Following an announcement in June this year by online betting service provider CrownBet Pty Ltd of an upcoming re-brand as SPORTINGBET, its competitor – Sportsbet Pty Ltd – has been successful in its application to the Federal Court to prevent CrownBet from using its proposed new brand name.
Earlier this year, CrownBet Pty Ltd (CrownBet) acquired William Hill Australia Holdings. Under the sale agreement, CrownBet acquired intellectual property rights in relation to the brand SPORTINGBET, which had not been used since about 2015. The sale agreement requires CrownBet to cease using the name WILLIAM HILL by August 2018. Pursuant to an earlier sale agreement with Crown Resorts Ltd (selling out its stake in CrownBet), CrownBet is also required to cease using the CROWNBET brand. Consequently, CrownBet must re-brand itself by August 2018.
In mid-June 2018, CrownBet announced that it would be re-branding as SPORTINGBET. In response, Sportsbet Pty Ltd (Sportsbet) brought proceedings against CrownBet and sought an interlocutory injunction to prevent CrownBet from using SPORTINGBET. Sportsbet alleged that if CrownBet were to use SPORTINGBET, it would:
- amount to engaging in misleading and deceptive conduct in contravention of section 18 of the Australian Consumer Law (ACL);
- amount to making false or misleading representations about goods or services in contravention of section 29 of the ACL; and
- infringe Sportbet’s trade marks.
For the purposes of the application for an injunction, Sportsbet relied only on the claims under the ACL.
Justice Moshinksy of the Federal Court granted the injunction sought by Sportsbet, finding that the balance of convenience weighed in favour of injunctive relief and that Sportsbet had a strong prima facie case.1
Of significance was the Court’s finding that a reasonable consumer of online betting would likely be confused and led into error. In particular, the Court considered it likely that consumers would use the services of SPORTINGBET under the mistaken impression they were dealing with Sportsbet. In circumstances where a significant number of consumers used Sportsbet’s services on a mobile device with a smaller screen, the likelihood of mistaking SPORTINGBET for Sportsbet would be even higher.
The Court found that if a consumer were to search for terms such as “sportsbet”, “sports bet” or “AFL + betting”, SPORTINGBET would likely appear in the search results and cause confusion. Because Sportsbet’s services are offered only online and by phone Sportsbet relies heavily on word of mouth and advertising. As Sportsbet had engaged in extensive marketing in order to build up its brand recognition, the Court found that Sportsbet’s goodwill would likely be damaged if CrownBet were permitted to use SPORTINGBET.
CrownBet pointed to the fact that the SPORTINGBET brand had in fact been in use from 2001 to 2015 and Sportsbet had never before complained. However, the Court found that circumstances had changed since that period. Notably, Sportsbet had substantially increased its marketing expenditure – particularly from 2015 when SPORTINGBET ceased to be used in Australia – and had “markedly increased” its brand recognition. In any case, his Honour observed that “[t]here may well have been confusion during [the] period” when both marks were in use2 and so CrownBet’s reliance on the earlier state of affairs was misplaced.
CrownBet also argued that its proposed get up for its SPORTINGBET re-branding (e.g. use of colour and font style) would sufficiently differentiate it from Sportsbet. The Court rejected that argument on the basis that not all consumers would be familiar with the get up of Sportsbet and therefore some (if not many) consumers would be unable to differentiate between the two brands.
In assessing the impact on Sportsbet if SPORTINGBET were permitted to be used, Moshinsky J noted the difficulties in quantifying the damage that might be incurred if Sportsbet was ultimately successful in its substantive claims. For instance, his Honour observed that the relationship between Sportsbet and its consumers was of a sensitive nature, given that consumers provided their bank account details and other personal information to Sportsbet in order to set up an account. If Sportsbet were associated with SPORTINGBET, it would have a damaging effect on the relationship of trust with its consumers. It would also be difficult to accurately identify the number of consumers who might accidentally open an account with SPORTINGBET and to calculate the value of lost profits.
Finally, CrownBet claimed that if the injunction were granted it would not have sufficient time to re-brand before August 2018, being the time at which it had to cease using the CROWNBET brand. However, Moshinsky J found that the evidence did not support that argument. His Honour further found that “this difficulty [was] in part of their own making”.3 CrownBet must have expected Sportsbet to seek an injunction of this kind and, had CrownBet announced its new brand sooner, the injunction application could have been dealt with earlier.
This decision is a useful reminder of the kinds of factors a court will consider in an application for an injunction where intellectual property infringement is anticipated.
Because this case was run on the basis of potential contraventions of the ACL, an assessment of the risk of consumers being misled was of particular significance. Justice Moshinsky was mindful of the impact on consumers and the need to protect them from misleading conduct. His Honour had particular regard to the level of sophistication of consumers of sports betting services and noted that although there may be many who are sophisticated there are, perhaps, many who are not. His Honour also considered the characteristics of the online sports betting industry, including the number of consumers who use mobile devices to place bets; the level of trust they place in the betting service provider; and the reliance on word of mouth and advertising.
Acknowledging that in some circumstances a small difference can be enough to sufficiently differentiate a mark from another brand, his Honour reasoned that it “all depends on the context” and that CrownBet’s proposed brand differentiation plan would not have overcome the risk of error. In this case, given the market characteristics and the way in which online bets are placed, it would have been “quite easy” for consumers to mistake SPORTINGBET for SPORTSBET irrespective of the difference in colour and font.
Of particular interest is how Moshinksy J essentially found that CrownBet must have expected Sportsbet to contest its use of the SPORTINGBET mark and, on that basis, CrownBet ought to have made its re-branding announcement sooner in order to allow time to determine any dispute before the relevant date in August. Although this finding was not given much weight in Moshinsky J’s assessment of the balance of convenience, it serves as a reminder that, in relation to injunctive relief, the courts will look at the practical injustice done to the parties.
In light of this decision and the apparent strength of Sportsbet’s prima facie claims under the ACL, it will not be surprising if CrownBet completely overhauls its re-branding strategy. As for the substantive litigation, it will be interesting to see if and how Sportsbet’s trade mark infringement claim will unfold.
1.Sportsbet Pty Ltd v Crownbet Pty Ltd  FCA 1045 at .
2. Sportsbet Pty Ltd v Crownbet Pty Ltd  FCA 1045 at .
3. Sportsbet Pty Ltd v Crownbet Pty Ltd  FCA 1045 at .
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