Cases on trade mark infringement in the context of keyword advertising are rare. However, the UK High Court recently handed down a ruling on exactly that topic – in Victoria Plum Limited v Victorian Plumbing Limited. The decision is the first time a court has considered the ‘honest concurrent use’ defence to trade mark infringement in the context of keyword advertising. It is also the first time in which keyword advertising has been held to be passing off.
Background to the dispute
Victoria Plum Limited (the Claimant) and Victorian Plumbing Limited (the Defendant) were both bathroom retailers, trading wholly or primarily online. Both parties were established in 2001 and had peaceably co-existed since then, albeit low levels of “inevitable” confusion on the part of the public had occurred because of the parties’ “confusingly similar names”.
The Claimant owned a number of registered trade marks, the key mark being a UK registration for the words “VICTORIA PLUMB”. In 2008, the Defendant began to bid on keywords that were identical to (or immaterially different from) the Claimant’s “VICTORIA PLUMB” registration. For example, keywords selected by the Defendant included “victoria plum(b)” and “victorian plum(b)”. Accordingly, when users searched online for the keywords chosen by the Defendant, its advertisements were displayed in response.
By 2015, the Defendant’s spend on keyword advertising had reached £625,000. The Claimant found the situation intolerable and sued for trade mark infringement.
Keywords – trade mark infringement?
Mr Justice Carr reviewed the existing caselaw and reiterated the test for trade mark infringement in the context of keyword advertising. He confirmed that keyword advertising is not inherently objectionable – indeed, it promotes competition by offering internet users alternatives to the goods or services of trade mark proprietors. However, consistent with existing caselaw, he held that bidding on trade marks as keywords would be trade mark infringement where “the advert displayed in response to the keywords does not enable normally informed and reasonably attentive internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to in the advert originate from the proprietor of the trade mark or an undertaking economically connected to it or, on the contrary, originate from a third party”.
The Court found that the Defendant’s adverts did not enable normally informed and reasonably attentive internet users to ascertain whether the goods or services referred to in the adverts originated from Victoria Plum, or an undertaking economically connected with it, or from a third party.
For example, the following screen shot shows how the Defendant’s ads included the words “victoria plumbing”, which is confusing for consumers:
As such, the Defendant was infringing the Claimant’s trade marks by bidding on the keywords. The following factors were relevant to Mr Justice Carr’s decision:
- the keywords purchased (and the words shown in the Defendant’s ads) were similar to the Claimant’s “VICTORIA PLUMB” trade mark (which had a substantial reputation through long-standing use);
- the Defendant’s ads did not make clear that they were not adverts for the Claimant;
- the goods and services offered by the Claimant and Defendant were identical;
- users searching for “Victoria Plumb” were likely to be expecting to find links to the Claimant’s website; and
- the high click through rate from the Defendant’s adverts, which expert evidence suggested was the result of user confusion occurring on a significant scale.
Was the defence of honest concurrent use available?
The Court held that the Defendant could not rely on the defence of ‘honest concurrent use’ to the claim of trade mark infringement. The defence permits a defendant to continue to use its own name or trade mark. The parties had peaceably co-existed for many years despite instances of actual consumer confusion. However, the Defendant did not want to continue to use its own trade mark, but sought to use the Claimant’s trade marks as keywords. As such, there was no honest concurrent use of the Claimant’s marks (the Defendant had only used them as keywords).
In any event, the Defendant’s conduct was not honest, since it should have realised that its high ad spend and click through rate had caused consumer confusion. The Judge said that bidding on the Claimant’s trade marks as keywords was not consistent with the Defendant’s duty to act fairly in relation to the legitimate interests of the Claimant – a key requirement of the honest concurrent use defence.
There is also a twist in the story. The Claimant had bid on the Defendant’s name, ‘Victorian Plumbing’ as a keyword with its ads, containing the text ‘Victoria Plum’, being displayed in response. The Defendant therefore counterclaimed for passing off.
The Defendant won on its passing off claim as it was able to establish the following:
(i) it had built up a reputation in the name “Victorian Plumbing” by using it over a long period of time;
(ii) users searching for “Victorian Plumbing” were likely to be looking for the Defendant’s website. However, when the Claimant’s ads were displayed this could lead to consumer confusion. The Claimant’s ads did not make clear that they were not connected with the Defendant. As such, a substantial proportion of the relevant public were likely to have been misled into believing that the Claimant was, or was connected with, the Defendant; and
(iii) the Claimant’s misrepresentation would likely cause the Defendant damage.
The Court’s ruling that bidding on the keywords was trade mark infringement is not unexpected, given the close similarity of the Claimant’s trade marks and the words used in the Defendant’s ads. The “normally informed and reasonably attentive internet user” would not be able to spot the difference.
Many businesses use keywords as part of their advertising strategy and in most cases this will be unproblematic where their adverts are clear. This ruling highlights the particular difficulties around keyword advertising where the trading names of the parties are very similar. Parties in that position have a special responsibility to ensure that their ads clearly inform users who they are e.g. by prominently displaying their own trading name.
Parties trading under similar names should not assume that the honest concurrent use defence will be available where trade mark infringement by keyword advertising is alleged. The essence of keyword advertising is that the advertiser wants to use a third party brand, not its own brand. This is the very opposite of what the honest concurrent use defence seeks to protect.