Liability of internet search engines and their users for trade mark infringement arising from keyword advertising

Advertising on the Internet is an incredibly valuable tool and enables even the smallest, isolated business to offer its goods and services to consumers on a global basis. One way to attract business from consumers who are unaware of a trader’s website or other details, is the ranking of a trader’s site at one of the commonly used search engines in response to the search terms and criteria selected by the consumer. If a trader’s website does not appear near the top of the rankings list, the consumer is less likely to visit the trader’s website as most Internet users tend to check the most highly ranked websites first in a similar way to the way in customers in a supermarket often select products from the shelves within a convenient reaching distance.

The way that Internet search engines generate the list of relevant websites in response to a user’s search request varies from provider to provider and are often obscured from the public to (a) protect the proprietary algorithms used by the search and engine and (b) prevent traders from manipulating those algorithems to their advantage.. Google, Inc’s policy for instance can be found at www. http://www.google.com/technology/ at which page Google says

“The heart of our software is PageRank™, a system for ranking web pages developed by our founders Larry Page and Sergey Brin at Stanford University. And while we have dozens of engineers working to improve every aspect of Google on a daily basis, PageRank continues to provide the basis for all of our web search tools.

PageRank relies on the uniquely democratic nature of the web by using its vast link structure as an indicator of an individual page's value. In essence, Google interprets a link from page A to page B as a vote, by page A, for page B. But, Google looks at more than the sheer volume of votes, or links a page receives; it also analyzes the page that casts the vote. Votes cast by pages that are themselves “important” weigh more heavily and help to make other pages “important.”

Important, high-quality sites receive a higher PageRank, which Google remembers each time it conducts a search. Of course, important pages mean nothing to you if they don't match your query. So, Google combines PageRank with sophisticated text-matching techniques to find pages that are both important and relevant to your search. Google goes far beyond the number of times a term appears on a page and examines all aspects of the page's content (and the content of the pages linking to it) to determine if it's a good match for your query.

Google's complex, automated methods make human tampering with our results extremely difficult. And though we do run relevant ads above and next to our results, Google does not sell placement within the results themselves (i.e., no one can buy a higher PageRank). A Google search is an easy, honest and objective way to find high-quality websites with information relevant to your search.”

As can be seen from above one can “advertise” or use keywords and other tools to increase one’s page rank to get a higher listing.

The use of keywords to rank websites is common to many search engine providers. If a trader can determine search terms ( ‘keywords’ ) that consumers regularly use when doing a search that result in the trader’s website being included in the list of suggested websites, they can amend the information on their website to include those keywords.

Some search engines will rank a website higher that features the user’s keywords more often than websites that feature the user’s keywords less often. This ranking technique was based on an assumption that if your website featured the required keyword, it probably provided information about the topic to which the keyword relates. Likewise, if the keyword appeared multiple times, it was assumed that there was more information provided about the relevant topic than if the keyword only appeared once.

However, this has led to many traders abusing this ranking technique by superloading their website with commonly used keywords in a way that added nothing to the quality of information provided at the website, such as repeating keywords multiple times in small or invisible text or at the base of the page.

This type of misuse of keywords has meant that many search engines no longer use keywords when ranking search results¹⁾.

As a revenue generating service, search engines now offer traders the opportunity to ‘purchase’ keywords as an advertising tool. This means that in addition to the standard list of search results, a consumer is also provided with a second list of ‘sponsored links’. That is, the trader pays to have their website appear on this second list of results when a consumer uses certain search terms. This was a feature which led to the popularity and profitability of Google’s seach engine.

For example, if you use a car manufacturer’s name or trade mark as a search term, the standard list of results will probably list the website of that car manufacturer. However the second list may include traders who sell second hand vehicles made by that car manufacturer or traders who service that manufacturer’s vehicles or a toy store that sells replica models of that manufacturer’s car models. If the traders listed have a licence to use the car manufacturer’s name or trade mark, then depending upon the terms of that licence, this form of advertising should be fairly non-controversial.

However, if a rival car manufacturer pays to have their website listed when a consumer uses another car manufacturer’s name or trade mark as a search term, not having a licence to do so, this may constitute a trade mark infringement.

If a trade mark infringement is said to have occurred, the trade mark owner may have an action against the rival trader and / or the search engine provider, who ‘sold’ the use of the trade mark as a keyword to the rival trader.

Where a trader uses a keyword as a sign that is substantially identical with, or deceptively similar to an Australian registered trade mark in relation to goods or services in respect of which the trade mark is registered²⁾ in Australia, without the authority of the trade mark owner, the trader will have infringed the registered trade mark.

The High Court has held that “use of a mark in an advertisement of goods is a use in the course of trade, and is of course a use in relation to the goods advertised” where there is “use of a mark as a trade mark³⁾. In Shell Company of Australia Ltd v Esso Standard Oil (Australia) Ltd⁴⁾ the High Court had to determine whether use of an animated cartoon oil-drop character in a television commercial was use of the constituent pictures as a trade mark. To make this decision, the Court had to determine whether “in the setting in which the particular pictures referred to were presented, they would have appeared to the television viewer as possessing the character of devices, or brands, which the appellant was using or proposing to use in relation to petrol for the purpose of indicating, or so as to indicate, a connection in the course of trade between the petrol and [Shell]”⁵⁾.

Kitto J found that the use of the oil-drop character was to convey a message that “it is that the chemical composition of Shell petrol gives it advantages over its rivals”⁶⁾ and therefore the action for infringement should fail as the mark was being used descriptively rather than as a badge of origin.

With keywords which are also trade marks and therefore presumably not “generic” words, the keywords are not being used to describe a quality of the goods and services being supplied by the trader, and they do not actually appear as a as a badge of origin in the material viewed by the consumer. The only use of the trade mark is by the computer software of the search engine providers which matches the consumer’s search criteria including the trade mark with the trader’s website when creating the search results list.

When the search engine provider provides labelled sponsored links it is clear that the sponsored links are distinct from the search results generated as a result of the search engine’s analysis of the content of websites found on the Internet.

The Trade Marks Act⁷⁾ (“the Act”) definition of ‘use’ provides:

“use of a trade mark in relation to goods” means use of the trade mark upon, or in physical or other relation to, the goods (including second-hand goods)

“use of a trade mark in relation to services” means use of the trade mark in physical or other relation to the services

It has not been examined by the Australian courts in relation to use of trade marks as keywords on the Internet by rival traders.

When the Act was drafted, it is unlikely that the drafters could have foreseen such use, but there is no reason why use of trade marks as keywords ought not to be considered as being use “in other relation” to the goods and services.

When used as a keyword to trigger a rival’s website to be displayed and that website advertises or sells goods and / or services in Australia, it is likely that a commercial advantage is being derived from the subsisting goodwill built around the registered trade mark, however, that in itself is not sufficient⁸⁾.

When you consider the fact that a consumer looking for goods and services on the Internet using a search engine must formulate one or more search terms that they believe will be useful in locating the website best fitted to the goods or services they are looking for, it is clear that there is more than mere commercial advantage is being derived from the subsisting goodwill built around the registered trade mark.

The search terms are being used by the consumer to deliberately narrow the available information to a list of likely suppliers to the required goods and services. If a consumer associates a registered trade mark with the goods and services they are seeking, it is likely that in at least some cases, they are looking for the goods and services actually produced by the owner of the registered trade mark. In a way akin to looking in a phone directory for the telephone number of a particular company using the company name, a consumer may be looking for the website of the registered trade mark owner (or the trade mark licensees) using the trade mark.

In the UK, the position would be simpler as any form of use course of trade may infringe. There is no requirement for the trade mark to be used as a trade mark. Infringement will occur if:

A person uses in the course of trade a sign which:

• is identical with or similar to the trade mark, and
• is used in relation to goods or services which are not similar to those for which the trade mark is registered, where the trade mark has a reputation in the United Kingdom and the use of the sign, being without due cause, takes unfair advantage of, or is detrimental to, the distinctive character or the repute of the trade mark.⁹⁾

If a keyword is likely to be used by a consumer to find goods and or services of one particular trader, the use of that trade mark by a rival trader as a keyword is likely to be deemed to be use that takes unfair advantage of the repute of the trade mark.

In the US, it would also be easier to find infringement in cases of use of a trade mark as a keyword as trade mark infringement presents wider issues, more akin to those which in Australia are dealt with in actions for passing-off and contravention of s. 52 of the Trade Practices Act¹⁰⁾ and there is a general cause of action for unfair competition, which does not exist in Australia¹¹⁾. In the US, the function of a trade mark is to point distinctively, either by its own meaning or by association, to the origin or ownership of the wares to which the trade mark is applied¹²⁾

If it is found that a trader who purchases another trader’s registered trade mark as a keyword infringes that trade mark owner’s rights, it is possible that the conduct of the search engine provider who sells the keywords constitutes contributory infringement.

This question has been examined recently in the US.

In Google, Inc v American Blind & Wallpaper Factory, Inc¹³⁾ Google filed for declaratory relief seeking a judicial determination that its “Adwords” advertising program does not infringe American Blind's trade marks. In that case American Blind had common law trade marks “American Blinds” and registered marks “Amercian Blind & Wallpaper Factory” amongst others which it said were infringed by Google’s Adwords program. The cases reports that Google’s Adwork program “enables advertisers to purchase or bid on certain keywords. Then, when an Internet user enters those keywords in Google's search engine, the program generates links, known as “Sponsored Links,” to the advertisers' Web sites. Sponsored Links appear at the top and on the margins of Google's search-results pages. American Blind alleges that, in many instances, the search-results pages “are designed so that the Sponsored Link' display is inconspicuous or otherwise not apparent,” and “it is not apparent who exactly sponsors' these links.”. Whenever an Internet user clicks on a Sponsored Link, the corresponding advertiser must pay Google. According to American Blind, Google has reported that ninety-six percent of its net revenues in the first quarter of 2004 were derived from advertising. Google also offers a feature called “AdWords Keyword Suggestions,” which recommends additional keyword purchases to its advertising customers to “help you improve your ad relevance.” The suggestions are organized into categories by Google and sometimes are referred to as “optimization campaigns.

Through AdWords, Google has sold to American Blind's competitors keywords comprised, in whole or part, of the American Blind Marks, including “American Blind,” “American Blinds,” and “Americanblinds.com,” and these sales have continued over American Blind's objections. Thus, when an Internet user enters these keywords in Google's search engine, Sponsored Links to the competitors' Web sites appear on the search-results page. Moreover, through its AdWords Keyword Suggestions feature, Google actively and deliberately encourages American Blind's competitors to purchase as keywords both the American Blind Marks and “virtually every conceivable, though indistinguishable, iteration of those marks.”. For example, an advertiser who is considering purchasing the keyword “American Blind” is encouraged also to purchase the keywords “american blinds,” “american blinds and wallpaper,” and “american blinds and wallpaper factory,” among others. Google has labeled the optimization campaign containing these suggestions as the “American Blind optimization campaign….”

American Blind elaborates that “Defendants' search engines are deceptive and mislead consumers into believing falsely that the website links to which they are directed via manipulated search results' links are sponsored or authorized by and/or originating from American Blind” and that the “manipulated search results' engineered by the Defendants fail to inform the consumers that the companies listed therein may have no relationship with – and, indeed, may directly compete with American Blind – the trademark owner for which the user was searching.”

The Court found that

Google was successful in its application to the United States District Court for the Northern District of California, San Jose Division to dismiss American Blinds’ motion alleging tortious interference with prospective business advantage. It was unsuccessful in its application to dismiss American Blinds motion alleging trade mark infringement false representation and dilution under the Lanham Act, dilution and injury to business reputation and unfair competition under the California Business and Professions Code, and trade mark infringement and unfair competition under California common law and American Blind's alternative claims of contributory trademark infringement and contributory dilution under the Lanham Act. In relation to the latter causes of action, the Court found that on hearing the motion to strike out that it was not clear assuming the most favourable light to American Blind that Google had not beyond doubt engaged in actionable trademark “use”.

However, in another US decision delivered by United States District Court for the Eastern District of Virginia shortly afterwards, in the matter of Government Employees Insurance Company v Google, Inc¹⁴⁾ the Court found on final hearing found that whilst there was trade mark “use” the plaintiff failed to establish a likelihood of confusion stemming from Google's use of GEICO's trade mark as a keyword. In particular, the plaintiff had not produced sufficient evidence of whether the Sponsored Links that do not reference GEICO's marks in their headings or text create a sufficient likelihood of confusion to violate either the Lanham Act or Virginia common law.

In their decision, the Court emphasised that its ruling applies only to the specific facts of the case, including the unique business model employed by plaintiff and the specific design of Google's advertising program and search results pages.

In Australia, if a third party acts together with a party to infringe a trade mark, that third party can be held liable as a joint tortfeasor¹⁵⁾. Liability for a third party may also arise where the third party has sufficient knowledge of, or compliance in trade mark infringement¹⁶⁾. However there would need to be proof that the parties have acted in concert in furtherance of a common design.

If a search engine provider sells a keyword without knowledge that it infringes a registered trade mark, it is unlikely that it would be held liable as a joint tortfeasor. However, if once notified by the registered trade mark owner of the alleged infringement, it continues to allow the trade mark to be used as a keyword, it is much more likely that this conduct would be seen as acting in concert with the keyword user in furtherance of a common design and hence be exposed to liability as a joint tortfeasor.

Google has gone to some lengths to avoid being seen to be a contributory infringer by complying providing a policy for use outside the US and Canda which provides

If a search engine provider sells a keyword without knowledge that it infringes a registered trade mark, it is unlikely that it would be held liable as a joint tortfeasor. However, if once notified by the registered trade mark owner of the alleged infringement, it continues to allow the trade mark to be used as a keyword, it is much more likely that this conduct would be seen as acting in concert with the keyword user in furtherance of a common design and hence be exposed to liability as a joint tortfeasor.

Google has gone to some lengths to avoid being seen to be a contributory infringer by complying providing a policy for use outside the US and Canda which provides

When we receive a complaint from a trademark owner, our review is limited to ensuring that the advertisements at issue are not using a term corresponding to the trademarked term in the ad text or as a keyword trigger. If they are, we will require the advertiser to remove the trademarked term from the ad text or keyword list and will prevent the advertiser from using the trademarked term in the future. Please note that any such investigation will only affect ads served on or by Google.

Furthermore, please be aware that we do not take any action in situations where an advertisement is being triggered by non-trademarked terms even though the search query contains a trademarked term. This stems from the fact that Google allows advertisers to use a broad matching system to target their ads. For example, if an advertiser has selected the keyword shoes , that advertiser's ad will appear when a user enters the word “shoes” as a search query, regardless of other search terms that may be used. So, the ad would show if the user entered any of the following search queries: “tennis shoes,” “red shoes,” or “Nike shoes.” This system eliminates the need for the advertiser to specify individually the many different search query combinations that are relevant to their ad.

If you are a trademark owner (or represent a trademark owner) and have an objection to an advertiser's use of a term corresponding to your trademark as a keyword or in ad text that is consistent with the foregoing, please fill out the following form …

The conduct of one trader using another trader’s trade mark as a keyword may contravene sections 52 and 53(d) of the Trade Practices Act 1974 (Cth). Section 52 prohibits misleading or deceptive conduct and section 53(d) provides that a company must not represent that it has a sponsorship, approval or affiliation it does not have.

The ACCC recently wrote to the Trading Post¹⁷⁾ expressing concern that its Google sponsored link using the keyword “Stickybeek” was potentially misleading as internet users might mistakenly believe that the Trading Post’s autotrader website was affiliated with business Stickybeek, based in the Hunter region of New South Wales which operates a website used by businesses in the region for advertising, including classified advertising by local car dealers.

The ACCC was particularly concerned about the placement of the sponsored link under the word Stickybeek adjacent to the Google search results.

The Courts have not yet heard a matter dealing with this issue, but regulator’s stance on this matter should not be ignored by traders using a keyword advertising strategy.

The tort of passing off is similar to misleading and deceptive conduct, as mentioned above. It is classically held to occur where a trader passes off his or her goods or services as being those of another trader. There must have been a misrepresentation that gives rise to the likelihood of deception or confusion as a result of that misrepresentation¹⁸⁾.

In the case of keywords, it is possible that the use of one trader of another trader’s trade marks as a keyword would lead to deception or confusion as to whether there is any association between the trader using the keywords and the owner of the registered trade mark.

The Internet continues to present new challenges to intellectual property and consumer protection laws. The future of keyword advertising is likely to be greatly impacted by courts’ decisions in relation to trade mark infringement in keyword use. Where traders use descriptive terms for keywords, their use of this advertising to a global market is a powerful and uncontroversial tool. Where other trader’s trade marks are selected as keywords, potential legal complications arise. Businesses who are likely to advertise heavily on the Internet should consider the value of having a trading name and trade marks that are unusual or concocted words to reduce the possibility that a competitor can use the same words in a descriptive way. This would discourage other traders from using the words as keywords in their competing Internet advertising.

STEVE WHITE
WHITE SW COMPUTER LAW
JUNE 2006

www.computerlaw.com.au © White SW Computer Law 2006 This paper is a guide only and should not be used as a substitute for legal advice, readers should make their own enquiries and seek appropriate legal advice.