Can you infringe a competitor’s trade mark using “search engine optimisation” methods (“SEO” in industry-speak)? In Australia, the answer will depend largely on whether your use of that trade mark amounts to use “as a trade mark” within the meaning of the Trade Marks Act 1995 (Cth).

In a recent decision of the Full Court of the Federal Court of Australia, Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75 (20 June 2014) (“Lift Shop case”), the Full Court considered whether a composite device trade mark containing the words “LIFT SHOP” had been infringed by use by a competitor of the key words “lift shop” in SEO. The Full Court found that this was not use “as a trade mark” and therefore not infringement.

Before we delve a little more into the decision itself, we should start with asking – what is SEO? SEO is an increasingly popular marketing strategy used by many companies to increase the traffic to their website by obtaining higher ranking placements in search engine results. It involves a variety of methods to increase the prominence of the webpage in search results, from writing content that includes frequently searched words and phrases to adding certain keywords to a website’s “meta-data”, such as the title tag and description.

Given the likelihood that traders will hold intellectual property rights in a variety of “keywords” that their competitors might like to use as keywords in their website’s content and meta-data, it is unsurprising that the permissible limits of SEO are now being tested in the courts.

By way of background to the Lift Shop case, Lift Shop Pty Ltd (“Lift Shop”) and Easy Living Home Elevators (“Easy Living”) are direct competitors in the market for customised and disability platform elevators. Lift Shop is the registered owner of the following logo trade mark:

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Easy Living engaged a marketing firm to modify its website and enhance its ranking using SEO methods. The marketing firm asked Easy Living to nominate the website addresses of its top five competitors, select keywords to “target” and draft a title for its website including the top five keywords selected. One of the keywords it chose was “lift shop”.

Lift Shop argued that using this keyword amounted to trade mark infringement, misleading and deceptive conduct under s 18 of the Australian Consumer Law and passing off (although the last ground was later dropped). The judge at first instance dismissed the application, finding that the term “lift shop” was used descriptively and not used “as a trade mark”. While Easy Living’s stated objective was to appear in the same search results as Lift Shop, the primary judge held that it did not do so hoping to obtain the benefit of the appellant’s trade mark reputation. Rather, it did so in “open competition” with the applicant (Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2013] FCA 900 at [31]).

Before the Full Court, the only question was that of trade mark infringement. Lift Shop submitted that the primary judge focused on Easy Living’s subjective intentions and therefore failed to apply the objective test in considering whether the respondent’s use of “lift shop” was use “as a trade mark” under section 120(2)(b) of the Trade Marks Act 1995 (Cth)). The Court soundly rejected this argument, finding that consumers would have understood the words “lift shop” to mean that the respondent’s business was of a similar character to other businesses operating as “lift shops”. Such use was said to be the “antithesis of trade mark use” (Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd [2014] FCAFC 75 at [46]).

While the Court found in favour of Easy Living in this case, website owners should keep potential IP infringement issues in mind when using SEO tools and methods, particularly when using keywords which have become distinctive of other traders in the marketplace. In the Lift Shop case, the keyword that was chosen, although contained within a competitors trade mark, was a descriptive term of the type of business run by both competitors. The position may be different in circumstances where the relevant trade mark which is adopted as a keyword is of a more distinctive character. While this issue has not been resolved by the Australian Courts, the recent EU decision in Marks & Spencer v Interflora (see here) suggests that in the EU at least, the use of third party trade marks as keywords poses a material trade mark infringement risk.

On the flip side, Google has also recently updated its policy in this area will no longer prevent advertisers from selecting another company’s registered trade mark for use as a keyword in Australia (check out our IP Whiteboard post on the changes here). This policy came in the wake of a High Court decision that Google was not responsible for the misleading conduct of advertisers.