Specsavers Pty Ltd v Coastal Contacts

The allegedly contravening conduct 5 The conduct which Specsavers claims to be in contravention of the abovementioned provision is to be considered in light of the way in which consumers make purchases over the internet. 6 Where a consumer engages in that process, he or she commonly uses the Google search engine and conducts a search by reference to key words. 7 What is important in the present case is that a merchant who wishes to sell goods over the internet can nominate and pay for certain key words which, when entered by a consumer, take that person to the merchant's sponsored link. It is open to the merchant to exclude certain words used in combination with the key word so as to make the search results more selective. 8 Of particular importance in the present case is that the merchant, Coastal Contacts, has nominated and paid for the use of a common, descriptive word, namely "contacts", but it had not (until recently) excluded the word "Specsavers" from the search terms. 9 Thus, when a consumer enters the word "contacts" in a Google search, whether the word "contacts" is entered alone or in combination with another word, the search throws up the Coastal Contacts sponsored link. Significantly, (until recently) this occurred if the consumer entered the words "contacts" and "Specsavers" in the Google search. 10 The sponsored link contains text supplied by Coastal Contacts. The text includes statements about which Specsavers complain. The statements include what Mr Hutley SC, for Specsavers, called a "hanging representation", namely:- "Buy Online and Save Up To 70%". 11 Some of the statements of which Specsavers complains are made on the sponsored link. Others are made in, or are concerned with, text which is contained on the Clearly Contacts website. The consumer sees that text when he or she follows the sponsored link through to the website. 12 Upon entering the Clearly Contacts website, the consumer can continue the process of search and selection by reference to information about the range of lenses, the different prices and the brands of lenses. Notably, the text includes references to Specsavers branded lenses which are said to be exactly the same as the Clearly Contacts branded lenses. 13 The consumer can choose to place an order for lenses from the Clearly Contacts website by entering prescription and volume details, that is to say, the number of boxes of lenses. When this is done, a summary of the order appears on the screen, including shipping details. 14 Although the Coastal Contacts' link advertises "free shipping", it is only at the time when the shipping details appear on the website that the consumer sees that shipping is not free unless the order is over $99 and the lower priority shipping option is selected. 15 The summary of order page is the consumer's last chance to review the order before paying. At this point, the consumer also sees that there are additional costs in the form of handling and insurance which comprise 6.95% of the merchandise price.

The "Save Up To 70% Representation" 16 The Clearly Contacts sponsored link states, "Buy Online & Save Up To 70%". This is described as the "Save Up To 70% Representation". 17 Mr Hutley calls this the "hanging representation" because Specsavers does not allege that the representation is false in itself. Rather, Mr Hutley submits that the representation is false or misleading when viewed by a consumer who types in the key words "contacts" and "Specsavers". That person will ask himself (or herself) the question, "70% of what?" and assume that the comparison is made with Specsavers. 18 It is true, as Mr Blackburn SC submitted on behalf of Coastal Contacts, that in the circumstances pointed to by Specsavers, it is the action taken by the consumer which brings about the misleading impression. But in my opinion, that is not an answer to the claim that the "Save Up To 70% Representation" is, or is likely to be, misleading or deceptive to consumers. 19 What must be looked at is the whole of the impugned conduct: Butcher v Lachlan Elder Realty Pty Limited (2004) 218 CLR 592 at [109]; Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [102]. 20 Here, it is (or was) the failure of Coastal Contacts to exclude from the key words the name Specsavers and the knowledge of Coastal Contacts that the name Specsavers will be combined with the common descriptive term "contacts" which brings about the misleading conduct. 21 There is a sufficient likelihood of success to establish a prima facie case: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [65]. 22 The same conclusion applies to other brand names used by the Specsavers Group such as "opsys".

The "Save 70% Representation" 23 A Google sponsored link paid for by Coastal Contacts states "save 70% on Focus Dailies". This is called the "Save 70% Representation". 24 Focus Dailies is a brand of contact lens sold by Clearly Contacts. Its website states that Focus Dailies are also sold as Specsavers Easyvision Opsys and that, although the products may be branded differently, they are exactly the same lenses. 25 For the reasons referred to in relation to the "Save Up To 70% Representation", Specsavers has established a prima facie case that the representation contravenes s 18 of the Australian Consumer Law. 26 Coastal Contacts in its letter dated 7 February 2012 and draft short minutes of order offered to undertake to the Court not to make the "Save 70% Representation".

The $18.99 Representation 27 The Coastal Contacts' sponsored link which contains the "Save 70% Representation" also states:- "Focus Dailies Lenses Only $18.99". 28 Specsavers contends that the $18.99 Representation is misleading for two reasons. First the $18.99 price is available only if the consumer takes the volume discount which applies to a purchase of 8 boxes of lenses. Otherwise, the price is $21.95 per box. 29 The second reason why the $18.99 Representation is said to be misleading is that there are additional costs of shipping, handling and insurance which will be added to the price. 30 Whilst shipping will not apply where the consumer orders goods for $99 or more, handling and insurance costs of 6.95% of the merchandise price will be added to every purchase. 31 I accept that the class of consumers to whom the advertisements are directed are, as described by Mr Blackburn, "net savvy" persons who are experienced at navigating their way through the information which is available using a series of mouse clicks or similar instructions: see Campomar Sociedad, Limitada v Nike International Ltd (2000) 202 CLR 45 at [101] - [103] and Campbell v Backoffice at [26]. 32 However, it seems to me to be sufficiently clear in light of the principles that have been applied in relation to misleading advertising, that Specsavers has established a prima facie case: see Australian Competition and Consumer Commission v Global One Mobile Entertainment Pty Limited [2011] FCA 393 at [49] - [51]. 33 There is no escape from the proposition that the $18.99 Representation, as stated on the sponsored link, is misleading for the two reasons given by Specsavers. The only question which arises is whether, in all of the relevant circumstances, the material on the website is sufficient to show that the relevant class of consumers would not be misled. 34 In my opinion, the case is of sufficient strength to meet the test stated by the High Court in Australian Broadcasting Corporation v O'Neill. 35 The qualification proposed by Coastal Contacts in its draft short minutes is not sufficient to overcome the misleading nature of what appears on the sponsored link. As Emmett J said in Australian Competition and Consumer Commission v Dell Computers Pty Limited, it is misleading to offer products for a particular price without making clear that it is a pre-requisite for obtaining the products at that price that the consumer must also pay an additional charge for delivery: Australian Competition and Consumer Commission v Dell Computers Pty Limited (2002) 126 FCR 170 at [70]; see also Australian Competition and Consumer Commission v TPG Internet Pty Limited [2011] FCA 1254 at [57]ff.

The $18.99 Representation does not specify a single price 36 The $18.99 Representation does not specify a single price for the contact lenses. It specifies an amount which, if paid, would constitute a part of the consideration per box for 8 boxes of lenses but it does not also specify in the sponsored link the additional sum which must be paid for handling and insurance. 37 The $18.99 Representation therefore contravenes s 48(1) of the Australian Consumer Law unless it falls within the exception stated in s 48(3). 38 Coastal Contacts knows, at the time when it makes the $18.99 Representation, the amount the consumer will be charged for handling and insurance because a 6.95% charge is added to every order. Thus, assuming that the charge for insurance and handling is a charge payable in relation to sending the goods from the supplier to the consumer, the statement on the sponsored link does not fall within s 48(3) because it does not specify any amount, let alone a minimum amount, for that service. 39 The only question which arises is whether the statement of the charge for handling and insurance which is made on the Clearly Contacts website on the payment summary page is sufficient to satisfy the requirements of s 48(3). 40 In my opinion, it is sufficiently arguable that the statement made on the website, when the consumer navigates through the steps involved in making a purchase, does not satisfy s 48(3). Specsavers has accordingly established a prima facie case that the $18.99 Representation, as it appears on the sponsored link, contravenes s 48(1) of the Australian Consumer Law. 41 The proposal made by Coastal Contacts in its letter of 7 February 2012 that it specify next to the $18.99 price a statement that consumers should "see website for details" does not alleviate the difficulty which it faces. Nor does the similar proposal in the draft short minutes.

The Lowest Price Representation 42 The "New Visitors" page on the Coastal Contacts website makes the following statement:- "Lowest Prices Guaranteed [Coastal Contacts logo]. We are dedicated to delivering you the highest quality eye care products at the guaranteed lowest prices." 43 Similar statements appear elsewhere on the Coastal Contacts website. 44 These statements are described as the Lowest Price Representations. Specsavers contends that these representations are misleading for a number of reasons which emerge from a consideration of the terms of the "Lowest Price Guarantee" which appears on the Coastal Contacts website. 45 In my opinion, the Lowest Price Representations create the impression that Coastal Contacts' prices are the lowest prices on offer for equivalent eyewear and that a consumer will be reimbursed for any excess. 46 It seems to me that this impression is, prima facie, misleading because an examination of the "Lowest Price Guarantee" as explained elsewhere on the website shows that the so-called guarantee is a store credit. 47 Moreover, the availability of the credit is subject to certain limitations. In particular, the lower priced product must have been purchased on-line and is therefore not available on goods purchased from Specsavers. Furthermore, the other product must have the exact same brand name. This suggests that the "Lowest Price Guarantee" is illusory. 48 Coastal Contacts' draft undertakings propose corrective action to overcome the deficiencies referred to above. Coastal Contacts proposes to replace the Lowest Price Representations with an offer to "match any genuine competitor's price" or "beat any competitor's price by 10%". This overcomes the difficulty arising from the existing offer of a store credit but it does not overcome the second difficulty because it fails to make clear whether non-online merchants are competitors. Also, it does not remove the limitation which restricts the "guarantee" to products bearing the same Coastal Contacts brand name.

The SuperFast, Free Shipping Representation 49 The Coastal Contacts sponsored link refers in several places to "free shipping". 50 The Coastal Contacts "Home" page on its website contains the statement "SuperFast, Free Shipping". 51 If a consumer clicks on the words "SuperFast, Free Shipping", a pop-up box appears which explains the terms on which a consumer may obtain free shipping. The explanation includes the statement:- "… orders of $99 or more get free shipping with code FREESHIP". 52 It follows that free shipping or "SuperFast" free shipping is only available to consumers who place orders of $99 or more. 53 Moreover, the shipping details provided to consumers at the time of completing a purchase order show that the offer of free shipping on orders over $99 is restricted to the "Priority Ground" method of shipment which takes 6 to 12 business days. It is not available for courier delivery which is the fastest method of shipment. 54 The authorities summarised by Murphy J in Australian Competition and Consumer Commission v TPG Internet [2011] FCA 1254 at [114] - [115] show that it is not to the point that any misleading impression created by the representation on the sponsored link or the home page may be corrected before the contract is made. The consumer is enticed into the marketing web by the misleading statements before the correction occurs: Trade Practices Commission v Optus Communications Pty Limited (1996) 64 FCR 326 at 340. 55 The word "free" has a strong attraction and unless qualified, where necessary, it can easily produce a wrong impression and entice the consumer to take action as a result of the misleading impression created by the initial statement: Trade Practices Commission v Optus at 338-340. 56 The offer by Coastal Contacts not to make the SuperFast Shipping representation addresses only part of the complaint. It does not overcome the difficulty created by the Free Shipping Representation.

The Real Cost of Eyewear representation 57 A page on the Clearly Contacts' website contains the heading "The Real Cost of Eyewear and Why You Were Paying So Much More". It has a bar chart or graph showing that the cost of eyewear from Coastal Contacts ranges from $38 to $198. The cost of eyewear from bricks-and-mortar optical retailers is depicted as $400. 58 The actual cost of Coastal Contacts lenses as depicted in a spreadsheet and the cost of Specsavers lenses as established by the evidence reveals the misleading nature of the graph. 59 In my opinion, the proposal put forward by Coastal Contacts to remove (until further order) the bar graph identified at Tab 15 of exhibit LP-1 to Ms Peach's affidavit and to remove the words "additional 2 - 3 times" is sufficient to meet the gravamen of Specsavers' complaint.

The Identical Contacts for Less Representation 60 A banner advertisement for Coastal Contacts published on the 7 News website contains the words:- "click {here} to find identical contacts for less (logo) ClearlyContacts.com.au" 61 A consumer who clicks on the banner advertisement is automatically directed to a page on the Clearly Contacts website which contains a table listing various popular types and brands of contact lenses, including Specsavers. 62 Coastal Contacts' proposal that it undertake to remove (until further order) the webpage identified at Tab 12 of exhibit LP-1 to Ms Peach's affidavit is sufficient to meet Specsavers' claim. 63 I do not consider that Coastal Contacts should be forced to remove the banner advertisement at Tab 11. Standing alone, and without it directing a consumer to Tab 12, there is nothing establishing a prima facie case of misleading conduct in the banner advertisement. It is true that Tab 11 of exhibit LP-1 to Ms Peach's affidavit is likely to be linked to some other part of the website but until that is done I cannot say whether the particular link is deceptive. A pre-emptive strike is not appropriate.

The 50% Less Representation 64 A page on the Clearly Contacts website headed "Our Story" contains an offer to purchase:- "… the same designer brands and products offered in brick-and-mortar stores for half the price." 65 The undertaking offered by Coastal Contacts not to make the 50% Less Representation meets Specsavers' claim.

Balance of Convenience 66 In my opinion, the balance of convenience favours the grant of interlocutory relief. 67 I do not consider that the prima facie case found in relation to each representation is so weak as to justify the withholding of relief. 68 Coastal Contacts has not suggested that the cost or difficulty of compliance with the relief sought is oppressive or otherwise so costly as to justify the refusal of relief. 69 The questions which arise are questions of consumer protection. It is true that Specsavers is concerned with its own commercial interests but that does not detract from the proposition that I must consider the interests of consumers in determining where the balance of convenience lies: World Series Cricket Pty Ltd v Parish (1977) 16 ALR 181 at 200. 70 In my view, that turns solely on the strength of the prima facie case. I am satisfied that, in each instance, it is sufficient to warrant the exercise of my discretion to grant relief. 71 I will direct the parties to bring in short minutes to give effect to my reasons.

Costs 72 Specsavers has been substantively successful in the claims for interlocutory relief. Some of the proposals put forward by Coastal Contacts in the draft short minutes handed up at the hearing were sufficient to meet the claims. 73 The usual order should be made, that is to say, the costs of the interlocutory application should be costs in the cause. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.