October 2004

Hidden trade mark infringement - Are you a victim or a culprit? IP risks in key word advertising & search engine optimisation

The sale of advertising has long been a source of revenue for internet search engine companies. Technology now allows advertising to be tailored to the individual user using the "keyword" searched by the user.

Keyword advertising is now one of the major revenue streams for many search engine companies, but it raises issues of possible trade mark infringement - as the keyword triggering the appearance of an advertisement may be the trade mark of a business other than that featured in the advertisement. While this newly emerging form of potential trade mark infringement has been the subject of a series of trade mark infringement cases in the US and Europe, it has not yet been addressed by an Australian court. In this summary we look at what you can do about keyword advertising trade mark infringement in Australia.

Commercial consequences

If your trade mark is being used by other businesses to trigger their online banner or text advertising then:

  • your business may be losing online customer traffic; and

  • the value of your trade mark and the goodwill of your business may be diluted ? others may associate your trade mark with another business.

Depending on the nature of your business, the impact of the use of your trade mark in this manner could result in a substantial loss for your business.

If you use another person's trade mark to trigger online banner or text advertising for your business, then if the owner of the trade mark pursues one or more of the possible remedies discussed below:

  • your business may become liable for damages or an account of profits (as well as subject to other remedies); and

  • you may become personally liable for damages and penalties under the Trade Practices Act 1974.

Depending on the trade mark you use as a keyword and the impact it has had on the trade mark owners business, the extent of your personal liability and the liability of your business may be very significant.

Legal issues

Trade mark infringement disputes often concern allegations of one trader using a mark that is substantially similar to the mark of another trader, and specifically in connection with the same or closely related goods or services. Factors that distinguish keyword advertising from the traditional trade mark infringement situation include:

  • use of a trade mark as a keyword may not be considered use as a trade mark ? which is required for infringement;

  • the trade mark will not necessarily be displayed in the advertisement triggered by the keyword;

  • Internet users are accustomed to banner advertising on web pages and may not realise that the appearance of an advertisement when using a search engine is linked to the keyword they have used; and

  • while some text based advertising may appear amongst the search results, other text based advertising may be located in a position where it is clearly separate from the search results ? thereby minimising the risk of confusion.

The presence of such factors may make it unclear whether trade mark infringement has in fact occurred when there has been use of a trade mark as a keyword used to trigger online banner or text advertising. Another important issue: even if there has been trade mark infringement, who should be liable for any infringement that has occurred - the advertiser, the search engine provider or both?

Position in Australia

The issue has yet to be addressed by an Australian court. However, under Australian law, a trade mark owner whose trade mark is used to trigger online banner or text advertising could use at least one or more of the following grounds to protect its interests.

1. Trade mark infringement

If the trade mark is registered under the Trade Marks Act 1995, the trade mark owner may bring an action for trade mark infringement if the triggered result contains the registered trade mark (or a mark which is substantially identical with or deceptively similar to the registered trade mark) and relates to goods or services for which the mark is registered in Australia. Whether or not trade mark infringement occurs will of course need to be decided on a case by case basis depending on the appearance and content of the advertisement, and whether or not it is distinguishable from the other search results.

2. Passing off

Irrespective of whether the trade mark is registered or not, the use by another trader could amount to the common law tort of "passing off" (a classic example of "passing off" is the supply of another brand of cola when someone asks for a Coke). If the owner of a trade mark that is used as a keyword trigger brought an action for passing off, it would need to demonstrate that it had an established reputation in its trade mark, that the use of the trade mark as a keyword trigger misrepresented an association between the search engine or advertiser and the trade mark owner, and that the trade mark owner had suffered damage as a result.

3. Trade Practices Act

In addition, use of a trade mark as a keyword trigger could be misleading, deceptive or false in breach of sections 52 & 53 of the Trade Practices Act 1974. It would be necessary for a person complaining of the use of a trade mark as a keyword trigger to establish that relevant consumers were at least likely to be led into error in fact. The closer the apparent connection between the triggered result, based on a combination of its content, appearance and location, and the trade mark search term, the more likely an Australian court will find the triggered result as likely to lead persons into error (and so in breach of the Trade Practices Act).

What can you do?

If your trade mark is being used as a keyword trigger, you can demand that the advertiser or the relevant search engine (or both) cease using your trade mark as the trigger, based on one or more of the grounds discussed above. In our experience, action against the relevant search engine is the most likely to achieve the desired result with the least expense and inconvenience. For example, we recently assisted a client in having a well known search engine prevent the use of our client's trade mark as a trigger for the sponsored link advertisements of some of our client's competitors which appeared when our client's trade mark was entered in the relevant search engine.