10 June 2004
Key Points:
In the previous edition of Insights, we looked at whether the sale by internet search engines of keyword-based advertising involving trade marked terms to someone other than the trade mark owner may expose the keyword seller and/or buyer to an action for trade mark infringement.
On 3 March 2004, the English Court of Appeal issued its judgment in Reed Executive v Reed Business Information [2004] EWCA (Civ) 159, indicating that UK courts view this issue very differently to US courts (discussed in the original article) and are far less likely to find keyword-based advertising constitutes trade mark infringement.
Reed Executive owned a nationwide employment agency in the UK and registered "Reed" as a trade mark for employment agency services.
The Reed Elsevier group published a number of magazines and eventually developed a website at http://www.totaljobs.com/ advertising jobs. Reed Elsevier paid Yahoo! for a "totaljobs" banner ad linked to the search terms "recruitment" and "job" and was given a free link for searches of its own name. Reed Elsevier chose "Reed" rather than "Reed Elsevier" as this additional search term. As a result, if someone searched on Yahoo! using the terms "recruitment", "job" or "Reed", the "totaljobs" banner ad would be caused to appear along with the search results.
The Court of Appeals held that it could not see how causing the "totaljobs" banner ad, which did not include any use of the term "Reed", when a search was conducted using that term, could amount to trade mark infringement under the likelihood of confusion standard.[1] In reaching its decision, the court significantly stated:
"The web-using member of the public knows that all sorts of banners appear when he or she does a search and they are or may be triggered by something in the search. He or she also knows that searches produce fuzzy results – results with much rubbish thrown in. The idea that a search under the name Reed would make anyone think there was a trade connection between a totaljobs banner making no reference to the word "Reed" and Reed Employment is fanciful."
The court stated that infringement may still be found based on the likelihood of confusion of someone who clicked on the banner, but that such infringement would be based on the content of the underlying website, not the banner.
The court indicated that it may have reached a different decision under the identity test, although it reserved its opinion as to whether the use of the word "Reed" in that context amounted to use "in the course of trade." With respect to this issue, the court expressed doubts, stating:
"It may be that an invisible use of this sort is not use at all for the purposes of this trade mark legislation – the computers who "read" sets of letters merely "look for" patterns of 0s and 1s – there is no meaning being conveyed to anyone – no 'sign.'"
The court also held that the use of the term "Reed" to trigger a banner ad also did not amount to passing off. It cited the classic example of passing off – where a trader having accepted an order for brand X supplies brand Y in such circumstances that the customer is unlikely to notice the substitution and is thus misled, and noted:
"That is a hundred miles from a consumer conducting a search under the name Reed and finding a banner which on its face has no connection with his search term. Again, if he clicks through and finds misleading material on the site, there could be passing off – but that would be as result of what is on the site, not the Yahoo use."
The Reed case demonstrates a fundamentally different approach to the issue of keyword advertising based trade mark infringement than that adopted by the US and European cases we discussed in the last edition of Insights. In those cases, the ire of the trade mark holder was directed against the search engine company selling its trade marks as keywords. The buyer of such keywords received little attention. In the Reed case, the action was brought solely against the keyword buyer. The search engine company that sold the trade marked term as a keyword was not even named as a party. Additionally, the Reed case indicates that UK courts, unlike their US counterparts, are not prepared to find trade mark infringement on the basis of initial interest confusion, and thus, are far less likely to find trade mark infringement where the trade marked keyword triggers an ad that does not include the trade marked term in any way.
Australian courts are likely to reach a decision in line with the UK Court of Appeal in Reed, rather than with those of US courts. However, Australia has an unique additional weapon for the person complaining of this conduct, to be found in section 52 of the Trade Practices Act 1974 which prohibits "misleading or deceptive" conduct, in the very broadest terms. If therefore there is something about the triggered advertisement which goes beyond the mere opportunism of being triggered by a search including a competitor's trade mark, and actively deceives or is likely to deceive the search engine user to believe there is some connection with the competitor, this may be sufficient to ground an action.
[1] UK law does not consider likelihood of confusion where the marks and services of the trade mark owner and alleged infringer are identical - the "identity test" - but does require its consideration where there is not identity.
