In the competitive world of online advertising, brands look for any advantage they can find to improve website traffic and conversions. Search engine optimisation (SEO) and search engine marketing (SEM) are two of the many online marketing fronts where businesses compete. However, recent case law shows that using a competitor’s trade mark to get a boost from online searches may expose companies to legal liability.
This blog is the sixth in a series on Marketing your Startup: Risks, Tips and Traps which will highlight some key risks which startups should watch out for and some tips to avoid the risk of a legal claim. See our other blogs here.
What are the risks?
A trade mark is a way to identify your unique products or services and can be more than just a name or logo. It could be a number, word, phrase or even a sound or scent. A good trade mark will help to distinguish your goods or services from other traders. In the context of SEO and SEM, however, trade mark questions typically arise where a company has registered their business name or slogan as a trade mark and a competitor then tries to leverage that business name or slogan to compete via search engine results.
Section 120(1) of the Trade Marks Act 1995 (Cth) provides that a person infringes a registered trade mark if the person uses 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.
The key words in the context of SEO and SEM are “uses as a trade mark”. There are myriad ways in which a company might refer to or even represent a competitor’s trade mark during the course of business online that do not meet the threshold test of “use as a trade mark” and thus do not amount to trade mark infringement. In other cases, however, using your competitor’s trade mark can lead to hefty financial penalties. The Courts have already explored some scenarios.
In the leading case of Veda Advantage Limited v Malouf Group Enterprises Pty Limited  FCA 255, the Malouf Group was found to have infringed a competitor’s trade mark in Google Adwords results. The Malouf Group ran a credit repair business called Credit Repair Australia, while Veda ran a credit reporting business. Malouf’s business involved attempting to help people improve their credit ratings by making submissions to Veda. To secure customers, Malouf developed Google Adwords campaigns using “Veda” as a keyword, and also used “Veda” in its SEO. When a person undertook a search using the word Veda, Veda’s own website link would appear at the top of the organic search results, but so would advertisements for Malouf’s credit repair business in the paid advertisements at the top of the search results page.
When considering if Malouf’s use of the word Veda was “use as a trade mark” the Court asked whether Malouf had used it as a badge of origin, in the sense that it indicated a connection between the Malouf Group’s services and Veda’s trade mark.
In the context of SEO, the Court found that Malouf did not use the Veda keywords as a sign to distinguish its services from others, but simply as a means to identify users who might have an interest in using its services. Importantly, the keywords used for SEO were not visible to customers, because they featured in the back-end of the website. In the context of SEM, however, the decision was different. For at least two years, Malouf had used ‘Veda’ in various hyperlinked advertisements appearing on Google, including “Clean your Veda File”, “Fix My Veda History”, “Fix Veda File”, and “The Veda Report Centre”. Malouf argued that these uses were purely descriptive of the character of its business, namely the repair of Veda credit reports. In the majority of cases, the Court agreed. However, in the case of the advertisements containing ‘The Veda Report Centre’ and ‘The Veda Report-Centre,’ the Court concluded that the use of ‘Veda’ was use ‘as a trade mark’, designed to indicate a connection between Malouf and Veda, and also amounted to misleading or deceptive conduct in breach of the Australian Consumer Law.
Similar issues were considered in Lift Shop Pty Ltd v Easy Living Home Elevators Pty Ltd , a case involving the company Lift Shop Pty Ltd, which owned a logo trade mark (i.e. a logo) for “LIFTSHOP”. Easy Living Home Elevators competed with Lift Shop in the provision of customised elevators and lifts and disability platform elevators.
In 2012 Easy Living added the term “lift shop” to the title of its website and the contents of its home page, and designated “lift shop” as a keyword. When consumers searched on an internet search engine for “lift shop”, results for both businesses would appear.
Lift Shop alleged that the Easy Living’s use of the words “Lift Shop” amounted to trade mark infringement, passing off and misleading or deceptive conduct contrary to section 18 of the Australian Consumer Law.
On the question of misleading or deceptive conduct, the Court found that there was a clear difference between the entries of the parties on the search result pages, including different URLs and the fact that the appearance of the entries next to each other emphasised the differences. Any idea of an association between the two was dispelled when a visitor visited either web page. The Court considered that although Easy Living wanted to appear in search results that were likely to identify its competitor, Lift Shop, the intent was to compete with Lift Shop by bringing its business to the attention of Lift Shop’s potential customers.
On the question of trade mark infringement, the relevant question was whether the words “Lift Shop”, as used by Easy Living in the title of its web page, functioned to distinguish its goods or services from those of others. It was found that the words just described the character of its business (i.e. as a shop that sells lifts) and they were not used to distinguish Easy Living’s business from others. To the contrary, in the setting of the search engine results page, the use of those words was to show that Easy Living’s business was of the same character as other businesses operating as “lift shops”. The Full Court characterised such use as “the antithesis of trade mark use”.
For more detail on the risks of trade mark infringement, see our blog here.
In the context of SEM, there is a fine line between uses of a competitor’s trade mark that are permissible as merely a description of services offered, and uses that amount to use of a competitor’s trade mark “as a trade mark”. It is therefore important to consider all possible meanings that the use of a trade mark may convey to the consumer. Advertisers can only use the competitor’s name/trade mark in a descriptive way, and not as indicating a badge of origin. The risk is reduced in the case of SEO, where the designated keywords aren’t seen by consumers.
We hope you enjoyed our sixth blog in a series of blogs about Marketing your Startup: Risks, Tips and Traps
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