March 16 2017
Trademarks and keyword advertising: a matter of first impression
The Court of Appeal for British Columbia recently rendered an interesting decision with regard to keywords on the Internet1. Is the practice of purchase competitors’ trademarks as keywords allowed in Canada? How far is this practice tolerated?
Did You Say “Keywords”?
When Internet users do searches on the Web, two different types of results come up: “organic” search results (over which advertisers have little to no control) and “sponsored links” (for which the advertiser has to pay). The process by which advertisers can show sponsored links is commonly called “keyword advertising” and is similar to auctions.
Keyword advertising gives advertisers the opportunity to buy specific keywords to associate with their company. Some advertisers buy their competitors’ trademarks as keywords. Is the practice allowed in Canada? Up to now, the few decisions on the issue did not sanction the use of a third party’s trademark in the context of keyword advertising. However, the Court of Appeal for British Columbia recently held that bidding on keywords, combined with a confusing advertising message, can amount to passing off.
One Acronym for Two Colleges
The Vancouver Community College v. Vancouver Career College (Burnaby) Inc. case opposed two post-secondary education establishments with similar names: the Vancouver Career College (“Career”) and Vancouver Community College (“Community”).
Career bought Community’s VCC acronym as a keyword for its keyword advertising. Users who searched for Community using its acronym “VCC” would see, as part of the search results, a sponsored link (including the domain name VCCollege.ca) leading to Career’s website. Also of note, nothing in the advertisement allowed users to distinguish between Career and Community. However, Community’s website did not use the acronym “VCC” (or any other mark of Career) and it was somehow apparent that the website related to Community (and not Career).
In this context, Community initiated a passing off action in order to stop Career from using Community’s trademark. In particular, Community alleged that the use of “VCC” by Career created confusion with regard to the colleges’ identities and that said misleading representation caused damages to Community.
Confusion: A Matter of First Impression
In 2015, the Supreme Court of British Columbia concluded that buying a competitor’s trademark as a keyword was not in itself problematic. The Court also stated that the confusion must occur when consumers reach the defendant’s website (Career) and not when the search results are displayed in the browser. In the case at hand, if there was any confusion when the search results were displayed, it was dispelled “one click away” when the consumer landed on the defendant’s website.
The Court of Appeal for British Columbia overturned this decision at the beginning of the year.
First, the Court of Appeal reaffirmed that simply bidding on a keyword was not enough to successfully bring a passing off action: the use of the keyword must also cause confusion. On this point, the Court of Appeal held a different position than the Supreme Court of British Columbia: the former concluded that the risk of confusion must be assessed when the search results are displayed (and not “one click away”, when the user lands on the website). By applying this principle, the Court of Appeal concluded that there was passing off in this instance because Career’s use of “VCC” created confusion in the consumer’s mind when the search results were displayed, and the displayed sponsored links did not allow to differentiate between the two entities. As result, there was interference with Community’s goodwill which was sufficient to establish damages.
Need for Caution
In light of this decision, bidding on a competitor’s trademark as a keyword may not be an issue in itself… at first glance. Indeed, there is a need for caution: if the sponsored link that is displayed is likely to mislead consumers, then the risk of passing off increases. Moreover, for some industries, this practice is simply prohibited by their industry codes.2
1Vancouver Community College v. Vancouver Career College (Burnaby) Inc., 2017 BCCA 41.
2See for example the PAAB Code for pharmaceutical advertising.