In recent decades a growing number of companies have used the Internet to advertise products and services. However, the rapid growth in internet use has also given rise to conflicts between registered trademark owners and third parties using said marks. For example, search engine advertising systems make it possible to create ads that show products or services to users who are looking for them.
A potential conflict arises where a registered company name or trademark is used by a competitor, such that the competitor's advert will appear in a preferential location on screen when an internet user types the registered company name or trademark into a search engine.
On 4 May 2018 Division III of the Federal Court of Appeals in Civil and Commercial Matters delivered a landmark ruling on the use of third-party trademarks as keywords in internet advertising.(1)
The court analysed the behaviour of the defendant, Open Discovery, which had used the plaintiff's well-known trademark VERAZ as a keyword in order to appear in online ads targeting consumers which were searching directly for the plaintiff's trademark.
In the abovementioned decision the Federal Court of Appeals in Civil and Commercial Matters issued a resolution in AdWords, determining that such behaviour constitutes undue use of a trademark and an act of unfair competition; substantial damages were awarded in connection with said unfair use.