Canadian Supreme Court Issues First Ruling on Legality of Keyword Advertising

Google adwords program has  given rise to legal controversy, provoking a wave of litigation across several countries. However, until recently no Canadian Court had addressed the legality of an advertiser using a competitor’s trade mark related keywords in terms of whether this constituted either trade mark infringement or false, deceptive or misleading advertising.

In the case of    Private Careeer Training Institutions Agency v Vancouver Career College (Burnaby) Inc the British Columbia Supreme Court held that bidding on a competitor’s trade name in connection with keyword advertising is not misleading.

The Plaintiff alleged  the defendant had engaged in false, deceptive or misleading advertising by using competitors’ business names as keywords in their google or yahoo advertisements. They sought an injunction against their practice on this basis which was denied by the Court.

As part of its web promotional strategy, the defendant used keyword advertising, whereby they paid Google and Yahoo for links to its websites to appear as sponsored links, selecting    keywords to describe its website which incorporated the trade marks and business names of it’s competitors.

Although the Plaintiffs framed it’s legal argument as a claim involving false, deceptive or misleading advertising, as opposed to traditional trademark violation or passing off, the Court surveyed case law which made reference to trademark and passing off concepts in it’s assessment of what is confusing or misleading in the context of alleged improper advertising.

The Court acknowledged that there was no Canadian precedent to draw upon on the legality of keyword advertising which uses the business name of competitors. However, as stated above,  the Judge drew upon jurisprudence which had evolved in the area of trademark law to glean what is mean by the term ‘confusing’ or ‘misleading’.  The Court reasoned that an  essential element to a claim of statutory passing off under S7(b) of the TradeMarks Act is the presence of ‘confusion’.

To determine whether the use of trademarked keywords are confusing there must be a determination of their effect on those persons who normally comprise the relevant market for those services.  Applying this reasoning, the Court concluded that the only question was whether the Plaintiff’s use of Keyword Advertising in it’s internet marketing campaign was misleading. The Judge rejected the Plaintiff’s assertion that two students were as a  deceived or misled by the Plaintiff’s web promotional strategy, and was unpersuaded that the strategy had or could in the future lead a potential student to make an error of judgement based on confusion.

The defendants’ contention was that its aggressive internet advertising strategy was essentially a contemporary version of  a common marketing practice of a company placing its advertisement in close proximity to a competitor’s advertisement.

This argument found favour with the Court who noted that “the practice of using Keyword Advertising is no different than the time-honoured and generally accepted marketing practice of a company locating its advertisement close to a competitor’s in traditional media (e.g., placing its Yellow Pages advertisement next to or in close proximity to a competitor’s telephone number  in the same directory so that potential customers of that competitor discover there is another company offering a similar product or service and that they, the consumer, have a choice

The ruling seems eminently sensible, as nobody would suggest that it is illegal or unfair for a car company to purchase an advertisement  next to the classified listings for car dealers or a trader to seek to have their products placed next to a competitor’s products on a supermarket shelf.

Related posts:

  1. L’Oreal SA v Bellure NV – Attack on comparative advertising
  2. Court refuses AutoDESK trademark protection for .dwg file extension
  3. ECJ rules in Google’s favour in trade mark keyword infringement case
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4 Responses to Canadian Supreme Court Issues First Ruling on Legality of Keyword Advertising

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