Trade Marks in online advertising – if it’s invisible, is it an infringement?

Internet search engines are vital tools in an increasingly competitive business environment, and that places a premium on methods for ensuring that your business appears at or close to the top of the “results” list. Two recent cases raise the question of when Company A can lawfully use words associated with Company B’s trade marks to deflect the searcher away from Company B and towards Company A.  Specifically when will that constitute a trade mark infringement, when will it constitute misleading and deceptive advertising, and when will it be both?

Trade mark infringement occurs only if the infringer uses a registered trade mark ‘as a trade mark’. That leads to difficult issues when a third party uses a registered trade mark in the context of both metadata and keyword search advertising.

The Accor decision: trade mark use in metadata can constitute infringement

The Harbour Lights case involved a dispute involving trade mark rights in the name of a building. The developer of a residential complex in Cairns owned the registered trade marks ‘Harbour Lights’ and ‘Cairns Harbour Lights’ for rental and accommodation letting services. It licensed the use of those trade marks to Accor, the appointed on-site letting agent. The defendant operated a business in competition with Accor’s short-term letting operations.

The defendant’s website used the term ‘Harbour Lights’ in its source code. Both the developer and Accor argued that this constituted trade mark infringement and misleading or deceptive conduct under the Australian Consumer Law. The Court agreed, finding that the defendant had infringed the trade marks.

The trial judge accepted that the source code “was visible to those who know what to look for.” On appeal, the Court noted the source code was “used by a search engine” and that it did not matter that the ordinary user of the site could not see the trade mark ‘Harbour Lights’ which was being used by the defendant. Putting the trade mark in the source code was itself a breach of the trade mark and therefore illegal.

The Veda Advantage case: trade mark use in Google AdWords may not constitute infringement

The Veda Advantage case was a dispute involving the use of registered trade marks as keywords and in the title tags and descriptions of sponsored link advertising in the Google AdWords program.

The defendant used the Google AdWords program to advertise, promote and direct consumers to its websites. One of the campaigns the defendant had run involved the use of 86 keywords that comprised of or contained the word ‘Veda’. Veda Advantage Limited was the owner of several registered trade marks, including ‘Veda’ and ‘Veda Advantage’.

The court held that the defendant’s use of the ‘Veda’ keywords was not a trade mark use, as the defendant merely selected and provided the keywords to Google, which was not indicative of a connection in the course of trade between the services provided by the defendant, and the services provided by Veda. Using the trade mark as a keyword did not constitute trade mark infringement and was therefore legal.

What does this mean?

The Accor decision serves as a warning sign to businesses intending to use their competitors’ registered trade marks in website source code. That can amount to trade mark infringement, even though the metadata is not visible to an ordinary internet user and can only be viewed by performing advanced technical functions.

By contrast, the purchase and use of a competitor’s trade mark as a Google AdWord (in and of itself) will not amount to trade mark infringement.  The rationale for this is that Google AdWords are invisible to consumers and therefore cannot function as a ‘badge of origin’, as is required to establish trade mark infringement.

With respect to the courts which delivered the decisions above, which were simply deciding those cases on the facts before them, this distinction seems artificial.

In each case:

  • the registered trade mark was being used to attract the attention of consumers searching for a competitor’s goods or services; and
  • the trade mark was essentially invisible to a regular consumer and could only be viewed by performing particular functions in an internet browser.

It is intriguing to note that one form of conduct was unlawful, and the other perfectly permissible, when the intention and practical effect of each form of conduct was the same.

It will be interesting to see how the courts (both in Australia and internationally) approach these issues in an increasingly digital environment.

In the interim, however, the position appears to be that:

  • a competitor may purchase and use another party’s registered trade mark as a Google AdWord, no matter how distinctive it is, and avoid liability for trade mark infringement unless accompanied by other conduct (such as using the trade mark in the Google Ad itself or on the linked website); but
  • a competitor can be found liable for trade mark infringement if it uses another party’s registered trade mark within website source code unless it can establish a viable defence, the trade mark is being used in a descriptive sense, or it can otherwise show that it has not used the trade mark ‘as a trade mark’.

Disclaimer

This article is general commentary on a topical issue and does not constitute legal advice. If you are concerned about any topics covered in this article, we recommend that you seek legal advice.

Queries

For further information please contact the author Charlotte Nielsen, Consultant (Brisbane),  Andrew Sutherland, Partner (Sydney), Robyn Purdy, Senior Associate (Melbourne), or any member of our Intellectual Property team.

The Author

Charlotte Nielsen

CONSULTANT, BRISBANE