7 Television Deed for the Games of the XXVII Olympiad in Athens. The Athens Agreement was executed in June 2004, and grants to Operations the following rights: · exclusive rights to create audio and visual images of the Athens Olympic Games for transmission within Australia and to transmit and display by way of television (free-to-air and pay and all modes of real time video including broadband and internet); · certain exclusive rights to create and transmit radio broadcasts of the Athens Olympic Games in Australia; · rights to use "Olympic Marks", as defined, which includes the Olympic Symbol and the Athens Games mark; · rights to create and use a new composite logo combining Channel Seven's logo or name and one of the Olympic marks; and · rights to publish and market within Australia a viewers' guide advertising Seven's television, real time video, and internet businesses and programs. 8 On 19 February 2004, a licence agreement with the AOC was entered into, under which a license was granted to use the copyright in the Olympic Symbol, being the five coloured interlocking rings, and the expressions "Olympic", "Olympics", "Olympic Games", "Olympiad" and "Olympiads", which are referred to as "Protected Olympic Expressions". 9 News does not claim to have any agreement with the IOC and/or the ATHOC and/or the AOC granting it any rights in respect of the Athens Olympic Games. 10 Since at least mid-July 2004, the illustrated banner in [2] above has been displayed on the Olympics website from time to time, on which the words "Athens Olympics" are used, together with an image of the "Olympic" torch and flame, and flashing logos of News' newspapers throughout Australia, as well as a link to the Fox Sports web page. 11 A similar banner had been displayed since mid-July 2004 on the Fox Sports website which included the above material, but this was removed sometime on Tuesday. 12 Since mid-July the News websites have included web-links to other pages which relate to the Athens Olympic Games and are intended to show results, medals and other aspects of the Athens Games.

RELEVANT PRINCIPLES 13 In considering whether there has been misleading conduct or a false representation of association or approval, it is not necessary to prove that some person or persons have actually been misled by a misrepresentation. The Court is concerned with whether the conduct is likely to mislead or deceive. The threshold question under s 53 of the Act is whether there has been a representation of sponsorship, approval, or affiliation, which is false. The first task therefore, is to determine what was represented on the websites as to authorisation or association. An erroneous assumption by a member of the public will not necessarily result in conduct being regarded as likely to mislead or deceive, and assumptions that are extreme or fanciful must be disregarded. The test to be applied is what is the likely reaction to the representation by ordinary or reasonable members of the class to whom the representation is directed: see Campomar Sociedad, Limitada v Nike International Limited (2000) 202 CLR 45 at 83-88; Taco Company of Australia Inc v Taco Bell Pty Limited (1982) 42 ALR 177. One looks at the effect of the conduct on reasonable members of the class affected. It is not sufficient if the conduct simply causes confusion or uncertainty. 14 In assessing what is conveyed by the web pages it is not appropriate to anticipate that every person viewing the site would take the time to analyse subtle merchandising or legal overtones or connotations, and the issue is largely one of transitory impression. If the material in question is continuously displayed and access to the site is frequent, as opposed to a one-off occurrence, then the impression will be reinforced. 15 The question should be approached on the basis that the class of viewers is a broad and wide ranging one, which includes inexperienced or unsophisticated visitors to the websites, as well as highly educated and shrewd members of the public. But such a viewer must be presumed to act reasonably. As Gibbs CJ said in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Limited (1982) 149 CLR 191 at 199: "It seems clear enough that consideration must be given to the class of consumers likely to be affected by the conduct. Although it is true, as has often been said, that ordinarily a class of consumers may include the inexperienced as well as the experienced, and the gullible as well as the astute, the section must, in my opinion, be regarded as contemplating the effect of the conduct on reasonable members of the class. The heavy burdens which the section creates cannot have been intended to be imposed for the benefit of persons who fail to take reasonable care of their own interests. What is reasonable will of course depend on all the circumstances. The persons likely to be affected in the present case, the potential purchasers of a suite of furniture costing about $1,500, would, if acting reasonably, look for a label, brand or mark if they were concerned to buy a suite of particular manufacture. The conduct of a defendant must be viewed as a whole. It would be wrong to select some words or act which, alone, would be likely to mislead if those words or acts, when viewed in their context, were not capable of misleading." 16 See also the observations of Mason J in that case at 209, and those of Brennan J in World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 203; and CRW Pty Ltd v Sneddon (1972) AR(NSW) 17 at 28 to similar effect. 17 In considering whether and what associations are conveyed by a representation it must be kept in mind that even vague suggestions are capable of evoking or conveying an association. As Burchett J said in Pacific Dunlop Limited v Hogan (Crocodile Dundee case) (1989) 23 FCR 553 at 586: "In my opinion, the vagueness of the suggestion conveyed in this case is not sufficient to save it. That vagueness is not incompatible with great effectiveness. It would be unfortunate if the law merely prevented a trader using the primitive club of direct misrepresentation, while leaving him free to employ the more sophisticated rapier of suggestion, which may deceive more completely. In my opinion, the deployment in circumstances of the present kind of techniques of persuasion, designed to influence prospective customers in favour of the trader or his products upon the basis of some underlying assumption which is false, may be held to be misleading or deceptive …" 18 Expressed in other terms, the association need not be indicated in a manner which is very obvious but can consist of a subtle or pervasive suggestion. For example, the use of the words "Duff Beer" on a beer can label was held to give rise to an association between the beer and the well-known television series The Simpsons, because "Duff Beer" was the name of a fictional beer incidentally referred to in a significant number of episodes of The Simpsons: see Twentieth Century Fox & Anor v South Australian Brewery Co Limited & Anor (1996) 66 FCR 451. Likewise, a representation in the form of an image of a large respected retail establishment which had become defunct on stationery of another corporation in a different and more down market line of retail business was held to carry a suggestion of association between the respected retail establishment and the business of the party using the stationary in Mark Foys Pty Ltd v TVSN (Pacific) Ltd (2000) 101 FCR 61. 19 The relevant principles as to association were canvassed in detail by Mansfield J in South Australian Brewery Co Pty Ltd v Carlton & United Breweries Limited (2001) 185 ALR 719 at pars [72]-[76] and which also refers to a decision by McGechan J in New Zealand Olympic and Commonwealth Games Association Inc v Telecom New Zealand Ltd (1996) 35 IPR 55, which concerned alleged false representations as to endorsement or association with the Olympic Games. The applicant in the latter case had sought an interlocutory injunction to restrain an advertisement by Telecom which contained the word "RING" in large bold block capitals three times across a top line and twice across a lower line, with the two lower "RING" words being beneath the gaps between the upper three, in a manner reminiscent of the Olympic Rings symbol. There were no circles depicted, but the word "RING" was displayed in the same colours as the well-known Olympic Rings. The advertisement was for Telecom mobile phones. It was as follows: " RING RING RING RING RING WITH TELECOM MOBILE YOU CAN TAKE YOUR OWN PHONE TO THE OLYMPICS." 20 McGechan J held that there was no significant likelihood of an assumption by readers that the defendant was connected with, or a sponsor of, the Olympic Games. After reviewing the authorities his Honour said at [60]: "I accept those who read newspaper advertisement tend to browse. They will not be reading advertisements in a closely focused way, at least in the first instance. Those who notice the five coloured 'ring' words, then drop their gaze to the next line picking up the reference to Olympics, and then refer back to the five 'ring' words, and then make an association with the five circle Olympic symbol will be mildly amused. It will then seem like a cartoon or a clever device. It is the sort of situation where one pauses for a moment to laugh and acknowledge the lateral thinking involved. However, it is a long way from that brief mental process to an assumption that this play on the Olympic five circles must have been with the authority of the Olympic Organisation or through sponsorship of the Olympics." 21 The above case is closest factually to the present case, but it illustrates that while some general approaches can be derived from the authorities, each case must turn on its own particular circumstances and context. It is not possible to reason from the factual matrix of one example to another. 22 During submissions in the present matter, reference was made to the Olympic Insignia Protection Act 1987 (Cth) ("the Insignia Act") for the purpose of indicating the restrictions provided under the Insignia Act on the use of the five ring Olympic symbol and expressions and representations which suggest associations, sponsorship and licensing by official Olympic bodies. In the present case, the Insignia Act is not relied on by Seven as giving rise to any enforceable rights concerning the websites. While it provides some helpful background to the relative importance of certain symbols and expressions concerning depictions related to the Olympics, it is not of direct relevance. I note that the explanation by counsel for Seven as to why these proceedings were not brought under the Insignia Act, was that there was no consent by the AOC to institute the proceedings under s 47 of the Act. Presumably, an informed decision was made that it was preferable to proceed on the Trade Practices provisions. Counsel for News points out that the need for the consent of the AOC is not required in respect of an interim injunction. However, this proceeding is now for relief on a final basis, which would require consent. In relation to the Olympic torch and flame, s 2A of the Insignia Act provides for prescription by the regulations of an Olympic torch and flame for a particular games, but this provision is not relied on by Seven. No doubt a great deal of attention was paid in the formulation of the Insignia Act to the relative importance of Olympic symbols and representations, and it is noteworthy that the Olympic torch and flame are not made the subject of any restriction under the Insignia Act.

information provider defence - section 65a of the Act 23 News submits that s 65A of the Act provides a defence to this proceeding because News is a "prescribed information provider" within the meaning of that provision. A "prescribed information provider" is a person who carries on a business of providing information and includes the holder of a broadcasting licence or a person who provides a broadcasting service under such a licence. In this case, it has not been suggested that News is not a prescribed information provider. 24 The difficulty with this line of defence is that the matter complained of is the publication of advertising material in connection with the supply, or possible supply, of information services, namely the coverage of the Athens Olympic Games by News. In my view, there is no substance in this defence, because the gravamen of the complaint by Seven is that News is publishing material, using the websites, in connection with and to promote their Olympic coverage. For these reasons, I consider that section 65A does not apply. 25 The exception provided by s 65A(1) was considered by Wilcox J in Lovatt v Consolidated Magazines Pty Ltd (1988) 12 IPR 261 at 273, where his Honour observed that the intention of s 65A was to continue to subject the prescribed information provider to the provisions of the Act in connection with any items directly promoting the supply of its own goods or services, and that to the extent that a prescribed information provider uses its own publication to boost its own business, it would be liable for a breach of ss 52 and 53. I applied this reasoning in Gianni Versace SpA v Monte (2002) 119 FCR 349 at [118]-[136], which considers the ambit and operation of s 65A of the Act.

Reasoning on present application 26 There can be no dispute that the Athens Olympic Games is a major newsworthy event which over the next few weeks will attract an anticipated audience of billions throughout the world. In order to promote such coverage it is inevitable that reference will repeatedly be made in the media to such phrases as the "Athens Olympics", "the Olympic Games" and other expressions and images directed to focus attention on the Athens Games and to attract and satisfy public interest in the Athens Games. There is no monopoly on such reporting. 27 It is evident that the banner on the News websites is in a striking prominent red colour, and that it refers to the Athens Olympics with emphasis being placed on the expression "Olympics" which is in larger white type, immediately adjacent to a hand holding a flaming metal torch on a downwards slope. Adjoining this there are flashing logos of the various newspaper publications of News, together with a small logo link to foxsports.com.au. Immediately underneath this banner there is count-down table which I currently see as "02 days 12 hrs 03 mins 09 secs" a time period which is continually reducing. If I click the Fox Sports logo it takes me to another page where there is no banner or torch, and a frozen form of the count-down. On the Olympics website there are references to results, medals, schedules and a number of specific Olympic sports, all of which are linked to pages reporting on those sports. The banner with the flashing newspaper references and the count-down is featured on these linked pages, and there are details, for example, in the case of the hockey link, to particular news items relating to hockey players and their activities. When I click the medals link from the Olympics website, a page entitled "Medal Tally" is displayed, which is blank at the moment, but is designed to indicate the number and type of medals received and details relating to those medals. Again, this site has the red banner which I have described earlier. It does not have any count-down box in relation to the Athens Games. There are also links to a number of interactive sites concerning the Olympics. 28 It is apparent that the Olympics website is a springboard to a number of other links covering the Athens Olympic Games. In my view, an ordinary reasonable visitor to this site, seeking information about the Games or participants either on a casual or regular basis, would have regard to these features, and would be likely to form the view that Fox Sports is providing coverage for the Athens Olympic Games on the internet with considerable detail in real-time, and with interactive features. They could also be expected to try the links and to look at the material on the other pages, and no doubt to look at the particular newspapers, the names of which are flashing on the banner. A visitor would not be particularly concerned to know whether the site is officially endorsed by or affiliated with official Olympic bodies. 29 There is no wording on the websites or the links which express any sponsorship of, affiliation with, or approval by either the official Olympic bodies or Channel Seven. Nor is there any reference to any authorisation from such bodies or association with them. Therefore, any association must be inferred. There is an express use of the words "Athens Olympics", but of itself this is simply descriptive of the event and the information which is available on this subject through the various links, and does not touch on or suggest any approval or official association. The torch would, in my view, indicate to a reasonable person, a service in connection with the Olympic Games, particularly at the present time, a few days before they begin. But there is no Olympic symbol on the banner, or an official insignia of the Games, or any specifically protected "Olympic expression". The red colour of the banner has no particular Olympic significance. It is simply a prominent background against which the reference to the Olympics and the newspaper publications, the names of which appear in white, can be contrasted. The link to Fox Sports is simply a link, and does not indicate any sponsorship affiliation with the official Olympic bodies. The count-down, in my view, provides information and serves to indicate that the Games are drawing closer which, perhaps, is not surprising given the direction in which time flows. Taken individually, the elements of the banner and the websites do not assert or imply any connection or affiliation, approval, sponsorship or authorised association. 30 In so far as it is alleged that the countdown display with the torch, the words "Athens Olympics" and the Fox Sports logo constitute a representation to the effect that the Athens Olympic Games will be broadcast on the Fox Sports pay-television services, and that such broadcasts are authorised, I do not consider there are any such representations. No wording expressly conveys this message. All that the reference to Fox Sports in the banner communicates is that information on the Games is available at the Fox Sports website. This is quite a different matter to representing there will be a broadcasting of the Athens Games by Fox Sports. References to a website of a television channel does not carry with it, in this context, a misrepresentation as to the provision of broadcasting coverage of the Olympic Games by Fox Sports. There is no reference to streaming films of events or activities. This allegation is not made out. 31 The question then arises in relation to other features, whether, when taken together in the context of the approaching Athens Games, the cumulative impact of all these elements creates the impression in the mind of a reasonable visitor of a kind that can be said to be one of the types of association covered by s 52 and s 53(c) and (d) of the Act. 32 News has produced in evidence a number of other website pages including the SBS website, which I understand is licensed by Seven. Other sites, provided by News, include the ABC website, the Sydney Morning Herald website, the Yahoo Sports website, and several official websites including the AOC website and the Athens 2004 website. The latter two are official websites and have images of the Olympic Circles, and the Athens 2004 website includes a laurel crown, which is associated with the Athens Olympics. The SBS website contains the expression "associated with the Olympics". The official AOC website and the official "Athens 2004" website use the colours blue and white in banners relating to the Games, which are the colours of the Greek Flag, whereas in contradistinction the banner in the present case is in a bright red colour which has no apparent connection with Greece or the Athens Games. 33 Counsel for Seven submits that this material is irrelevant because the mere fact that other broadcasters advertise the Olympics in particular ways does not have any bearing on the present issue. He says, quite correctly, the fact that other persons may breach the Act does not advance the case for the respondents to the present proceeding. 34 The basis for referring to the other sites is said by News to ground a submission that a reasonable member of the public visiting the subject sites would have an appreciation that similar material was appearing on other sites, would be likely to form the view that it was probable that not all of them were authorised, and therefore, would not perceive the subject sites as representing official authorisation, sponsorship links, or a suggestion of affiliation. Counsel for each party, for example, have referred to the fact that it is well known that Channel Seven will be broadcasting the Olympic Games, and that in assessing the likely reaction of a member of the public it is necessary to bear this in mind. In my view this material is of no significance because it presupposes a level of analysis and a line of reasoning which it is not realistic to attribute to a reasonable visitor to the websites. In assessing the impression likely to be made on the public by the websites, the emphasis is on impression and suggestion rather than sophisticated analysis and comparison on the part of the viewer. 35 Ultimately, as counsel have submitted, it is largely a matter of transitory impression. Weighing the cumulative effect of the considerations and observations as to the material which have been put to me, I do not consider that the banner or websites convey the associations, approval or sponsorship as suggested, and therefore I do not consider that they contravene the Act. The evidentiary material is not sufficient to establish, in any specific aspect or taken as a whole, that there is a representation of any link with the official Olympic bodies or any authorisation or approval by any of them.

conclusion 36 Accordingly, I am of opinion that the application for relief fails and it must be dismissed with costs. I note that at about the time these proceedings were instituted News made amendments to its websites. However, the principal issue remaining was fully argued and News was successful. I do not therefore consider that costs should be reduced as a consequence of the alterations made by News.

I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Counsel for the Applicant: S Gageler, SC with K Barrett

Counsel for the Respondent: F M Douglas, QC with N R Murray

Solicitor for the Respondent: Allens Arthur Robinson

Trade Practices Act 1974(Cth)ss 52, 53, 65A

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