In a “key” decision, the British Columbia Court of Appeal (“BCCA”) deals with IP issues when bidding for keywords in online search results.

Using a competitor’s trademark as a keyword for driving traffic to your website is not automatically offside Canadian trademark law. This does not mean, however, that Canada is an Internet “wild west”. If you are considering choosing a competitor’s trademark as a keyword to boost your search engine optimization strategy (SEO), take care as a critical factor will be what “message” is conveyed to the consumer when the search result is displayed to the searcher.

Facts

This case involves two very similarly named schools: Vancouver Career College and Vancouver Community College. Vancouver Community College alleged that Vancouver Career College used the acronym VCC in order to piggy-back off of Vancouver Community College’s reputation and educational services. This type of intellectual property infringement is known as “passing off”.

Back in 2015, the Supreme Court of British Columbia considered how the trademark regime functions within the context of the use of keywords in online activities, such as SEO. Merely purchasing a competitor’s trademark as a keyword for SEO, according to the court, did not result in a case for infringement of a common law trademark.

Vancouver Career College used Google™ AdWords™ services for keyword bidding. This program enables businesses to set a budget for advertising and only pay when people “click” on the ads. The ad service is largely focused on keywords. Businesses that use this type of service can create relevant ads from keywords that people use to search the Internet. The keyword then triggers the bidder’s ad to be displayed. If the ad is “clicked,” the user is directed to the website of the bidder.

When users searched for Vancouver Community College, using its acronym “VCC”, they received a sponsored link to the Vancouver Career College’s website. The ad displayed the domain VCCollege.ca. Once the user “clicked” on the domain name, the user was directed to Vancouver Career College’s website but the term “VCC” was not displayed. However, it was apparent the website related to only that of Vancouver Career College. In support, Vancouver Community College provided evidence showing users of online search engines who searched for “VCC” were directed to Vancouver Career College thinking it was Vancouver Community College.

The relevant timeframe for assessing whether confusion had taken place, according to the lower court, was once the consumer had reached and viewed Vancouver Career College’s website (VCCollege.ca), and not the earlier stage of when the consumer saw the initial search engine results page. As it was apparent that the website related to only the Vancouver Career College, there was no misrepresentation; Vancouver Career College was not liable for passing-off.

This decision was overturned by the BCCA.

On appeal, Vancouver Community College alleged that Vancouver Career College had misrepresented itself as VCC, particularly with regard to its bidding for the keyword “VCC” in search engines, and claimed that this acronym was its unregistered trademark. The appeal focused on the common law action of “passing off.” The court relied on the three components that make up or comprise passing-off in Canada: (a) the existence of goodwill, (b) deception of the public due to a misrepresentation, and (c) actual or potential damage.

The Search Engine Results Page is the “First Impression”

The Supreme Court of British Columbia based its conclusion of liability on the point in time in which the user first saw the mark. The critical moment was after the searcher clicked on a search result to arrive at the landing page. This differed on appeal. The BCCA found that while using the “first impression” test was correct, the lower court erred with regard to when to make that determination. It concluded confusion should be assessed at the earlier stage of the search engine results page which displayed the sponsored link. At par. 55, Saunders J.A. stated:

The issue before us in relation to the component of confusion is whether the judge erred in principle as to the moment for assessing confusion. In my view, while the judge correctly referred to the first impression test, he erred in delaying its application to the searcher’s arrival at the landing page, a moment well past the moment of first impression; the conclusion that the first impression does not occur until the searcher has reached a website by clicking on a search result, cannot be sustained on the authorities before us.

There was nothing about the domain name “VCCollege.ca” that distinguished its owner, Vancouver Career College, from Vancouver Community College. Further, there were no words or letters that disclaimed affiliation with Vancouver Community College. According to the BCCA, it was an error for the judge to discount the likelihood of confusion before the searcher arrived at the landing page of the website. As such, the search engine results page constituted a misrepresentation.

In order to establish the second component of passing off, namely, deception of the public due to a misrepresentation, Vancouver Community College also asked the court to go further and find that the practice of bidding on keywords, including “VCC” and “Vancouver Community College” is sufficient to satisfy the second component of passing off. The BCCA disagreed and found bidding on a keyword is not sufficient to amount to a component of passing off. The critical factor in the confusion component is the message communicated - how the defendant presented itself. Merely bidding on words, by itself, is not delivery of a message.

Given there was interference with Vancouver Community College’s goodwill as a result of the confusion, which was sufficient to establish damage, all three components of passing off were established.

Although using a competitor’s trademark as a keyword is not alone sufficient to constitute passing off, caution must be taken given it is the nature and content of the sponsored link that appears as a result of the keyword and the message which it conveys to the consumer that could lead to infringement.