06 February, 2017

All the Right Words - The British Columbia Court of Appeal Decides on Keyword Advertising and Passing Off in Canada

While the Internet's vastness and accessibility seems like a given for those who've seen it grow over the years, finding what you need can still be quite the struggle, especially when you're looking for more niche or specific information or services. Search engines like Google have made this a breeze in most cases, but unbeknownst to most, there is a war going on underneath the surface of search engines and websites. Due to the sheer amount of competition in most sectors, being the top result in a search query, or at least making it to the first page and above your competitors, pushes website administrators and creators to rely on less 'nice' methods to push their results ahead of others. One way is through the use of website metadata, particularly the keywords associated with your website. In the light of this specific feature, could you use your competitors' name or trademarks in your own website's keywords? The Canadian Court of Appeal looked to settle this point after a first instance decision sometime in late 2015.

The case of Vancouver Community College v. Vancouver Career College (Burnaby) Inc. dealt with the use of the acronym VCC, which has been used by Vancouver Community College for some time, which had also registered the abbreviation and its full name as trademarks in Canada (marks 0910482 and 0916687). Vancouver Career College also aimed to use the same acronym with or in place of their name, in their domain name, incorporating it into their marketing materials and in social media, and also purchased the keyword advertising rights to it on Google and Yahoo. Vancouver Community College subsequently took Vancouver Career College to court under claims of passing off and trademark infringement.

The Court first dealt with the claim of passing off, which is enshrined in the Canadian Trade-marks Act in section 7. Similarly to the concept of passing off, a claim in Canada needs to consist of three components: "… the existence of goodwill, deception of the public due to a misrepresentation and actual or potential damage to the plaintiff ".

The first component is goodwill in the name 'Vancouver Community College' and 'VCC', which, putting it into more simple terms, amounts to "…the positive association that attracts customers towards the owner’s wares or services rather than those of its competitor". In particular to names, this requires specific recognition in a primary sense of the name in the relevant marketplace as distinctive to that entity. The Court rejected the notion from the Supreme Court of BC had erred in required an additional secondary meaning, as only the primary meaning would be needed to establish goodwill in 'VCC'. Having considered the evidence submitted at first instance, the Court determined that the Supreme Court had erred in their finding of no goodwill (overstating the scope of evidence to the contrary, and failing to consider a body of evidence to the positive), and that there indeed was goodwill in the acronym at the relevant time.

Keywords can be quite "persuasive" (Source: Dilbert)
The second component is confusion, i.e. deception through misrepresentation to the relevant public causing confusion in the minds of the public as a likely consequence of the impugned actions. Justice Saunders, handing down the Court's unanimous decision, saw that the Supreme Court erred in their assessment of confusion in the case, as "… confusion is fully established by proof that the respondent’s domain name is equally descriptive of the appellant and contains the acronym long associated to it". The Supreme Court determined that confusion was only achieved when the searcher arrived at the website's landing page, and not before the fact. While Justice Saunders did see that the mere existence of the acronym was enough to cause confusion, the bidding for keywords containing the full name or the acronym would not cause confusion as "… the critical factor in the confusion component is the message communicated by the defendant. Merely bidding on words, by itself, is not delivery of a message. What is key is how the defendant has presented itself, and in this the fact of bidding on a keyword is not sufficient to amount to a component of passing off".

The Court then moved on to consider damage caused to the plaintiff, which, according to Justice Saunders, can include damage to one's goodwill or loss of control of that same goodwill (i.e. there is not necessarily a need for actual monetary damage). Concluding her judgment on passing off, Justice Saunders did indeed confirm that Vancouver Community College had suffered damage to their goodwill, and that Vancouver Career College had passed off their services.

Finally, the Court looked at whether the registered trademarks had been infringed under section 9 and section 11 of the Trade-marks Act. Justice Saunders dealt with this matter briefly, and saw that "… there are too many factual determinations and outstanding issues" for the Court to determine and that the matter is best remitted back to the Supreme Court for fresh consideration.

Ultimately, the Court of Appeal issued a permanent injunction against Vancouver Career College for the use of the acronym 'VCC' and 'VCCollege' in its Internet presence. The matter of damages and the breach of the trademarks were to be looked at by the Supreme Court.

The case is quite the interesting one, and the Court's considerations in terms of confusion seems to focus on the searcher's viewing of the results page, rather than the viewing of the landing page after clicking a link. It did, however, entrench the determination that the purchasing of keywords incorporating others' marks would be wholly acceptable in Canada, which does leave rightsholders somewhat exposed.

Source: JDSupra

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