A decision last year left businesses thinking that they could use competitor trade-marks as keywords to trigger sponsored links with no trade-mark risk. However, a recent Court of Appeal decision qualified the trial judge’s decision, concluding that this issue has not yet been resolved.

In Private Career Training Institutions Agency v. Vancouver Career College (Burnaby) Inc., 2010 BCSC 765, the British Columbia Court of Appeal made it clear that the trial judge’s ruling concerned only a specific area of B.C. regulatory law, and that it was not a trade-marks decision.

No guidance was provided as to the general legality of keyword advertising using third party trade-marks. However, earlier decisions stemming from certain other forms of online trade-mark use suggest that using third party marks to attract Internet users may be actionable in some cases.

As a result, the prudent course remains to avoid using competitor trade-marks as keywords if potential consumers are likely to be misled as a result — whether the mark is visible in the text of the sponsored link or not.

Keyword Advertising

Keyword advertising is a service offered by various search engines, including Google and Yahoo. Advertisers pay to have their websites associated with specific keywords. When Internet users search for those words, the advertiser’s website appears as a “sponsored link” alongside the organic search results, which are determined on the basis of their relevance. In this way, advertisers can propel their websites to prominence over the organic search results, for a fee.

Keyword advertising is controversial, however, because search engines often permit advertisers to select competitors’ trade-marks as their keywords. The keyword does not form part of that advertiser’s website or material but allows the search engine providers to bring the advertiser’s link to the attention of the consumer following input of the keyword. While paying for a keyword does not grant an advertiser the exclusive use of that word, it arguably permits advertisers to benefit from the goodwill and reputation others have built-up in their marks, potentially to the mark owners’ detriment.

The B.C. Decisions

The dispute before the courts arose when the Applicant, a B.C. regulatory body responsible for governing post-secondary educational service providers, applied for an injunction preventing the Respondent, the operator of several Vancouver post-secondary institutions, from using the trade-marks of its competitors as keywords. The Applicant claimed that keyword advertising violated its bylaw prohibiting advertising capable of “misleading a consumer”.

The trial court sided with the Respondent, finding that keyword advertising was not “misleading”, based in part on American trade-mark decisions holding that keyword advertising did not give rise to confusion among consumers. The Applicant appealed, and while the Court of Appeal upheld the trial judge’s holding, it also took the opportunity to specify that it was not a trade-marks dispute before the courts, but rather a regulatory dispute involving the interpretation of a regulatory bylaw. As such, the trial judge should not have relied on trade-mark confusion cases.

Implications for Advertisers

The primary effect of the Court of Appeal’s decision was to clarify that the trial judge’s ruling does not resolve the issue of whether keyword advertising is “confusing” under trade-mark law, nor does it give advertisers the green light to use third party marks as keywords. The traffic signal is back at yellow.

There are various Canadian decisions concerning the use of trade-marks as metatags, invisible code built into webpages to increase their prominence in search engine results. Several Canadian courts have suggested that, under certain circumstances, using another person’s mark as a metatag could be actionable under trade-mark law, even though the mark is not visible to consumers. As keywords are not built into the advertiser websites, the metatag cases are distinguishable, but the general concept of using someone else’s trade-mark in any fashion without their permission to garner consumer attention continues as a driving force and major irritant in this area and until there is further clarification from the courts, there may be some risk in using trade-marks of competitors as keywords.