Can you use a competitor’s Trade Mark in Google AdWords?
Published on June 6, 2016 by Selwyn Black
Keywords and sponsored links
Google AdWords is an online advertising service. One of its features is sponsored links. Sponsored links are advertisements triggered by keywords supplied by the advertiser. When a user conducts a Google search with a word or phrase including a keyword, the search results page displays the sponsored link in addition to the search results. Advertisers pay Google when a user clicks on their sponsored link. For example, if you type in ‘plumber’, the following sponsored links appear. The below plumbing businesses would have included ‘plumber’ as a keyword, leading to their sponsored link being displayed in the search.
It is commonplace for advertisers to use competitors’ names and trade marks as keywords in Google AdWords. This means the advertiser’s sponsored link will appear when someone searches for their competitor. It makes sense from a marketing perspective to target competitors’ potential customers – after all, they are searching for a product/service that you offer. Further, the more search results your sponsored link appears in, the more likely you are to get business from Google search users. Occasionally an advertiser will also include competitors’ names and trade marks in the text of the sponsored link. There are many circumstances where the use of trade marks by advertisers, even those owned by competitors, is “quite legitimate”: ACCC v Trading Post Australia  FCA 1086 per Nicholas J. So what isn’t legitimate? This was recently considered in the Australian case Veda Advantage Limited v Malouf Group Enterprises Pty Limited.
Veda Advantage Limited v Malouf Group Enterprises Pty Limited
This case considered whether the respondent Malouf’s use of words that are also Veda’s registered trade marks or which are the same/similar to those marks constitutes trade mark infringement. The case also considered whether this behavior constitutes misleading and deceptive conduct and/or false or misleading representations, but this is not the focus of this article.
Veda is a data analytics company and claims to be the leading provider of credit information and analysis in Australia. Veda owns a number of Australian registered trade marks, including “VEDA”, “VEDA ADVANTAGE”, “VEDACHECK” and “VEDASCORE”.
Malouf is a credit repair company. It helps consumers with poor credit ratings rectify errors in credit reports – for example, those issued by Veda. Malouf used Google AdWords to advertise its business. When the case was heard, eighty-six of its keywords consisted of or incorporated the word “veda”. Some of its sponsored links also included
“veda”. Veda alleged that Malouf’s use of the word “veda” as keywords and in the text of the sponsored links was trade mark infringement.
To understand the case, we need to go back to basics. A trade mark is a sign which distinguishes a trader’s goods or services from other traders. Under section 120 of the Australian Trade Marks Act, a person/company infringes a trade mark when they use as a trade mark a sign that is substantially identical with, or deceptively similar to, the trade mark in relation to goods or services in respect of which the trade mark is registered.
It was agreed by both parties that Malouf had used a sign that was substantially identical with or deceptively similar to the Veda trade marks. The main issue considered by the Court was whether Malouf’s use of “veda” in Google AdWords keywords and/or the references to “veda” in the text of its sponsored links involved use of the word “veda” as a trade mark for the purposes of section 120 of the Trade Marks Act.
Trade Mark Use – Keywords
Justice Katzmann held that Malouf’s use of ‘veda’ in keywords was not a trade mark use for a number of reasons. Firstly, the advertiser, in this case Malouf, simply selects keywords and provides them to google. This is not use that indicates a connection between the services provided by Malouf and the services provided by Veda. Secondly, keywords involving the word “veda” may be used by anyone under the Google AdWords program, including Malouf’s competitors. Thus when a consumer searches using one of these keywords, sponsored links of Malouf’s competitors may appear. They may also appear in organic search results. Thirdly and perhaps most importantly, the keywords are invisible to consumers. Justice Katzmann stated that “the proposition that using words which are invisible and inaudible, indeed imperceptible, to consumers is using them as a trade mark makes no sense”. After all, keywords cannot be seen to distinguish the services of one trader from another when no one can see the keywords.
Trade Mark Use – Sponsored Links
Unlike keywords, the use of the Veda trade marks in Malouf’s sponsored links was visible, making it more complicated. A number of phrases were used by Malouf in their sponsored links, such as “Get your Veda File” and “Veda Credit File Repairs”. Justice Katzmann considered the use of “Veda” in most of the advertisements such as the two above was use of the Veda trade mark in a descriptive sense and not as a trade mark. That is, the use of “Veda” served the function of describing the object to which Malouf’s services are directed, that being fixing, cleaning or repairing Veda credit information reports. Two of Malouf’s sponsored link advertisements were titled “The Veda Report Centre” and “The Veda-Report Centre”. Justice Katzmann did not see these as being descriptive. She stated that in these advertisements ‘Veda’ was used as a “badge of origin” to indicate a connection between Malouf’s business and Veda. These two sponsored links thus constituted infringement of Veda’s trade mark.
In Veda Advantage Limited v Malouf Group Enterprises Pty Limited [No 2], Justice Katzmann granted an injunction permanently preventing Malouf from using the phrases “The Veda-Report Centre” and “The Veda Report Centre” in its sponsored link advertising. She also ordered that Malouf pay 20% of Veda’s costs.
A Pyrrhic Victory
Justice Katzmann commented in the later proceedings, that “Veda’s victory was certainly modest”. Indeed, the proceedings did not stop Malouf from using its trade marks as keywords. Nor did it stop Malouf from using ‘Veda’ in a descriptive manner, which covered the majority of its sponsored links. Veda only succeeded in proving that the sponsored links headed “The Veda Report Centre” and “The Veda-Report Centre” constituted trade mark infringement. Those advertisements were only run for a total period of two weeks. In fact, Veda was not even aware of those sponsored links at the time it initiated legal proceedings. This was truly a pyrrhic victory for Veda.
What can we take away from these judgments? Firstly, in Australia including a competitor’s name/trade marks as keywords in Google AdWords does not constitute trade mark infringement. Secondly, advertisers need to be careful with how they include a competitor’s name/trade marks in sponsored link advertisements. Advertisers should only do so in a descriptive way if they want to avoid legal action. If this is all a bit confusing, it is best get legal advice about the ins and outs of Google AdWords.