Permitted Keyword Advertising in Canadian Trademark Law

One of the basics of trademark law is “use”. It is important in several ways, but a major one is testing whether somebody is infringing another’s mark.

A lot of this comes down to the purpose of trademarks: giving a consumer tools to distinguish one product from another. With that in mind, it is obviously important to prevent someone from using another’s trademark, lest there be confusion by the public.

There are competing interests, though. Some might remember the Pepsi Challenge from a few decades ago, where Pepsi asked blind taste testers to say whether they preferred the taste of Pepsi over Coke. Pepsi was obviously mentioning the Coca Cola trademark, but was this “use” for trademark purposes? Courts sided with Pepsi, citing the legitimate reference for comparison purposes. Again, the goal is to help the public distinguish and choose.

But there are other types of use, including those arising through new technologies. Keyword advertising is an example, and how it fits into traditional trademark rules.

Keyword advertising is employed by companies like Google or Facebook, which derive a huge amount of their income from ads. Customers are allowed to buy or bid on particular keywords. When those keywords are typed into search engines, the user will either be directed to a particular site, or shown ads which match the keywords. The business which purchased the keywords will either pay when the ads are displayed, or when a user clicks on them.

There is no requirement by the ad companies that keywords be owned by the successful bidder. So, for instance, Honda could pay for the “BMW” keyword and whenever users searched BMW, a Honda ad would be displayed. It is a simple way for companies to get their name in front of competitor’s users.

A competitor whose keyword is being used hates this, of course. They would rather the world not know about the other company, or at least minimize its exposure. Some of them have attacked keyword advertising, and have used trademark law as one of the weapons.

The argument they raise is that buying a keyword constitutes “use” of that word for purposes of trademark law. If they are correct, it would curtail any reference to the keyword by a party other than the trademark owner. You would expect competitors to push back against this. The advertising companies like Google would also not be pleased if the market to bid up prices for keywords was restricted.

Canadian law appears to be allowing this type of keyword advertising, but not without limits. The British Columbia Court of Appeal reviewed the law in Vancouver Community College v. Vancouver Career College (Burnaby) Inc, 2017 BCCA 41, rev’g 2015 BCSC 1470. The Career College was using the Community College’s marks in keyword advertising, and the Court of Appeal found that bidding on keywords did not constitute confusion for trademark law. However, they also said that the resulting ad which pops up could cause confusion, and in fact it did in this case (the ad referenced “VCCollege.ca”, which could have applied to either party).

So while keyword advertising is theoretically allowable, other factors need to be considered and vetted to ensure there is no confusion. Keep this in mind when looking at your overall marketing plan.