The purchase of a competitor’s trade-mark as an online advertising keyword is not an infringement, according to a recent Federal Court of Australia decision. In making its finding, the Court in Veda Advantage Limited v Malouf Group Enterprises Pty Limited, [2016] FCA 255 relied on evidence that the keywords were not visible to consumers and were selected and provided to Google by the defendant, rather than being used to identify a trade source. However, use of the trademark in a “sponsored link” in relation to the same services as those of the registered mark was held to be an infringement in certain circumstances.

Search engines, such as Google, facilitate web searches by allowing users to enter various terms into a search field. In executing this search, Google displays “organic” and “sponsored” search results. Search engine optimization (SEO) improves the priority of a company’s listing in the organic search results. Businesses can optimize their exposure by using code, content and website design that relate to key words that are commonly searched. Sponsored links, on the other hand, are advertisements that may be created, changed and monitored by advertisers. Sponsored links are triggered by keywords privately supplied by the advertiser to Google.

In Veda, the plaintiff was a leading credit report provider in Australia and owner of the registered marks VEDA, VEDA ADVANTAGE, VEDACHECK and VEDASCORE. The defendant Malouf’s business helped people repair or correct bad credit reports. Malouf bought advertisements for its business through Google AdWords. Malouf selected more than 85 keywords that incorporated the word “veda”, such as “veda,” “contact veda,” and “veda credit score”.

The Court was asked to determine if the purchase of keywords using the plaintiff’s mark constitutes trademark infringement. It considered expert evidence from a digital marketing specialist. The Court held that Malouf’s purchase of keywords using the VEDA mark did not infringe Veda’s trademark rights for the following reasons:

  1. The keywords were not used to indicate a connection between the defendant’s services and those of the plaintiff.
  2. The keywords could be acquired by anyone; the keywords were not performing the function of the trademark by identifying a trade source to the exclusion of others. The use of keywords as search terms produced not only the defendant’s listings, but those of his competitor.
  3. The keywords are invisible to the consumer so the consumer does not know what keyword is prompting the results.

The most significant point for the Court was that the keywords were invisible, inaudible and imperceptible to consumer. The keywords could not be understood to distinguish the services of one trader from those of another because the consumer is not aware of their involvement. In coming to this decision, the Court relied on another Australian case, Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd, [2015] FCA 554, involving metatags. In Accor, it was similarly held that the use of metatags consisting of words that are subject to trade-mark protection does not constitute trademark infringement.

With respect to the sponsored links that referenced VEDA, the Federal Court of Appeal likewise found no infringement (in all but two instances) accepting the defendant’s position that use of the mark in the sponsored ad was in the context of describing the character of the defendant’s business:

“[…] I am not satisfied that Malouf has used the Veda Trade Marks as trade marks. Rather, it seems to me that they have been used to describe the object to which its services are directed — fixing, cleaning or repairing Veda credit files or reports — not as a badge of the origin of its business and therefore not as a trade mark.

Some of the defendant’s sponsored ads include the phrases such as “Fix your Veda File Now” and “Fix Your Veda History Now.” These were not found to be infringing. However, the Court found that two sponsored advertisements for “The Veda Report Centre” and “The Veda-Report Centre” infringed the VEDA mark because it was used in relation to services in respect of which those marks were registered.

Canadian courts reach similar conclusion relating to metatags

Last year the Federal Court of Appeal affirmed the lower court’s ruling that the use of metatags with confusingly similar marks to the plaintiff’s registered marks did not constitute trademark infringement. A metatag is a word or small phrase that is included in the source code of a website, but does not appear on the visible webpage. Internet search engines may use metatags as a means of identifying relevant webpages and ranking the websites, which are displayed in the search results.

In Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca) (2015 FCA 290), the central issue was whether 411 Travel’s use of metatags that included RedTag’s trade name constituted trademark infringement. In that case the defendant had naively copied metatags from the plaintiff’s website. However, the inclusion of the metatags did not lead consumer directly to the 411 Travel’s website; rather, because they had been directly copied, they directed potential consumers to book their travel arrangements with the plaintiff’s website.

Moreover, the metatags were not visible on the defendant’s website, but displayed in association with the defendant’s website in the list of search results. The list of search results allowed the consumer to make an independent choice, and therefore the display of the mark in the listing did not constitute infringement. The Red Label decision appears to be aligned with the Australian decision in Accor.

As a whole, these cases demonstrate the court’s evolving approach to enforcement and application of intellectual property law online. Both Veda and Red Label suggest that it may be difficult to establish trademark infringement based on keywords or metatags that are not visible to the consumer. Specifically, in both cases the courts were unable to find that the defendants had used the mark in association with its services.