When using the Google AdWords advertising service, can a business legally use its competitors’ trade marks as keywords and in the headings of sponsored links?
The AdWords service works by an advertiser nominating certain keywords which, if entered into the Google search engine by a internet user, display the advertiser’s sponsored links. Sponsored links appear at the top of the search results, and are marked as advertisements, distinguishing them from the ‘organic’ search results. Google charges the advertiser a small fee for each time a person clicks on a sponsored link.
The recent Federal Court decision, Veda Advantage v Malouf Group Enterprises considered the legalities of using a competitor’s trade marks as keywords and in the headings of sponsored links.
Veda is a company that maintains a creditworthiness register. It does so under the trade mark VEDA.
Malouf, a credit repair company, used “veda” as a keyword in the AdWords service, and in the headings of sponsored links. The keywords included: “contact veda”, “veda credit score”, “veda phone number”, “my veda file”, and similar variations. When entered in Google, this would result in Malouf’s websites appearing as sponsored links at the top of the search results.
The sponsored links had headings that included: “Clean Your Veda File”, “Fix My Veda History”, “Repair Your Veda Score” and, importantly, “The Veda Report Centre”.
Veda alleged that the use of the word “veda” in the keywords and sponsored link headings infringed Veda’s registered trade marks and constituted misleading and deceptive conduct under the Australian Consumer Law.
The Court’s decision – trade mark infringement
In considering the question of trade mark infringement, the Court applied the conventional test namely whether, in the course of trade, the mark was used as a “badge of origin” so as to differentiate the services of one trader from those of another.
The single judge in this case, Justice Katzmann, did “not accept that the use of a sign which is invisible to the consumer is use as a trade mark within the meaning of the Trade Marks Act”.
The court held that Malouf’s use of the word “veda” in the keywords did not constitute an infringement because the keywords, not being visible to consumers, could not act as a “badge”.
Malouf’s use of “veda” in most of the sponsored link headings did not infringe the trade marks because the headings merely alluded (in a descriptive way) to the services offered by Malouf — “fixing”, “cleaning” or “repairing” Veda credit files or reports.
However, the heading “The Veda Report Centre” was not so descriptive, and instead marketed Malouf’s business under the Veda name. Being in the context of an advertisement for Malouf, the heading likely indicated to consumers that there was a connection between Malouf’s business and Veda, thereby infringing Veda’s trade mark.
The court’s decision – misleading and deceptive conduct
The court held that the keywords, not being visible to consumers, were not capable of misleading a consumer, and that Malouf’s conduct in this regard did not breach the Australian Consumer Law.
Regarding the sponsored link headings, the court held that, for most of the headings, the use of the word “veda” would not mislead a consumer. The Court commented that a consumer would not be misled due to the descriptive nature of the headings, and due to the fact that the subheadings, URLs, and the websites themselves did not contain representations which would mislead a consumer into believing that they were interacting with Veda.
However, the use of the heading “The Veda Report Centre” was found to constitute misleading and deceptive conduct. The Court held that a reasonable consumer would be likely to think that “The Veda Report Centre Centre” was a place or business operated by Veda or a related or authorised company. The term “The Veda Report Centre” used the definitive article “The”, and had an “authoritative air”. It was therefore likely to mislead a consumer, particularly given the coexistence of the Veda Resolution Centre, operated by Veda.
The conduct was misleading even though after the link was clicked, the Malouf website did not refer to Veda. By that stage, the Court held, a consumer would have been “enticed” into Malouf’s “marketing web”.
The Veda decision demonstrates that, where a competitors’ trade mark is in a keyword that is not visible to consumers, or if a mark is used descriptively, a trade mark infringement is unlikely to have occurred. Likewise, a breach of the Australian Consumer Law is unlikely to have occurred where a representation is not visible to a consumer, or where the representation, in all the circumstances, is unlikely to mislead. However any visible use of a competitor’s name or trade marks may (depending on the manner of use) amount to trade mark infringement and/or misleading or deceptive conduct.
It is also important to note that this was the judgment of a single judge, and we do not have guidance from an appellate court in relation to the use of a competitor’s trade mark as keywords and in metadata.
Advertising on search engines is a key component in a business’ marketing strategy. In light of the Veda decision, we recommend a health check of your business’ online advertising strategies, including whether and how your competitors’ use your trade marks in their sponsored links.
If you need any assistance or advice, please contact either Daniel Kovacs, Principal Lawyer, on (03) 8600 8859 or email@example.com or Jeremy Goldman, Principal Lawyer, on (03) 8600 8886 or firstname.lastname@example.org.
Note: This update is a guide only and is not intended to constitute legal advice.