Initial interest confusion is aimed primarily at regulating the use of keywords in Internet trading, i.e. words typed by a user into the search field of a search engine when looking for specific information on the Internet.

The leading recent Canadian case is Red Label Vacations Inc. (c.o.b. RedTag.ca) v. 411 Travel Buys Ltd. (c.o.b. 411TravelBuys.ca).[1] In Red Label, the defendant used the plaintiff’s three registered trademarks in its metatags: "redtag.ca"; "redtag.ca vacations"; and "Shop. Compare. Payless!! Guaranteed". It was held by Manson, J. at trial, and affirmed on appeal, that the use of a trademark in a metatag does not constitute passing off or trademark infringement, because the metatag is not visible to consumers.

Manson J.’s view of the inapplicability of the initial confusion test was followed in the first instance in Vancouver Community College v. Vancouver Career College (Burnaby) Inc.1 (the “VCC” case). The plaintiff asserted that the defendant was guilty of passing off through the use of the Google AdWords VCC and Vancouver Community College, and the domain name VCCollege.ca. As in Red Label, the trial judge found no likelihood of confusion in fact, and also that there could be no initial interest confusion either, because the person making the search has the opportunity to decide whether to click on a link on the main search page, or else on a sponsored advertisement marked as such.

The VCC case recently was reversed3 by the British Columbia Court of Appeal, that took a contrary view of the facts in spite of the fact that the trial took 19 days, and the trial judge heard testimony from 18 witnesses on the issue of likelihood of confusion. The Court of Appeal decision appears to have been influenced strongly by the fact that a person who keys in either VCC or Vancouver Community College when performing a search using the Google® search engine, would likely see the respondent’s ad on the same page as the organic results containing the appellant’s listing.

More important to the issue of likelihood of confusion, is the clickthrough rate, to which neither the trial judge nor the Court of Appeal referred. The Court of Appeal decided that it is enough to prove passing off that the respondent’s ad appears on the same page as the appellant’s listing, irrespective whether the person making the search actually selects the respondent’s ad and is confused into thinking that the respondent is the appellant or that the respondent is connected with the appellant in a business sense.

The Court of Appeal also appears not to have appreciated the fact that passing off does not lie in normal circumstances unless it can be shown that the defendant is using the accused trademark or trade name as a trademark or as a trade name. There is no indication in the trial judge’s reasons that VCC, Vancouver Community College, or VCCollege.ca., are used by the respondent either as a trademark or trade name.

In the author’s opinion, Manson J.’s view that initial interest confusion likely is not an actionable offence under Canadian law, absent facts that point to actual deception, is correct. “Confusion”, in the trademark sense, normally refers to confusion of a continuing nature, but the kind of confusion that may result from the use of trademark keywords more likely is of a transitory nature. Passing off normally is not an effective alternative because the keyword/metatag/AdWord is not being used as a trademark, likelihood of confusion is problematic, and damages are difficult if not impossible to prove. The situation could be different if the advertiser has engaged in deception or misrepresentation.