The High Court has recently issued its first decision about use of keywords identical to another party's registered trade mark rights in the context of Google Adwords – see InterCity Group (NZ) Limited v Nakedbus NZ Limited  NZHC 124. This is the first decision in New Zealand about keywords, after similar decisions in overseas jurisdictions in the last few years.
The High Court found that by using the keywords "inter city" and displaying Google advertising, Nakedbus had infringed InterCity's registered trade mark, breached the Fair Trading Act 1986 by misleading and deceiving consumers, and had engaged in passing off. While the judgment is only interim and subject to appeal, the High Court found that InterCity was entitled to declaratory and injunctive relief and a further hearing to determine an account of profits.
Google AdWords and the selection of keywords is a powerful marketing tool used by many businesses around the world to promote their business via the Google search engine. The High Court decision therefore provides some welcome guidance to New Zealand users of Adwords and their use of keywords, especially when the keywords are identical to those of direct competitors.
The High Court found that use of keywords identical to a registered trade mark did not amount to trade mark infringement because Nakedbus' use of the InterCity sign was not "likely to be taken as being used as a trade mark". However, the Court found there was trade mark infringement by Nakedbus in the Google advertisements generated by the keywords, which the Court found to be misleading to consumers. The Google advertisements made statements such as "inter city buses from $1 – We'll beat any inter city fare" and were considered ambiguous as consumers were likely to believe they were InterCity advertisements or were otherwise connected to InterCity. For similar reasons, Nakedbus' Google advertisements were also found to be misleading and deceptive under the Fair Trading Act.
While the decision may be appealed by Nakedbus, it indicates that use of identical keywords does not in itself amount to trade mark infringement, but that Google advertisements generated from the keywords might still infringe, and so land advertisers in hot water. For these reasons, users of Google Adwords who use keywords identical to those of their competitors need to be very careful about what the messages in their Google advertisement tell consumers, especially as to the origin of goods or services.