This question is often asked by companies considering ways to funnel internet traffic to their own website by diverting internet users seeking to access a competitor’s website.

A single judge of the Federal Court has found that the use of a competitor’s trade mark as a keyword in Google AdWords is neither trade mark infringement nor likely to mislead or deceive consumers under the Australian Consumer Law (ACL).

In Veda Advantage Limited v Malouf Group Enterprises Pty Limited [2016] FCA 255 Justice Katzmann did “not accept that the use of a sign which is invisible to the consumer is use as a trade mark within the meaning of the Trade Marks Act”.

In dismissing the ACL claim her Honour found, “…ordinary or reasonable members of the relevant class would understand that by clicking on the headline to any of the advertisements in question they would be taken to the web page of the relevant Malouf business. They would have no reason to understand from the advertisements that the relevant Malouf website was operated by or on behalf of Veda, or with its sponsorship or approval.”

Veda might be seen as a green light for companies to take a more aggressive approach to SEO (search engine optimisation) by registering keywords for competitor’s names and trade marks. However, those companies should bear the following in mind.

  1. Any visible use of a competitor’s name or trade marks may (depending on the manner of use) amount to trade mark infringement and/or misleading or deceptive conduct.
  2. We do not have guidance from an appellate court in relation to the use of a competitor’s trade mark as keywords and in metadata.

The facts

Veda is the leading Australian provider of credit reports on individuals and companies. Veda has a number of registered Australian trade marks including a trade mark for VEDA for financial services in class 36.

Malouf runs a business which provides credit repair services assisting individuals and businesses to correct inaccuracies in credit reports, including those provided by Veda. Malouf registered 86 keywords with Google which incorporate “veda”. The keywords were used to trigger advertisements for Malouf’s credit cleaning services including the following examples.

Veda claimed that Malouf’s use of “veda” in both keywords and in the text of sponsored links amounted to:

  • trade mark infringement under s120(1) of the Trade Marks Act 1995; and
  • misleading or deceptive conduct and false or misleading representations contrary to sections 18 and 29(1)(h) and (i) of the ACL.

Not use as a trade mark

In its defence, Malouf argued that the use of “veda” in keywords was not use as a trade mark. Accepting this argument, Justice Katzmann found that:

  • “Objectively, Malouf is or was not using the keywords as a sign to distinguish its services from the services of others. Rather it has used them to identify internet users who may have an interest in using its services”;
  • “…the proposition that using words which are invisible and inaudible, indeed imperceptible, to consumers issuing them as a trade mark makes no sense”.

In reaching this decision, Justice Katzmann preferred the approach taken by Justice Kenny in Complete Technologies Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd [2011] FCA 1319 on this issue over the approach taken by Justice Rangiah in the more recent decision of Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2015] FCA 554.

Her Honour also declined to follow two European decisions, in which findings of trade mark infringement were made relating to the use of trade marks in keywords and metatags: Google Finance SARL v Louis Vuitton Malletier SA (C-235/08) [2011] Bus LR 1 All ER (EC) 411 and Interflora Inc and Anor v Marks & Spencer No. 5 [2014] EWCA Civ 1403.

Justice Katzmann distinguished the European test for infringement which involves “use in the course of trade” from the Australian “use as a trade mark” requirement. Her Honour identified that the Australian test requires use of the trade mark “as a badge of origin of the goods or services”, which was not satisfied by use of the VEDA trade mark by Malouf as a keyword.

Her Honour further found that the use of “veda” in the text of sponsored links (such as those shown above) was descriptive and did not, therefore, amount to infringement (save for one exception, “The Veda Report Centre”).

Unlikely to mislead or deceive consumers

First, in relation to the use of keywords, Justice Katzmann found that the use of “veda” as a keyword did not amount to a representation to consumers because it was not visible, rather “it was a representation to Google”. This key finding was not made in the leading decision concerning the use of competitor’s trade marks as keywords, Google v ACCC (2013) 249 CLR 435. This is likely because Google v ACCC concerned ads which used the competitor’s trade mark alone in the ad heading (e.g. “Kloster Ford” and “Harvey Travel”) which provided a sufficient basis for the Court to make a finding of misleading or deceptive conduct without having to consider the extent to which the use of non-visible keywords was itself conduct that was likely to mislead or deceive.

With respect to the use of “veda” in sponsored links her Honour found (with one exception, “The Veda Report Centre”) that the use of the mark was descriptive of services provided by Malouf with respect to credit reports issued by Veda and unlikely to mislead consumers. For this reason, Her Honour distinguished the sponsored links in question from those found to be misleading in Google v ACCC which, as mentioned, had headings consisting of the competitor’s name without any other text.

In addition, consistent with the findings in Google v ACCC, Justice Katzmann found that ordinary and reasonable consumers would distinguish between sponsored links and organic search results due to the “the yellow “ad” box” which appears beside sponsored links.

Conclusion

While this decision might be seen to endorse the “sharp practice” of using a competitor’s name and trade marks as keywords and in metadata, companies (and their SEO consultants) should be careful in relation to any use of a competitor’s name or trade marks in ad text.