Keyword Advertising May Be Confusing After All

Torys Quarterly: Adapting to Change

Recent rulings reveal how keyword advertising is being dealt with by courts. How should businesses stay ahead of these disputes?

A recent decision by the Court of Appeal for British Columbia, in a reversal of a 2015 British Columbia Supreme Court ruling (as we previously reported here), found that the manner in which Vancouver Career College advertised the keyword “VCC” did in fact constitute passing off its services as those of the plaintiff, Vancouver Community College.2

What is Keyword Advertising?

A website operator can place bids with search engines like Google for specific keywords to be associated with their website. When a keyword is searched, the search engine will display the highest bidder’s ad or website as a “sponsored link” (clearly distinguished from organic results). When that link is clicked, the website operator will be charged the amount of its bid.

The Court’s Decision

By itself, keyword advertising of another party’s trademark does not constitute passing off. Rather, the context and manner in which an advertiser bids on certain keywords must be taken into account. In this case, the respondent’s purchase of the keyword “VCC” generated most of the traffic to its website VCCollege.ca such that the respondent’s advertisements almost always appeared in searches for the term “VCC.” The search results for VCCollege.ca also displayed the VCC component in bold lettering (i.e., VCCollege.ca). This was important context for the Court’s decision.

The Court noted that the 2015 decision incorrectly afforded no weight to the appellant’s extensive evidence demonstrating how “VCC” had become identified in the public mind with Vancouver Community College. In assessing this evidence, the Court found that Vancouver Community College had indeed accumulated goodwill in the mark “VCC” which had been interfered with by the respondent. This finding was sufficient for the Court to determine that Vancouver Community College had suffered potential damages as a result of the respondent’s misrepresentations.

The Court reaffirmed that the established confusion test to be applied is that of the first impression made in the mind of a “casual consumer somewhat in a hurry,” rather than a person with working familiarity with search engines, capable of sifting through search results.

The Court also found that the 2015 decision incorrectly determined that the “first impression” for the purpose of assessing confusion occurs when a searcher arrives at the competitor’s landing page through a link from the search engine results. The correct time to assess confusion is when the search engine results were generated and displayed, since that is the moment of first impression in the mind of a consumer. The fact that a searcher has the ability to retreat from a competitor’s website and continue with a search does not mean that keyword advertising cannot lead to confusion. The Court reaffirmed that the established confusion test to be applied is that of the first impression made in the mind of a “casual consumer somewhat in a hurry,” rather than a person with working familiarity with search engines, capable of sifting through search results.

What’s Next?

In light of this recent decision, businesses that rely on online advertising, particularly keyword advertising that comprises a competitor’s trademarks, should review their current keyword bidding practices. The Court has clearly set out that the test for confusion occurs at the time the search engine results are generated. Further, this decision reaffirms that the test person for confusion is that of an “average consumer” and not someone who has a more sophisticated understanding of search engine results. As a result, advertisers should consider if search results pages that are generated through their keyword bids would be seen as likely confusing with their competitor’s trademarks.

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1 Vancouver Community College v. Vancouver Career College (Burnaby) Inc.. 2015 BCSC 1470.

1 Vancouver Community College v. Vancouver Career College (Burnaby) Inc., 2017 BCCA 41.

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