Intercity Group (NZ) Ltd v Nakedbus NZ Ltd [2014] HC 124

KEY ISSUE

Did use of a competitor’s mark in Google AdWords infringe the trade mark?

Was the mark used descriptively in advertising or as a trade mark?

FACTS

I and N are the no. 1 and 2 long distance bus companies in NZ, with I being the original monopoly.

I owns INTERCITY®.  There were many prior disputes between them in relation to “inter city” use.

N purchased 87 Google AdWords containing “inter city” and used the phrase in advertising which was displayed when the search term was entered into Google.  The phrase also appeared on its website.

I sued N claiming trade mark infringement, passing off and breach of the Fair Trading Act 1986.

N asserted that its use was use of a descriptive term and not trade mark use.

COURT DECISION AND REASONING

The NZ Trade Marks Act differs from Australian and European trade mark legislation in requiring that “the sign is used in such a manner as to render the use of the sign as likely to be taken as being use as a trade mark” (s 89(2).  N’s use of the mark in its Google AdWords was not use when consumers were searching because the words are invisible to the consumer.  As there was no use for trade mark purposes, there was no infringement.  

Although there was no trade mark infringement, the use of the competitor’s trade mark as keywords for Google AdWords purposes was misleading and deceptive conduct in breach of the Fair Trading Act 1986.

I produced survey evidence showing that consumers used “inter city” to search for I’s website, not as a generic search term.  For generic searches, they used “bus” plus the departure and destination locations.  The Court accepted this evidence.  Accordingly, N’s use in advertisements and on its website was deliberate trade mark use.  N’s use was not honest (for the s 95 defence) and therefore the use was infringing.

N has appealed the decision.

KEY LESSONS

Purchase/use of Google AdWords comprising the registered trade mark of a competitor is not infringement.  However, the trade mark owner is likely to have a remedy under the Fair Trading Act 1986 for misleading and deceptive conduct.

Even quite descriptive words and apparently descriptive use can be infringing when the evidence establishes that consumers use the relevant words to search for the infringer’s competitor rather than for the goods or services generally.