The Federal Court of Australia has examined the issue of trade mark infringement by advertisers using competitors’ trade marks as Google AdWords. Advertisers need to ensure they do not use competitors’ marks as a ‘badge of origin’ to avoid trade mark infringement.

Veda Advantage Limited v Malouf Group Enterprises Pty Limited concerned Veda, a financial services company and Malouf, a credit repair business. A “VedaScore” is a number that summarises the information in a person’s credit file and is expressed as a number between 0 and 1200. In simple terms, the higher a person’s VedaScore, the better that person’s credit profile and the more likely that person will receive credit.

Malouf purchased a series of keywords that contained the word “veda”, so when a consumer typed “veda” into Google’s search engine, their search results would include sponsored ad links for Malouf’s services.

Veda alleged that by using “veda” as a keyword and in the text of the sponsored ad links, Malouf was infringing Veda’s trade mark. Additionally, Veda alleged Malouf engaged in false or misleading and deceptive conduct under the Australian Consumer Law.

In keeping with previous findings of the Court, Katzmann J held Malouf’s use of “veda” as a keyword was not trade mark infringement. Key to this finding was the way Google AdWords works: the keywords used by advertisers remain invisible to consumers, therefore cannot be perceived by the consumers as being used as a badge of origin, or in connection to trade or services of the advertisers. In other words, the “invisible” use of a trade mark cannot constitute an infringement.

Contrarily, Katzmann J found that the use of a trade mark in sponsored ad links, where the trade mark is visible to consumers, can result in infringement. The Court held that where “veda” was used in these links as a descriptor – for example “Fix Your Veda History” – it did not constitute trade mark use. However, when it was used in the context of an ad promoting the “Veda Report Centre”, the Court found it was indeed used as a badge of origin to indicate a connection between Malouf and Veda and to market Malouf under the Veda name.

In relation to the claims Malouf had breached the ACL, the Court found Malouf was not in breach except for its use of “Veda Report Centre” – which did, or was likely to, mislead or deceive consumers.

While using a competitors’ mark to optimise search results for your own business is a common advertising strategy, care should be taken to ensure that such use is descriptive and not use as a badge of origin.