Federal Court rules on Trade Marks as keywords
Russell Waters, Phillips Ormonde Fitzpatrick
The increase in businesses using the internet to promote their products and services has prompted a corresponding growth in the ways in which trade marks may be used and abused online.
Apart from obvious uses as domain names and on websites, trade marks may also be used as metatags (invisible tags which describe a web page’s content), or as keywords to optimiseparticular sites being found by search engines, such as Google. If a business uses its own trade mark for this purpose, there isn’t a problem, but issues can arise where a business uses a competitor’s mark on its website or as a keyword in a Google AdWords campaign. These issues were considered in the recent Federal Court case of Veda Advantage Limited v Malouf GroupEnterprises Pty Limited  FCA 255.
In 2011, the Australian Competition and Consumer Commission (ACCC) took action in the Federal Court of Australia against a number of traders in relation to use of trade marks as keywords. The action did not consider trade mark infringement, only misleading and deceptive conduct under the Trade Practices Act 1974 (the forerunner of the current Australian Consumer Law). The Court found that customers of Google’s Adwords program who used competitors’ trade marks and business names in sponsored links or advertisements, were guilty of misleading and deceptive conduct.
In one case, the Trading Post had registered the business name ‘Kloster Ford’ as a keyword, in circumstances where Kloster Ford did not in fact advertise through the Trading Post. The words ‘Kloster Ford’ appeared in the subject heading of the sponsored link generated by the AdWords program due to an automated ‘keyword insertion’ process. This sponsored link was found to misrepresent that the Trading Post was associated or affiliated with Kloster Ford, and that information regarding Kloster Ford cars could be found at the website. The Trading Post was fined, however there was no finding that use of trade marks as keywords per se was misleading or deceptive.
The ACCC also pursued Google for publishing the misleading advertisements and for allowing customers to register trade marks owned by competitors as ‘keywords’. This ultimately went on appeal to the High Court, which found that Google was not guilty of misleading or deceptive conduct in those circumstances. This left the onus squarely with advertisers to ensure that they did not infringe competitors’ rights nor mislead or deceive consumers.
In the recent case of Veda v Malouf, the Federal Court has again considered use of a competitor’s trade marks as keywords in a Google AdWords campaign.
Veda is a leading data analytics company in Australia, and its core business involves issuing credit reports on individuals and businesses to credit providers. These reports are issued by Veda as ‘Veda credit reports’ and are commonly referred to as ‘Veda files’ or ‘Veda reports’. Where individuals believe that a report is in error, Veda provides a facility for ‘repairing’ reports through the ‘Veda Resolution Centre’. It does not promote this
service or actually trade in providing such services; it is merely incidental to providing accurate credit reports. Veda has a number of trade mark registrations, including VEDA, VEDA ADVANTAGE, and other VEDA-derived marks in relation to various financial services.
Malouf is a credit repair business. On behalf of customers with poor credit ratings, it undertakes to remove disputable or contested listings from credit reports, including from ‘Veda reports’. As part of this service, Malouf obtains ‘Veda reports’ as an ‘authorised access seeker’ under the Privacy Act. It then prepares information to enable customers to contact the credit provider responsible for a negative listing who may, if satisfied with the information, ask Veda to remove the negative listing. To promote its services, Malouf developed a Google AdWords campaign. To attract customers wanting to contact Veda regarding a poor credit
report, they registered at least 86 keywords that incorporated the word VEDA. Veda sued, alleging infringement of its registered trade marks and breach of the Australian Consumer Law.
The Court found that use of the trade marks as keywords did not infringe, because the keywords were not visible to the consumer and were therefore not used as trade marks. The Court noted that courts in other jurisdictions had found that keyword use did infringe trade mark registrations. However, Australian law requires that, in order to constitute use as a trade mark, the mark must be used to distinguish between respective competitors’ goods or services. A mark cannot do this if it is only used as a keyword that is unseen and unheard by the consumer. The Court therefore found that Malouf’s registration of Veda’s marks as keywords was not trade mark use. However, as was found in the ACCC v Trading Post case, where a mark appears in a sponsored link, it is then visible to a consumer and this may constitute trade mark use.
Malouf successfully argued that in most of the hyperlinked advertisement headings, the word VEDA was not used as a trade mark, rather, the term was used descriptively. The Court found that headings such as ‘Fix Your Veda File’ or ‘Get Your Veda Credit File’, did not suggest that the services were supplied by Veda, only that the services provided by Malouf related to Veda files.
Whilst it may be disputed as to whether this was nevertheless use as a trade mark, section 122 of the Trade Marks Act 1995 provides a defence to infringement where a mark is used descriptively in good faith. Veda argued that Malouf’s conduct in registering so many VEDA-related keywords was inconsistent with good faith.
However, the Court found that Malouf’s conduct generally did not amount to an attempt to undermine Veda, or the integrity of its marks, so there was no lack of good faith. Although Malouf was successful in arguing that most of its AdWord headings were either not trade mark use, or were descriptive use in good faith, Malouf had also used the AdWord headings ‘The Veda Report Centre’ and ‘The Veda-Report
Centre’. These headings were found to be both use of the word VEDA as a trade mark, and a misleading suggestion that the associated link was connected to Veda and that the services offered there would be provided by Veda.
Veda ran an interesting argument in relation to their Australian Consumer Law claim, namely that Malouf’s conduct ‘as a whole’ was apt to mislead or deceive. However, the Court found that although it had been diligent in selecting a large variety of keywords relating to VEDA in order to target potential customers interested in cleaning or repairing their Veda file, it was not unlawful per se to target another party’s customers. They concluded that no customer would have been deceived by the conduct as a whole, particularly once they saw the context in which VEDA was used on the pages accessed through the various hyperlinked headings.
Somewhat surprisingly, Veda does not appear to have pleaded infringement of their registrations through use of their marks on Malouf web pages to which a consumer would be directed after following one of the hyperlinked headings. Whilst this was apparently raised in submissions at the hearing, the Court noted that it did not form part of Veda’s pleadings and considered that, in any case, the instances of use referred to appeared to be merely descriptive.
Veda was perhaps unlucky that the Court did not also find the heading ‘Veda Credit File Repairs’ infringed the VEDA registration, stating that this was merely descriptive use in relation to services offered by Malouf. However, since Veda offered (although it did not advertise) ‘repair’ type services in relation to their credit files (throughthe ‘Veda Resolution Centre’), and since ‘credit file repair’ services would clearly fall within the general ‘financial services’ covered by their registrations, it would appear at least as likely that this heading could be seen to relate to Vedabranded credit file repair services.
So, what does this mean for trade mark owners? Unfortunately, someone else using your trade mark just as a keyword will not infringe your trade mark rights in Australia. If you also have registrations overseas, and the goods or services are offered there, you may be able to prove infringement, since a broader definition of ‘use
as a trade mark’ may apply in other jurisdictions. However, if the keyword leads to a page where the mark actually appears, the Veda v Malouf decision confirms that if the mark is used online where a consumer can see it in relation to relevant goods or services being offered in Australia, it may not only breach the Australian
Consumer Law, but it may also infringe a trade mark registration for that mark.
If you have any questions about the use of competitor marks online, contact Russell Waters