For some businesses, Google AdWords offers an easy means of increasing brand recognition and profile amidst almost endless search engine results. Consequently, many are beginning to take advantage of the program. However, the AdWords phenomenon has prompted claims of trade mark infringement that have led to significant legal decisions. Tania Kowalczuk and Tim O’Callaghan discuss.

How legal is the use of Google AdWords?

As a means of drawing in attention to their own site, businesses sometimes select the trade mark (and/or subtle variations) of a competitor as an AdWord in Google’s “AdWords” advertising program service. Since April 2013, Google has permitted a business to purchase a competitor’s trade mark as an AdWord which can trigger the display of that business’ advertisement together with its website link when the user is looking for the competitor’s site.

So how legal is this practice?

In the Australian High Court decision, Google v ACCC, the Court held that Google had not engaged in misleading and deceptive conduct through the publication of advertisements (‘sponsored links’ as they were then known) which included a competitor’s trade mark both as AdWords through the AdWords program and also in the headline of the sponsored links. (Click here to read our IPT Alert on the Google v ACCC case from 7 February).

This case tends to absolve Google of responsibility for any trade mark infringement of its customers, but leaves open the question of whether the use by one business of the trade marks of another as AdWords is permitted by Australian law.

The question of whether use of a registered trade mark as an AdWord without the authority of the trade mark owner amounts to trade mark infringement under the Trade Marks Act 1995 has not yet been determined by Australian courts.

In the United Kingdom, the High Court of Justice recently handed down a decision in the long running battle between the flower delivery service businesses of Interflora and Marks and Spencer (Interflora Inc. and Interflora British Unit v Marks and Spencer plc and Flowers Direct Online Limited [2013] EWHC 1291 (Ch)). Justice Arnold found that Marks and Spencer had infringed Interflora’s trade marks by the use of AdWords it had purchased for the INTERFLORA trade mark (and variations of that mark) to trigger sponsored links on Google for the Marks and Spencer website.

The UK Court held that trade mark infringement was made out because the Marks and Spencer sponsored links did not enable reasonably well-informed and reasonably attentive internet users, or enabled them only with difficulty, to ascertain whether the service offered originated from Interflora, a member of the Interflora network or a third party.

Further, Justice Arnold found that a significant proportion of people who searched for ‘Interflora’ and clicked on the Marks and Spencer sponsored links were misled to the belief that Marks and Spencer was a member of the Interflora network. This adversely affected the origin function of the trade mark.

The nature of Interflora’s business played a significant role in this finding. Interflora operates a worldwide flower delivery network which allows its members to trade under their own names. That is a characteristic which may have increased the likelihood of confusion, notwithstanding the fact that the trade mark did not appear in the text of the advertisement.

Interestingly, the UK High Court of Justice accepted that, based on existing EU case law, there is a clear consensus that keyword advertising using a competitor’s trade mark is not inherently or inevitably objectionable from a trade mark perspective and that, as a general rule, keyword advertising promotes competition.

A significant factor in Justice Arnold’s view in the Interflora case arose from a very detailed analysis of consumer behaviour and the Judge’s considered view on general consumer awareness of the phenomenon of keyword advertising, and in particular the distinction between the paid advertisements and the organic search results. Justice Arnold noted that even now a significant proportion of internet users in the UK do not appreciate the difference.

The Google search results from this case for the word ‘Interflora’ and a number of other related keywords returned advertisements in the following format:

"M&S Flowers Online

Beautiful Fresh Flowers & Plants.

Order by 5pm for Next Day Delivery."

The Interflora Case is now the leading case in the UK confirming that use of a trade mark in the "hidden" Google AdWords program can amount to trade mark infringement under UK trade mark law.

To what extent can this case provide guidance for Australian purposes?

Probably not much.

Firstly, Australian trade mark law is sufficiently different to that of the UK so that the Interflora decision will probably not apply here.

Under the Australian Trade Marks Act, the registered trade mark of Company A cannot be infringed by Company B unless Company B uses the trade mark in a manner that amounts to use "as a trade mark", that is, as a badge of origin of the goods or services of Company B.

By contrast, the UK Trade Marks Act can become operable if Company B uses the trade mark of Company A "in the course of trade".

One can use a trade mark "in the course of trade" without necessarily using it "as a trade mark". Take for instance, the use of a competitor’s trade mark as part of comparative advertising: "My goods are different to those of ‘Company A’ for these reasons…". Such a comment may amount to use of Company A’s trade mark "in the course of trade" without using it "as a trade mark".

In addition to the Australian Trade Marks legislation, we also have laws to protect consumers from misleading and deceptive conduct and from false or misleading representations under the national Australian Consumer Law. Further, we have the law of passing off to protect businesses from Company A’s competitors trying to pass themselves off as Company A or as somehow associated with Company A. The Interflora case confirms what we already know in Australia, that it is not permissible to use someone else’s trade mark if it tends to mislead and deceive consumers.

Take home messages

  • In Australia, there is still no clear authority on whether the mere use of a trade mark as an AdWord will amount to trade mark infringement, misleading or deceptive conduct, false or misleading representations or passing off.
  • Whether Google Ads are misleading or deceptive, or are likely to mislead or deceive, is a question of fact and depends on the particular form of the Ad and the context in which it appears.
  • The content of Google Ads, particularly where your competitor’s trade mark is displayed, or the context in which it appears can give rise to an impression of an association with your competitor’s business or could otherwise be misleading or deceptive or may indeed amount to trade mark infringement.

What is the Google AdWords program?

Google operates an internet search engine and provides a number of other services on the internet. Google’s principal source of revenue is advertising and this is derived fom its service known as ‘Google AdWords’. This program allows advertisers to pay for search terms, known as ‘keywords’, which will display their advertisement and a link to their website on the Google search results screen in response to users entering the relevant keywords into a Google search. If more than one person purchases a particular keyword, Google activates an automatic auction process and the highest bidder will achieve the highest position in the advertisements section of the results page for that keyword. The advertiser pays on a ‘cost-per-click’ basis each time a user clicks on the hyperlink in its advertisement and is directed to the advertiser’s website. The other main internet search engines, Microsoft’s Bing and Yahoo!, also offer a similar keyword advertising service.