Hidden advertising practices finally exposed

Trade mark owners are becoming increasingly savvy in the way in which they use and protect their brands online and in social media. Most companies have guidelines and policies in place which govern their exposure online and will be quick to pick up on and address any usage that threatens to damage their reputation.

Sophie Thoreau

But what about usage that is unseen, hidden in website code or lurking behind the workings of a search engine? What damage could this really be doing to a trade mark’s reputation? Should competitors be legitimately able to use others’ brands to leverage their own success?

We update a decades-long battle that has raged almost since the inception of modern search engines.

Branded keywords, meta tags and “invisible” trade mark infringement

Unseen or “invisible trade mark” use typically falls into the category of branded keywords (such as Google’s Adwords®) or website meta tags. A branded keyword is a term or phrase used to search for a product or company via a search engine. The trade mark MEGALO® is an example of a branded keyword available on Google’s Adwords® system, as follows:

Megalo Image 1

While branded keywords are mostly used by legitimate trade mark owners to direct their own customers to their website, they are increasingly being hijacked by competitors to divert traffic to another site, or increase their page ranking.

Google supports this practice in many jurisdictions, ostensibly to “offer useful alternatives to the goods or services of the trade mark proprietor”.

Meta tags are hidden words or phrases that are embedded into a website’s code. Their primary function is to talk to search engines to explain what a web page is about. Meta tags enable search engines to prioritise or rank web pages based on what they think a searcher may be looking for.

Used properly, meta tags enable customers to quickly connect with the product or business they are looking for. Used strategically, meta tags can influence search engines to bring up competitors’ websites and ultimately draw customers away from their intended destination.

Using third-party trade marks in branded keywords and meta tags

Courts have long battled with the notion of trade mark infringement where the trade marks in question are never seen by the customer. Under Australian and New Zealand law, in order for an act to amount to trade mark infringement, the allegedly infringing mark must be used in such a way as to be taken as use as a trade mark, by the relevant consumer.

Because branded keywords and meta tags are invisible to the end consumer (assuming the average consumer does not trawl through a website’s source code), the position to date is that branded keywords and meta tags are not taken as trade marks, despite the fact that this is precisely how they are being used by the advertisers themselves. This means that the example below, in which “PC Power” could use its competitor’s trade mark MEGALO® to advertise its own services, would currently be permitted:

Megalo Image 2

Accor – a potential game changer?

A recent Australian decision in Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2017] FACFC 56 suggests the Australian courts may be reconsidering their approach to invisible trade mark use, at least in relation to meta tags. In this case, the defendant was sued for trade mark infringement, including for the use of the plaintiff’s trade mark HARBOUR LIGHTS, which it had inserted into its website as a meta tag. On appeal, the Federal Court of Australia ultimately held, divergent to previous case law, that although the meta tag containing the plaintiff’s trade mark was not visible to the ordinary consumer, the use of the words “Harbour Lights Apartments” in that phrase was, effectively, use as a business name, thus operating as a badge of origin to distinguish Liv’s services from others. This use was found to be use of a mark substantially identical with and deceptively similar to each of the registered trade marks in suit.

The Accor decision is an apparent sea-change following earlier Australian decisions such as Complete Technology Integrations Ltd v Green Energy Management Solutions Pty Limited [2011] FCA 1319, in which use of a thirdparty trade marks were clearly permitted. In that case, the judge held that although the meta tag usage diverted consumers away from the plaintiff to the defendant’s webpage, ordinary internet users would quickly become aware of the diversion and thus would unlikely be confused.

The New Zealand position

New Zealand courts have been in line with the position in Australia, until now. In Intercity Group (NZ) Limited v NakedBus NZ Limited [2014] NZHC 124, the plaintiff failed to make a case for trade mark infringement in relation to Nakedbus’ use of its registered trade mark, INTERCITY, in “invisible” branded keywords. The Court agreed with NakedBus’ argument that there was no use of Intercity’s trade mark in the course of trade because the keyword is invisible to consumers and therefore unlikely to be taken as a trade mark.

A later New Zealand decision, Tasman Insulation New Zealand Limited v Knauf Insulation Limited [2015] NZCA 602, recognised that use of a registered trade mark in a meta tag could be taken as use of a trade mark, but only if a significant number of informed consumers are likely to take that use as a trade mark. On the circumstances of that case, however, the Court held the defendant had not used the plaintiff’s trade mark “as a trade mark” and there was no trade mark infringement.

Where to from here?

While the New Zealand position is in contrast to recent developments in Australia, one could speculate that the New Zealand courts may be expected to align themselves with the Australian position in the future, at least in relation to meta tag usage.

This also comes amid growing anticipation of the latest chapter in Interflora v Marks & Spencer this year – the colossal battle over the branded keyword INTERFLORA, which extends back to 2008. In November 2014, the Court of Appeal for England and Wales ordered a retrial in the case after setting aside the European Court of Justice’s finding that the use of a keyword that is identical to a third party trade mark constitutes use in the course of trade, which is a prerequisite to trade mark infringement. The long-awaited decision is expected to provide definitive guidance on the legitimacy of “sharp” advertising practices by competitors in the online world.

Simply put, advertisers may soon find themselves walking a fine line between hunting clicks and maintaining transparency. 

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