Google’s size and popularity make it an understandably attractive platform for businesses. Leveraging the search engine as a marketing tool involves optimising your web content so that it ranks highly in the organic search results, known as Search Engine Optimisation (SEO), and/or investing in an AdWords campaign.

The courts have previously considered Google’s liability for misleading or deceptive advertisements of businesses using their Adwords program, and the legality of bidding on another business’ trade marks.

The issues were again recently raised in an Australian case between credit data company Veda Group and competitor, Malouf Enterprises. The decision provides a useful framework in which to understand whether or not you can bid on a competitor’s trade mark in Google Adwords.

What is Google AdWords?

Google AdWords allows businesses to ‘bid’ on keywords that relate to their products or services and will help direct users to the business’ ads. On a typical search page, there are paid listings from businesses using AdWords at the top or on the right-hand side. Organic results follow below, and Google ranks these according to relevance, usefulness and popularity – rather than dollars spent.

Businesses invest considerable time and effort into selecting what keywords to bid on so their ads appear to relevant consumers – especially given businesses must pay a particular amount per ad click. What does this mean for competing brands that provide similar products and services and want to attract the same customers? Can businesses bid on each other’s brand names or trade marks?

What Happened in Veda Advantage Limited v Malouf Group Enterprises Pty Limited [2016] FCA 255?

Veda Advantage Limited (Veda) brought a case against Malouf Group Enterprises (Malouf), alleging that Malouf had infringed their intellectual property rights by

  • Bidding on Veda’s trade marked keywords in AdWords; and
  • Displaying the VEDA trade mark in Malouf’s Google Ads.

Veda argued that the conduct amounted to misleading and deceptive conduct under the Australian Consumer Law.

Although the companies provide similar credit repair services, it was evidenced that the two businesses provided distinct services. Veda controls 85 percent of the consumer credit check sector, and records on 20 million individuals and 5.7 million businesses. Veda owns several registered trade marks containing the word VEDA in class 36: financial services.

Malouf’s business, on the other hand, is not involved in record keeping or data collecting. Rather, it provides services to fix Veda reports and scores and assist individuals that encountered difficulty with other credit providers. Through the Google AdWords program, Malouf had bid on over 85 phrases containing the Keyword ‘VEDA’, including “Repair your VEDA History” or “your VEDA credit score”, to capture the ‘one in five customers that wanted to fix their Veda credit file’.

Bidding on a Trade Marked Keyword: Badge of Origin and Invisibility

Whether Malouf had infringed Veda’s registered IP rights and the ACL hinged on whether Veda used the keyword as a ‘badge of origin’ or ‘source indicator’ and whether Malouf’s ads displayed it visibly.

In 2013, Google announced that it would not prevent competitors from bidding on a third party’s business name or registered trade mark. Consistent with this policy, the Court found that where Veda’s use of its registered trade marks was invisible to the public, it would not be seen as a badge of origin that distinguished the mark to the exclusion of all others.

As such, Malouf’s ads could not be considered trade mark infringement or a breach of consumer law. Conversely, where the keyword VEDA visibly appeared in Malouf’s ads, Judge Katzmann held that this implied a commercial connection between Malouf and Veda and did infringe Veda’s trade mark.

What this means is that competing businesses are legally entitled to “buy” or bid on the same keyword(s) as each other, if they are not visible to the public.

What if the Keywords are Visible?

Judge Katzmann distinguished that mere visibility or display of the trade marked keyword would not automatically amount to infringement. His Honour held that where the use of the word was descriptive, and not used as a trade mark, it would not infringe IP rights. He further held that Malouf had not used the term VEDA as a trade mark, but rather as a descriptor to define the kinds of services they provided, such as cleaning or repairing Veda credit files and reports.

Judge Katzmann found that Malouf’s advertisements were not in breach apart from where he used the phrase, “The Veda Report Centre”. This was held to be an instance where the keyword was used as a trade mark and misleadingly implied a commercial relationship. 

Key Takeaways

As laws continue to develop around the use of Google AdWords, the Veda case provides a useful framework for other businesses using this marketing tool. Where you use another business’ trade marks, ensure that the keyword you select is hidden from public view, or is descriptive in nature. Following his Honour’s judgment in Veda, you may be liable for trade mark infringement and in breach of the ACL if you display keywords that wrongfully imply a commercial relationship between the two entities. If you’re currently using or intend to use Google AdWords and have any questions, get in touch with our online business and advertising lawyers on 1300 544 755. You can also read our articles about bidding on another business’s trade marks or using them in your Adwords campaign.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.
Daniel Smith

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