Be wary of paid advertisements: keyword advertising in Canada

Keyword advertising on search engines such as Google or Yahoo! involves much predicting of the words that a potential customer may use when searching for a specific product or service. Easier to predict, however, is that if a customer is looking for a specific product or service, he or she may also search using the name of a competitor. The use of competitors’ names in keyword advertising – so that a paid search result using the keyword will rank above the bona fide result – is an emerging area of the law of trademarks and passing off, but has not received judicial consideration in Canada until now.

On 28th May 2010 the British Columbia Supreme Court handed down its decision in Private Career Training Institutions Agency v Vancouver Career College (Burnaby) Inc (2010 BCSC 765), the first Canadian keyword advertising decision. The court held that keyword advertising on search engines such as Google or Yahoo!, involving the use of a competitor’s trade name, do not constitute misleading advertising under the Private Career Training Institutions Act, a provincial statute. Although the decision was made in the context of administrative law rather than trademark law, the court did consider the issue of confusion as it has been developed in trademark jurisprudence when deciding the question of whether the use of such keywords constituted misleading advertising.

The petitioner in the case was the Private Career Training Institutions Agency, a body created by the act in order to oversee career training institutions in British Columbia. The respondent, Vancouver Career College (Burnaby) Inc (VCC), provides a variety of post-secondary educational services under a number of business names registered with the agency and thus subject to its bylaws.

In June 2009 the agency’s bylaws came into effect, including Bylaw 29, which prohibits a member institution from engaging in advertising or making a representation that is “false, deceptive, or misleading”. Bylaw 29 defines "deceptive advertising" as including “an oral, written, internet, visual, descriptive, or other representation that has the capability, tendency or effect of deceiving or misleading a customer”.

Part of VCC’s marketing efforts included search engine optimisation by way of keyword advertising. Beginning in December 2008, VCC began using business names of competitors as triggers for keyword advertising, so that when the name of certain competitor institutions were searched, a VCC school name would come up as the first sponsored search result.

The agency began receiving complaints from member institutions about VCC’s use of keyword advertising as early as April 2009. As a result, it released an interpretation guideline for Bylaw 29, which provided that:

“the use of another institution’s trademarks, logo, or business name, or anything confusingly similar, by a registered institution in any metatags (website or html), search engine AdWords, adCenter keywords, or any similar medium for advertising purposes shall constitute false, deceptive or misleading activity within the meaning of Bylaw 29(1), and is prohibited.”

However, in what would be a blow to the agency’s case, the court held that the interpretation guideline did not have the force of a bylaw and could not be used as an aid to the statutory interpretation of Bylaw 29, and specifically as to what would constitute misleading or confusing advertising.

The agency sought a permanent injunction restraining VCC from contravening Bylaw 29, and specifically restraining VCC from using business names of its competitors in connection with its advertising strategy. The agency’s position was that VCC had contravened Bylaw 29 by using competitors’ names as keywords, and failing to use its own in its internet advertising.

The agency also put forward the evidence of two students who claimed to have been confused by VCC search results appearing in response to search queries for other institutions. The first student went so far as to enrol in a course at a VCC institution before realising it was the wrong institution, and the second had made an appointment to tour a VCC institution before realising it was not the one she had thought it was.

In the absence of Canadian jurisprudence on keyword advertising, the court turned to US authorities on the subject, adopting the position that where a competitor’s name is used only in keyword advertising and does not appear in the heading or text of the advertisement, there is no likelihood of confusion.

The court also had regard to Canadian jurisprudence in the area of trademark law as to what is meant by the terms “confusing” or “misleading” in order to interpret Bylaw 29. In a cursory analysis, the court held that it should have regard to all the “surrounding circumstances” when considering the effect of the impugned advertising on those persons who “normally comprise the relevant market”.

The instances of confusion set out in the agency’s evidence were discounted by the court, which considered that any confusion experienced by the students in question was attributable to their own carelessness, and not as a result of anything that VCC had done. The court did not find that anything that VCC had done would lead a potential student astray or into making a “harmful error of judgment”. This is a markedly different test from whether there exists the possibility of confusion as a result of the alleged passing off or infringement in trademark jurisprudence.

In addition, in noting that the VCC websites to which a potential student would be guided by the sponsored links contained enough information to inform a visitor of the correct name of the VCC institution, the court found that any initial error that a visitor or potential student had made in clicking on the sponsored link could be remedied by returning to the search results page. Again, the issue of potential confusion was not analysed in any depth; however, in another departure from trademark jurisprudence, the court instead appeared to focus on the ease with which actual confusion could be remedied after the fact.

The court held that VCC had not breached the bylaw, as its keyword advertising was not designed to mislead anyone. Instead, it provided potential students with the “opportunity to investigate and consider other institutions besides the one they were looking for”, which the court considered to be beneficial to the consumer. Here too the court did not focus on the narrower issue of passing off or infringement, and the potential harm to the institutions whose names were being used as keywords, but rather imported the notion of the abstract benefits of competition into the analysis of whether the keyword advertising was misleading.

Although this case arose in the context of misleading advertising, it may be indicative of the manner in which Canadian courts will approach the issue of keyword advertising in the context of trademark or passing off cases. However, the unique facts of the case, and the fact that it was brought strictly under the act in question, may limit its applicability. It is hoped that future keyword advertising cases will examine the issue of actual or potential confusion in more detail than the present case, as well as being slower to focus on the perceived benefit of consumer choice as opposed to the potential effect on the trademark or name being appropriated for keyword advertising by a competitor.