Court rejects the concept of initial interest confusion

In Vancouver Community College v Vancouver Career College (Burnaby) Inc the British Columbia Supreme Court issued one of the first Canadian decisions addressing at length the issue of keyword advertising in the context of an action for passing off. Consistent with previous cases which addressed similar issues (eg, the use of a competitor’s mark in metatags), the court found that the use of a competitor’s trademark in keyword advertising did not constitute passing off. In doing so, the court rejected the idea of initial interest confusion as a basis for a finding of a likelihood of confusion.

Search engines such as Google and Yahoo! offer a service whereby website operators can pay to have links to their website appear in search results as sponsored links alongside the search engine’s organic results. Website owners can bid on certain keywords, including the trademarks of others, which then act as a trigger when searched, causing a sponsored link to appear in the search results. The sponsored links are displayed in a prominent but separate section from the search engine’s organic results. 

The central issue in the case was whether the defendant’s use of the mark VCC in its keyword advertising constituted passing off of the defendant’s services. The evidence at trial was that the plaintiff had used the VCC trademark between 1965 and 1990, when use of the mark ceased until 2013, when it recommenced. In the meantime, in February 2009 the defendant began a marketing campaign aimed at increasing the profile of the college. As part of the campaign, the defendant purchased VCC as a keyword for the search engines Google and Yahoo!, although it did not otherwise use this term in its public materials and the term was not visible in the search results.   

Ultimately, the plaintiff failed to satisfy the first element of the test for passing off, which required that the plaintiff establish goodwill or reputation in the VCC mark. However, the most interesting part of the decision is the court’s analysis of the second element of the test, whereby a plaintiff must establish that the defendant caused confusion through a misrepresentation.  

In considering this issue, the court looked at what happens when a person searches online. When such a search is conducted, the user enters a search term into a search engine and, rather than being taken directly to a specific website, the user is presented with a list of search results which contain both organic and sponsored results. The user can then review the search results before making a decision to click on an organic or sponsored link and be taken to a specific website.

It is well known that the issue of confusion is to be considered from the perspective of the first impression of an ordinary consumer of the parties' goods or services. In the court’s opinion, this first impression cannot arise when the user is presented with the search results, but can arise only when the user accesses a website identified by the search. The court held that the relevant consumer understands that it is necessary actually to see a website in order to determine whose site it is. In this case, when a user reached the defendant’s site, it was clearly identified as such and there was no use of the plaintiff’s marks on the site. As such, there was no likelihood of confusion based on the user’s first impression. In so finding, the court rejected the concept of initial interest confusion, the essence of which is that confusion can arise in the mind of the consumer before goods or services are actually purchased.

This decision follows the recent Federal Court decision in Red Label Vacations Inc v 411 Travel Buys Limited (2015 FC 19), where the court found that the use of a competitor’s trademarks in metatags did not constitute passing off or trademark infringement. Despite these findings, a level of uncertainty remains as to how a court may treat keywords in Canada on a case-by-case basis, whether in visible or non-visible form. The precedential value of this case may be somewhat limited, given the facts and resulting analysis. Accordingly, it is unlikely that the issue of keyword advertising in Canada has been firmly settled. 

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

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