Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd

Lift Shop, the owner of registered trade mark "liftshop", brought proceedings against its competitor, Easy Living, for trade mark infringement, passing off and misleading and deceptive conduct after Easy Living used the term "lift shop" in its online advertising.

Whilst the proceedings failed on all three counts, the judgment provides useful practical guidance both to businesses who wish to legally exploit the online environment, and to brand owners who believe that their trade marks, business names or domain names are being used to their detriment to increase a competitor's search engine ranking.

Use of trade marks as keyword search terms in online advertising

Easy Living's marketing agency suggested that Easy Living could improve its search engine ranking by using keyword search terms such as "home lifts", "lift shop" (ranked 8 of 173) and "liftshop" (ranked 27 of 173). Easy Living chose "lift shop", added it to its website title, nominated it as a keyword search term and included it in its homepage content.

As a result:

  • It was more likely that Easy Living's website would show up in responses to a search for "lift shop"; and
  • When a potential customer searched using the term "lift shop" both Lift Shop and Easy Living's websites appeared on page one of the search results, in fairly close proximity:

Click here to view image.

Alleged infringing use of Lift Shop's trade mark, "liftshop" by Easy Living

The parties each sell customised elevators in Australia. Competition is fierce, and each regards a sale to the other as one lost to it.

Examples of competitive practice, given by each of the parties' managing directors, left Justice Buchanan with no doubt that the parties were not just competitors, but "commercial enemies".

Lift Shop alleged that Easy Living's use of the term "lift shop" on and in relation to the Easy Living website, in order to rank highly in response to particular keyword search terms, infringed Lift Shop's "liftshop" trade mark. In addition Lift Shop brought allegations of breach of the Australian Consumer Law and the tort of passing off, as Easy Living's online conduct suggested that it either was Lift Shop, or was associated or endorsed by it.

Was Easy Living's use of "lift shop" as a keyword search term visible in the resulting ad, misleading and deceptive?

Justice Buchanan held that Easy Living had not engaged in misleading and deceptive conduct because:

  • It was clear that there was a difference between the entries of the parties on any search results page (see image above). For example;
  • both the URLs and descriptions in the titles were different;
  • there was nothing to suggest any association between the two businesses; and
  • the appearance of the entries next to one another served only to emphasise the differences.

In addition, once a potential customer visited the respective websites (which his honour considered was a necessary step to follow up the information shown in the search entry) any idea of an association was dispelled.

  • The term "lift shop" was used descriptively in the industry, meaning that it was unlikely that potential customers would view the words as suggesting an association between the parties. The fact that other businesses' websites (not associated with either Lift Shop or Easy Living) showed in response to a search for "lift shop" demonstrated its use as a generic, descriptive term.

The Court considered that although Easy Living wanted to appear in search results that were likely to identify its competitor, Lift Shop, the intent was to compete with Lift Shop by bringing its business to the attention of Lift Shop's potential customers.

It was held that there was no desire by Easy Living to suggest any form of association with Lift Shop, its business or its trade mark, with the Court accepting the evidence of Easy Living's managing director, that the reputation of Easy Living would not be enhanced by any association with Lift Shop.

In the words of the Court:

Easy Living did not hope to take Lift Shop's business as a result of some misunderstanding that Easy Living and Lift Shop might be associated. Easy Living sought to obtain business in open competition with Lift Shop".

Did Easy Living's online use of the term "lift shop" infringe Lift Shop's trade mark registration?

It is an infringement of a trade mark to use as a trade mark (that is, as a badge of origin or for the purpose of identifying your own goods) words that are substantially identical with or deceptively similar to a registered trade mark, on or in relation to the same or similar goods and services to those for which the trade mark is registered.

The Court found that the term "lift shop" in the title of Easy Living's home page was not used as a trade mark on the basis that:

  • "Lift shop"  was a descriptive term which other businesses used in their titles;
  • Easy Living did not use "lift shop" as a badge of origin; and
  • It was evident that Easy Living did not wish to suggest any association with Lift Shop.

Justice Buchanan concluded that the term was used by Easy Living solely in order to take advantage of the way in which search engines operate through the use of keywords.

The Liftshop case reinforces the nuances of Google Adwords in the context of Australia's trade mark and consumer protection laws.  The case also emphasises the care that needs to be taken when asserting rights in a trade mark in circumstances where that trade mark is being used descriptively.

Current law in relation to Google Adwords in Australia

Following the Liftshop case, the current state of the law in relation to use of competitor's trade marks in the Google Adwords program is as follows:

  1. Visible use of a third parties' trade mark in the headline, URL or text of a Google Ad is likely to amount to trade mark infringement and be misleading and deceptive. However, the position may be different if the use of the third parties' trade mark is descriptive (as in the Liftshop case) or if the trade mark being used is itself descriptive (as in the case of REA Group v Real Estate Ltd [2013] FCA 559).
  2. No Australian court has held that merely purchasing a Google Adword/s which isnot visible in the resulting Google ad amounts to trade mark infringement or misleading or deceptive conduct.