Back to school – Keyword advertising 101

In the 21st century, when advertising is frequently conducted via the Internet, the use of keyword advertising has become an increasingly contentious point of trade-mark law.

In short, keyword advertising is a form of online advertising in which a business selects words or phrases (the “keywords”) that trigger its advertisements to appear when the user of a search engine performs a search using those keywords.  The advertisements typically appear alongside the organic search results produced by the search engine.

Where multiple companies use the same keywords to trigger advertisements, the search engine will use an algorithm to select which company’s advertisements actually appear and in what order, based at least in part on the amount each business is willing to pay for the advertisement.  The difficulty from a trade-mark perspective is that businesses frequently choose competitors’ trade-marks as keywords.

There has been little development in Canadian jurisprudence in the area since the first Canadian decision on keyword advertising in 2010.  Last week, the Supreme Court of British Columbia, writing through Justice Affleck, tackled the issue head-on in Vancouver Community v. Vancouver Career (Burnaby) Inc., 2015 BCSC 1470.

In this case, the Vancouver Community College (“Community”) brought a passing off action against the Vancouver Career College (“Career”) in which it alleged, among other claims, that Career, principally through keyword advertising, misrepresented its educational services as those of Community.  As part of its claims, Community objected to the use of the acronym VCC by Career as part of the latter’s keyword advertising campaign, notwithstanding Community’s unregistered, common law trade-mark rights in VCC.  The evidence showed that Community used VCC as a trade-mark from 1965 until 1990, when it largely abandoned the use of VCC, until 2013, when significant use resumed.

Ultimately, Justice Affleck concluded that there was no passing off by Career, since Community failed to meet the first part of the test for passing off, in that it did not have sufficient goodwill and acquired distinctiveness in its unregistered VCC trade-mark to impart a secondary meaning to consumers.  However, the trial judge went on to discuss the second part of the test, namely, whether Career had caused confusion by misrepresenting its services as those of Community.  In doing so, Justice Affleck made the following comments of interest:

-on bidding by advertisers, and the operation and process of searching using search engines – “a bid on a keyword may send a searcher to the bidder’s landing page, but the process of the search is controlled by the searcher and the search engine, not by the advertiser”.

-on when a first impression is made on the consumer – consistent with the decision in Insurance Corporation of British Columbia v. Stainton Ventures Ltd., 2014 BCCA 296 (the “ICBC Decision”), “the “first impression” cannot arise on a [search] at an earlier time than when the searcher reaches a website [...] the “relevant consumer” will “understand that it is necessary to view a website to determine whose site it is” [citing the ICBC Decision].  In my opinion that is the point during a search when the relevant first impression is made”.

-on bidding on another company’s trade-mark as a keyword – “to award damages to the plaintiff or to enjoin the defendant from certain conduct because the defendant bids on the plaintiff’s name for the purposes of keyword advertising would be to disadvantage the defendant in a way that other online advertisers are not”.

In the result, Justice Affleck concluded that Career did not cause confusion by taking advantage of the keyword advertising service offered by Google.

Other than the issue of keyword advertising, which we expect is the point that will garner the most interest and commentary from practitioners, the decision is interesting for:

-Justice Affleck’s reliance on the ICBC Decision, as referenced above, which sparked its own interest for its assessment of when a “first impression” is made upon Internet users;

-Justice Affleck’s disposition of the official mark issue raised by Community in essentially 3 brief paragraphs without going into detail, such as whether Career actually used VCC as a trade-mark prior to publication of Community’s official mark for VCC;

-Justice Affleck’s finding that Community’s VCC mark enjoys “goodwill in the educational services it provides, but [has] not achieved a “secondary meaning” in the marketplace”, which contrasts with the comments of the Trade-marks Opposition Board (the “Board”) with respect to Community’s VCC mark in an earlier decision in which the Board rejected Career’s application to register the trade-mark VCCollege.ca; and

-Justice Affleck’s observation that Community’s action for passing off was an attempt to handicap Career, and was “motivated by a concern that its own inability to invest the necessary funds and expertise to create a sophisticated online advertising program leaves it at a competitive disadvantage in the marketplace in comparison with [Career]”.

Community has until September 19, 2015 to appeal Justice Affleck’s decision to the British Columbia Court of Appeal.

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Playing Nice: CIPO to accept applications with Nice Classifications this fall

In a milestone step towards harmonization of Canada’s trade-mark regime with most other developed countries, the Canadian Intellectual Property Office (CIPO) announced yesterday that starting this fall, it will accept trade-mark applications filed with goods and services classified using the Nice Classification system.

According to CIPO’s announcement, there will be changes to its website to take advantage of the use of Nice Classification.  In particular, the Goods and Services Manual will be redesigned to facilitate classification of goods and services, and the search capability of the CIPO online database will be updated to allow for searching within specific classes.

Historically, Canada has not used the Nice Classification system when it comes to descriptions of goods and services.  However, as part of the aforementioned harmonization process, Canada will accede to the Nice Agreement.  As we previously reported, CIPO has already started the process of assigning Nice classes to terms in its database.

Happy Canada Day to all of our readers!

C’est vrai: Québec government to continue seeking use of French on store signage

The Canadian media, including the CBC, is reporting that the Québec government intends to continue its fight to require the use of French on signage where trade-marks and business names are otherwise displayed in English.

This is the latest development in a dispute that has gone on for a number of years.  As previously discussed in our post from November 23, 2012, a number of well-known retailers took the Québec government’s French language watchdog, the Office québécois de la langue française (“OQLF”), to Court over a requirement that all retailers must use either a generic French descriptive word or a French language slogan or explanation to reflect what they are selling, if their signage features an English language trade-mark – even if such trade-mark is registered under the Federal Trade-marks Act.

The retailers, which included multinational heavyweights such as WALMART, COSTCO and BEST BUY, were successful both before the Québec Superior Court and, more recently in April 2015, before the Québec Court of Appeal.  The Courts confirmed that the display of English language trade-marks on exterior store signage, without additional French descriptive language, did not violate Québec’s Charter of the French Language (the “Charter”), as retailers in Québec are entitled to post their trade-marks as is – i.e., in English – on the storefronts of their establishments, because of exceptions built into the Charter.

The retailers were therefore granted the declaratory judgment they requested against the OQLF.  The Québec government has until June 26, 2015 to file for leave to appeal to the Supreme Court of Canada, although the CBC reports that the government will not seek such leave.

In the meantime, the Québec government has decided to approach the issue from a matter of legislative change.  Framing the issue as a matter of “politeness” and awareness of the French language, the government will propose legislative amendments in the fall that will “ensure a permanent and visible presence of French” on exterior storefronts.  The government is hoping to have the legislative amendments in place by 2016.

Using as an example the SECOND CUP coffee retailer, which apparently is known as “Les cafés SECOND CUP” in la belle province, Premier Philippe Couillard takes the view that while “everyone knows” they sell coffee, the fact that the company uses “les cafés” in Québec is a recognition on the part of the retailer of the existence of French in Québec.

While there will apparently be no requirement to translate English language trade-marks, there will instead be a need to add descriptive or generic language in French.  Hence, once again, the Québec government is set to challenge the resistance of companies wishing not to use French on their English language signage in that province.

The CBC reports that the Retail Council of Canada has endorsed the move; however, it remains to be seen how companies, including the aforementioned retailers, will react.

Given the history and the nature of the businesses involved, we expect that there are more chapters to come in this story.

About the Blog

The authors of the Canadian Trademark Blog are all members of the Canadian law firm Clark Wilson LLP, based in Vancouver, Canada. Each author's practice focuses–either in whole or in substantial part–on Canadian intellectual property law. Together, they manage the trade-mark portfolios of local, national and international brand owners in nearly all industries and markets.

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