Keyword Advertising of Competitor’s Mark Is Not Passing Off

In Vancouver Community College v. Vancouver Career College (Burnaby) Inc., 2015 BCSC 1470, Justice Affleck dismissed a passing off action action based on the use of keyword advertising.

Keyword Advertising

Keyword advertising, such as Google’s “Google AdWords”, is a method of online advertising in which the advertiser pays to have their advertisement appear in online search results. The keywords can be words or phrases chosen by the advertiser that trigger the advertisement to appear, usually as a sponsored search alongside the search engine’s normal or organic search results.

The Dispute

The Plaintiff,even though the Defendant’s website did not use either “VCC” or “Vancouver Community College” alleged that the Defendant’s use of the acronym “VCC” and of “Vancouver Community College” as keywords in its online advertisements created confusion. In support of its claim the Plaintiff filed numerous witness statements from students and prospective students, showing that they used online search platforms to search for the term “VCC”, and were ultimately directed to the Defendant’s website, and mistakenly though that it was the same institution as the Plaintiff.

The Decision

To succeed, the Plaintiff needed to show that defendant caused confusion by intentionally or otherwise misrepresenting its services as those of the plaintiff. Justice Affleck held that keyword advertising, including the use of a competitor’s name or mark, does not result in confusion because the searcher, and not the advertiser, maintains control:

[182] … When individuals in British Columbia who seek information about a career training institution conduct a search on a search engine, such as Google, they are not taken by default to any particular search result. The searcher is able to review the search results before making a decision to click on an organic or sponsored advertisement. Once persons clicks on the advertisement they are shown a webpage, often called a “landing page” or a “landing site”. The webpage displays information provided by the advertiser and it is for the searcher to make the decision to move forward with the search or if uninterested to return to the search results, and perhaps try another website. Neither the defendant nor any other advertiser online controls the search process. The main role of a website owner is to provide content for its website.

[186] … 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. Google and other providers of search engines generate revenue by offering an efficient bidding process. I cannot conclude that the defendant causes confusion by taking advantage of this service offered by Google.

The Court reasoned that it is the “first impression” of the searcher which must give rise to confusion arises. Justice Affleck found the situs for this “first impression” is not the result of the keyword search but when the searcher reaches the defendant’s website. Once there, individuals would not see the Plaintiff’s “VCC” or “Vancouver Community College” marks. In finding so, it rejected the U.S. approach of “Initial Interest Confusion”.

The Court also found that a passing off action should not be used as a sword to dissuade competitive behaviour:

[181] … In my view, this lawsuit, and the previous attempts to enlist this Court and PCTIA in the plaintiff’s struggle to constrain the defendant’s ability to compete with it has been 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 the defendant. Passing off is a cause of action which permits a court, in appropriate circumstances, to compensate a plaintiff for unlawful competition by a defendant. It is not intended to be used by a plaintiff to handicap a defendant that has developed a more effective means of marketing its goods and services than has a plaintiff.

[186] I will also comment on the bidding process in keyword advertising which is a well-established practice throughout the world of online advertising. It would be imprudent for this Court to attempt to preclude or even limit that practice in this jurisdiction unless it can be shown to be an unreasonable constraint on competition. That has not been shown. 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. It is not the defendant, or another advertiser in its position, which controls the bidding process, apart from making a decision to bid.

The Court ultimately also found that the plaintiff had not established that it has acquired distinctiveness in the marketplace despite the fact that it enjoyed goodwill in educational services. Therefore, based on these findings, Justice Affleck dismissed the action.

A copy of the reasons may be found here.

POSTSCRIPT: An appeal of Justice Afflecks’ findings on passing off was allowed by the British Columbia Court of Appeal (see our post here)