Buying a competitor’s trademark as a keyword for online advertising is not infringement, according to a recent decision by the Federal Court of Australia. In rendering its conclusion, the Court in Veda Advantage Limited v Malouf Group Enterprises Pty Limited,  255 FCA relied on evidence that the keywords were not visible to consumers and were selected and provided to Google by the respondent, rather than being used to identify a commercial source. However, the use of the mark in a “sponsored link” in connection with the same services as those of the registered mark was considered an infringement in certain circumstances.
Search engines, such as Google, make web searches easier by allowing users to enter various terms into a search box. When performing this search, Google displays both “organic” and “sponsored” search results. Search engine optimization (SEO) improves the priority of listing a business in organic search results. Businesses can maximize their exposure by using code, content, and website design that relate to commonly searched keywords. Sponsored links, on the other hand, are advertisements that can be created, edited, and monitored by advertisers. Sponsored links are triggered by keywords privately provided by the advertiser to Google.
In Veda, the applicant was one of the major credit report providers in Australia and owner of the trademarks VEDA, VEDA ADVANTAGE, VEDACHECK and VEDASCORE. Defendant Malouf’s business has helped people repair or correct bad credit reports. Malouf bought advertisements for his business through Google AdWords. Malouf selected over 85 keywords containing the word “veda”, such as “veda”, “contact veda” and “veda credit score”.
The Court was asked to determine whether the purchase of keywords using the plaintiff’s mark constitutes trademark infringement. He took into account expert testimonials from a digital marketer. The Court ruled that Malouf’s purchase of keywords using the VEDA trademark did not infringe Veda’s trademark rights for the following reasons:
- The keywords have not been used to indicate a link between the services of the defendant and those of the plaintiff.
- The keywords could be acquired by anyone; the keywords did not fulfill the function of the mark in identifying one commercial source to the exclusion of others. The use of keywords as search terms produced not only the defendant’s ads, but those of its competitor.
- The keywords are invisible to the consumer, so the consumer does not know which keyword is driving the results.
The most important point for the Court was that the keywords were invisible, inaudible and imperceptible to the consumer. The keywords could not be understood to distinguish the services of one merchant from those of another because the consumer is not aware of their implication. In arriving at this decision, the Court relied on another Australian case, Accor Australia and New Zealand Hospitality Pty Ltd v Liv Pty Ltd,  FCA 554, involving metatags. In Accor, it was also held that the use of metatags consisting of words protected by a trademark does not constitute trademark infringement.
With respect to the sponsored links that referred to VEDA, the Federal Court of Appeal also found no infringement (in all but two cases) in accepting the defendant’s position that the use of the mark in the The sponsored ad was in the context of the defendant’s personality description. Business:
“[…] I am not convinced that Malouf used the Veda trademarks as trademarks. On the contrary, it seems to me that they were used to describe the object to which his services are directed – repairing, cleaning or repairing Veda credit records or reports – not as a badge of the origin of his company and therefore not as a brand. .
Some of the accused’s sponsored advertisements include phrases such as “Fix your Veda file now” and “Fix your Veda history now”. These were not found to be infringing. However, the Court found that two sponsored advertisements for “The Veda Report Center” and “The Veda-Report Center” infringed the VEDA mark because it was used in connection with services for which those marks were registered.
Canadian Courts Reach Similar Conclusion Regarding Metatags
Last year, the Federal Court of Appeal upheld the lower court decision that the use of metatags with marks similar to the point of confusing them with the registered trademarks of the applicant did not constitute trademark infringement. A meta tag is a word or small phrase that is included in the source code of a website, but does not appear on the visible web page. Internet search engines can use metatags as a means of identifying relevant web pages and ranking websites, which are displayed in search results.
In Red Label Vacations Inc. (redtag.ca) v. 411 Travel Buys Limited (411travelbuys.ca) (2015 FCA 290), the central question was whether 411 Travel’s use of metatags that included the RedTag trade name constituted trademark infringement. In that case, the defendant naively copied metatags from the plaintiff’s website. However, the inclusion of the metatags did not take the consumer directly to the 411 Travel website; rather, because they had been directly copied, they asked potential consumers to book their travel arrangements on the applicant’s website.
In addition, the metatags were not visible on the defendant’s website, but displayed in association with the defendant’s website in the list of search results. The list of search results allowed the consumer to make an independent choice and, therefore, the display of the mark in the list did not constitute infringement. the Red label decision appears to be aligned with the Australian decision in Accor.
Taken together, these cases reflect the evolution of the court’s approach to enforcing and enforcing intellectual property law online. Both Veda and Red label suggest that it may be difficult to establish trademark infringement on the basis of keywords or metatags that are not visible to the consumer. Specifically, in both cases, the courts were unable to conclude that the defendants had used the mark in association with its services.