Many businesses use search engine optimisation strategies as part of their online marketing strategy to generate online traffic. This raises some interesting questions: what happens when the keywords chosen by businesses as part of their search engine optimisation strategies are trade marks owned by third parties? Where this occurs, will advertisers be held liable for trade mark infringement?

The use of third party trade marks in search optimisation was recently considered by the Full Federal Court in Liftshop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75 (Lift Shop decision). In this article, we discuss the findings of the Court in the Lift Shop decision and a number of related cases in which courts have considered whether advertisers are liable for trade mark infringement where third party marks are used in online advertising. While this article focuses on the judicial approach to liability for trade mark infringement, we also consider the position under the Australian Consumer Law and the recently amended Google AdWords Trademark Policy in Australia with respect to use of a third party trade mark online. We conclude by providing a summary of some important issues to consider when using search engine optimisation strategies in Australia.

Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75 (20 June 2014)

The Lift Shop decision is a decision of the Full Federal Court, which considers whether advertisers who use competitors’ trade marks in the text of an online advertisement (such as in the URL, the headline or the text of the ad itself) are liable for trade mark infringement under the Trade Marks Act 1995 (Cth) (Trade Marks Act).

The proceedings commenced when Lift Shop Pty Ltd (Lift Shop), the owner of a registered trade mark for ‘LIFT SHOP’, brought allegations of trade mark infringement, passing off and misleading and deceptive conduct against Easy Living Home Elevators Pty Ltd (Easy Living). The conduct in issue was Easy Living’s designation of the words ‘lift shop’ as a Google AdWord to be used in online searches, its incorporation of the words ‘lift shop’ in the title of its website (which appeared in its Google Ad) and its inclusion of the words in the content of its home page. As a result, when ‘lift shop’ was used in an Internet search, the website titles and URLs of Lift Shop and Easy Living were displayed in close proximity to each other, together with other businesses that used the words in their website titles.

At first instance, the proceedings failed on all three counts, with Justice Buchanan of the Federal Court holding that Easy Living had not infringed Lift Shop’s trade mark and had not engaged in passing off or misleading and deceptive conduct. Lift Shop appealed the decision to the extent it dealt with trade mark infringement.  

In a unanimous judgment, the Full Court held that Easy Living was not liable for trade mark infringement. The Court considered that Easy Living was not using the words ‘lift shop’ ‘as a trade mark’, that is, to distinguish Easy Living’s business from the business of other traders, but was instead using the words to convey that its business was one of supplying ‘lifts’ and ‘home elevators’. While the Court did note that the words ‘lift shop’ had descriptive aspects, the Court’s conclusion that there was no trade mark infringement was primarily based on its finding that the words did not function as a trade mark in the context in which they were used.

Can I be sued for trade mark infringement when I use a trade mark in an online advertisement in Australia?

There is a real risk that trade mark infringement may be found by an Australian court where an advertiser uses a competitor’s trade mark in the text of an online ad (including in the URL, the headline or the text of the ad itself). However, as seen in the Lift Shop decision, a finding of trade mark infringement may be avoided if the trade mark is used descriptively.

In the Lift Shop decision, one of the important factors in the Full Court’s finding that there was no trade mark infringement was that the words ‘lift shop’ were found to be used by Easy Living in a descriptive manner in the context of a page of online search results. The important point for the Court was that the words were used to describe the products sold by Easy Living and were not used as a badge of origin to distinguish Easy Living’s business from the business of other traders. The Court also considered it relevant that Easy Living’s use of ‘lift shop’ took place in the setting of a page of search results which included the titles of several other web pages which included the words ‘lift shop’. The Court held that the setting of a page of search results added weight to the finding that the words ‘lift shop’ were used descriptively, rather than as a trade mark.

Similarly, in REA Group v Real Estate 1 Ltd [2013] FCA 559, one of the issues the Court had to consider was whether Real Estate 1 had engaged in trade mark infringement by using domain names (both in search engine results and web browsers) and stylised logos which were similar to various domain names and registered composite trade marks owned by REA Group. The Court held that Real Estate 1 was liable for infringement of some, but not all, of the trade marks in issue. The trade marks that the Court found had been infringed contained features which were distinctive, including concocted words such as ‘realcommercial’. By contrast, the Court found other marks not to have been infringed where those marks were highly descriptive (such as ‘realestate’).

Can I be sued for trade mark infringement when I use a trade mark as a keyword ‘behind the scenes’ so that it does not show up in the text of an online advertisement?

Australian courts have not directly considered whether merely purchasing a competitor’s registered trade mark as a keyword but not displaying the mark in the text of an online ad constitutes trade mark infringement. This is a developing area of the law.

Australian courts have, however, considered whether a trade mark will be infringed if it is used as a ‘metatag’, which is a descriptive tag that is not displayed but is used to index and increase the ratings of websites. In Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd [2011] FCA 1319, the Federal Court held that there was no trade mark infringement where a trade mark was used as a metatag.

It is interesting to note that a similar position has been adopted in New Zealand with respect to invisible keywords and trade mark infringement. In the recent New Zealand High Court decision of InterCity Group (NZ) Ltd v Nakedbus NZ Ltd [2014] NZHC 124, the High Court considered whether Nakedbus use of the term ‘inter city’ (which was a registered trade mark of InterCity Group) constituted trade mark infringement where the mark was used both as an invisible keyword in a Google AdWord campaign and in the resulting ad itself. In relation to the invisible keyword, the High Court held that there was no ‘use as a trade mark’ and therefore Nakedbus did not infringe InterCity’s trade mark. In this regard, Justice Asher noted (at [86]):

Insofar as the use of the keyword was an act that was not seen or known or understood by the consumer, there was no use of the sign ‘likely to be taken as being used as a trade mark’.

What other issues should I consider if I am using a competitor’s trade mark as part of my search engine optimisation strategy?

Australian Consumer Law

In addition to trade mark infringement, advertisers should be aware that a trade mark owner may bring an action under the Australian Consumer Law by arguing, for example, that the advertiser’s use of a trade mark is likely to mislead the public into believing that the advertiser is associated with the trade mark owner. Misleading and deceptive conduct will be found where a third party trade mark is used as a keyword in the text of an online advertisement and the advertiser misrepresents an association or affiliation with the trade mark owner.

In the Lift Shop decision at first instance, Justice Buchanan held that Easy Living had not engaged in misleading and deceptive conduct. His Honour considered that Easy Living’s use of the words ‘lift shop’ was not intended to suggest an association with Lift Shop and held that there was nothing on the search results page to suggest any association between the two businesses. In reaching this conclusion, his Honour found it relevant that the words ‘lift shop’ were used descriptively in the industry. Conversely, in Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd [2011] FCA 1086, the Federal Court (in the primary proceedings dealing with the conduct of the Trading Post) held that the Trading Post had engaged in misleading and deceptive conduct by causing certain ads for the Trading Post website to be headed ‘Kloster Ford’ (which was the name of a car dealership competitor of Trading Post), which ads appeared in Google searches for the keyword ‘Kloster Ford’. The Court considered that the headlines were not likely to escape the attention of the ordinary and reasonable member of the relevant class, a finding which was likely due to the distinctive nature of the keyword used. As a result, the Court held that Trading Post had wrongfully represented that there was an association or affiliation between Trading Post and Kloster Ford.

Google AdWords Trademark Policy

In addition to actions brought in the courts, an advertiser should be aware that if it uses a third party trade mark in the text of a Google Ad, the trade mark owner may make a complaint to Google to ask that Google take steps to restrict the use of the trade mark. Recent amendments to the Google AdWords Trademark Policy have expanded the rights of advertisers to use third party trade marks in online Google Ads. It is important for advertisers and trade mark owners to stay up to date with these changes.

Under the current Australian Google AdWords Trademark Policy, Google may restrict the use of a registered trade mark, subject to certain exceptions, if an advertiser uses the trade mark as a keyword in the actual text of the resulting Google Ad.

However, recent amendments to the Trademark Policy have expanded the exceptions pursuant to which traders can use a third party trade mark in the text of a Google Ad. As a result of these amendments, advertisers in Australia may use a third party trade mark in their Google Ad if they:

  • are a reseller of goods and services related to the trade mark; or
  • offer compatible components or parts for goods and services related to the trade mark; or
  • provide information about the goods and services related to the trade mark.

Certain conditions apply if advertisers wish to fall within these exceptions.

What should I do now?

Advertisers should be aware of the risk of trade mark infringement where a third party trade mark is being used as a keyword in the text of an online ad. Courts are more likely to find infringement where the mark is distinctive and where the mark is being used ‘as a trade mark’ (that is, not descriptively, but to distinguish the advertiser’s business from the business of other traders).

Trade mark owners should closely monitor the use of their trade marks by third parties in online ads. Where infringement or misleading and deceptive conduct is suspected, avenues of redress include the Google AdWords Trademark Policy (if a Google Ad is involved), or court proceedings brought under the Trade Marks Act or the Australian Consumer Law.

Importantly, both advertisers and trade mark owners should tread carefully where a registered trade mark is used as a keyword ‘behind the scenes’ and not displayed in the text of an online advertisement.