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Keyword advertising: practical considerations for advertisers

Intellectual Property
Keyword advertising: practical considerations for advertisers

Keyword advertising has quickly become one of the most commonly used methods of online advertising. However, whether using a third party’s trademarks as keywords in keyword advertisement could potentially lead to liability for trademark infringement or passing off has been a relatively undeveloped area of trademark law.

Recent jurisprudence from British Columbia, in particular, the decision of the British Columbia Court of Appeal in Vancouver Community College v. Vancouver Career College (Burnaby) Inc, 2017 BCCA 41, rev’g 2015 BCSC 1470 (Career College) considers this issue in greater detail and provides some guidance on how to mitigate risk of liability for trademark infringement or passing off when using keyword advertising. Based on this decision, advertisers likely need to ensure that sponsored links used in keyword advertising sufficiently distinguish the advertisement from a competitor’s trademark to minimize the risk of liability.

In keyword advertising, advertisers pay to have their advertisements included in the search results listing when a particular search term or “keyword” is used on a search engine. The advertisements generally appear as a “sponsored link” separate from “organic” search results. Google AdWords is the most well known keyword advertising platform and has come to exemplify the practice. A common strategy is for advertisers to purchase keywords relating to a competitor, including the competitor’s business name or trademark. When a consumer searches for the competitor using the name or trademarks, the advertiser’s sponsored link appears. In some cases, the competitor’s trademarks may be integrated within the sponsored link itself. At issue in the Career College case was the propriety of this practice, which has potential pitfalls including potential liability for trademark infringement or passing off.

In Career College, Vancouver Community College sued Vancouver Career College for trademark infringement alleging that the career college’s use of the community college’s VCC unregistered trademark in keyword advertising was causing confusion among consumers and constituted passing off. However, the career college website made no references to Vancouver Community College and it was clear upon visiting the website that it was not in any way affiliated with Vancouver Community College. The lower court had found and the BCCA agreed that bidding on keywords by itself did not cause confusion. The BCCA further stated that what was important was how the advertising party had presented the advertisement and itself. The BCCA, therefore, concluded that merely purchasing a competitor’s trademark as a keyword in online advertising was not sufficient to demonstrate trademark infringement or passing off. However, the BCCA concluded that sponsored links could be presented in a way that caused consumer confusion and would lead to liability for trademark infringement or passing off. In coming to this conclusion, the BCCA had to consider the time at which confusion was to be assessed where keyword advertising was concerned. The lower court had determined that confusion should be assessed no earlier than when the consumer reaches a website. This effectively validated keyword advertising using a competitor’s trademark regardless of how the trademark was presented in the advertisement, provided there was no likelihood of confusion based on the contents of the website.

The BCCA disagreed, however, and stated that confusion was to be assessed at the time the consumer views the search results as that is when the consumer’s first impression arises. The court found, therefore, that confusion was likely as the career college’s domain name “VCCollege.ca” did not distinguish it from Vancouver Community College and there were no words, letters or any additional matter in the advertisement that disclaimed affiliation between the parties.

Keyword advertising by itself is unlikely to be trademark infringement. However, the actual use of a competitor’s trademark in keyword advertising is to be avoided. Moreover, the domain name should not incorporate the competitor’s trademark and sponsored links should be tailored to not create any association with the competitor’s trademark or brand or are not misleading or misrepresentative of such an association.

Andrew Kaikai and Lei Gao are associates with the intellectual property law firm of Ridout & Maybee LLP, practising in the Ottawa and Toronto offices, respectively.

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