Canada’s Intellectual Property Firm

Use of competitors’ names in keyword advertising held to be fair game

Authored byMark Pidkowich

On May 28, 2010, the British Columbia Supreme Court became the first Canadian court to weigh in on the issue of keyword advertising. In Private Career Training Institutions Agency v. Vancouver Career College (Burnaby) Inc., 2010 BCSC 765, Justice Gaul held that the use of competitors’ business names in keyword advertising is not false, deceptive, or misleading and may in fact be good for the consumer by providing an opportunity to examine a number of competitors offering similar products and services.

Private Career Training Institutions Agency (the “Agency”) is a provincial regulatory body created to establish basic education standards for registered career training institutions operating in British Columbia and to provide consumer protection to prospective students. The Agency is permitted to enact bylaws that regulate advertising by registered institutions. Bylaw 29(1) states that an institution “must not engage in advertising … that has the capability, tendency or effect of deceiving or misleading a consumer.”

In April 2009, the Agency began receiving complaints from several member institutions regarding the keyword advertising practices of Vancouver Career College (Burnaby) Inc. (“VCC”). Keyword advertising services such as Google AdWords allow an advertiser to pay to have its advertisement associated with specific keywords so that when a user enters one of those words into the search engine as a search term, the advertisement is prominently displayed to the user along with the search results as a “sponsored link.” An advertiser can place a bid for a keyword, and the bid amount determines the advertiser’s rank in the list of sponsored links when that keyword is searched. If the user clicks on one of the sponsored links, that advertiser is charged according to the bid it has submitted.

VCC admitted that it employed an extensive keyword advertising strategy, bidding on more than 7,000 keywords through Google and Yahoo. Ultimately, VCC began using the business names of its competitor institutions as triggers for keyword advertising in 2008 with the result that VCC school names came up as the first sponsored links when the names of various competitors were searched.

In response, the Agency sought a permanent injunction restraining VCC from using the business names of other member institutions in connection with its Internet advertising. The Agency alleged that VCC’s strategy of using competitors’ business names as keywords in its Google and Yahoo advertisements amounted to false, deceptive or misleading advertising contrary to Bylaw 29. More specifically, the Agency alleged that VCC designed its strategy to lead students seeking information about a competitor’s institution away from that institution and towards one of its own. Arguing that the issue should be examined from a consumer protection perspective, the Agency further asserted that no exception should be made for advertisements that mislead students, even if only temporarily. As evidence of deception, the Agency proferred the experiences of two students who claimed they had been misled by VCC advertising. For its part, VCC denied that such advertising practices are false, deceptive or misleading and likened its approach to the commonly accepted practice of competitors placing advertisements in close proximity.

Acknowledging the dearth of Canadian jurisprudence on the propriety of keyword advertising using the business names of competitors, the Court surveyed American case law on the issue before resorting to established Canadian trademark law to determine what is meant by the terms "confusing" and "misleading" in the context of improper advertising. Citing United Artists Corp. v. Pink Panther Beauty Corp. (1998), 80 C.P.R. (3d) 247 (F.C.A.), the Court held that it must make a determination of an advertisement’s effect on those persons who normally comprise the relevant market. Importantly, the Court held that the average consumer is not “generally completely devoid of intelligence or normal powers of recollection” nor “totally unaware or uninformed as to what goes on around them.”

Ultimately, the Court was not persuaded that VCC's keyword advertising strategy had led or could lead a potential student astray. Moreover, the Court found that any confusion suffered by the two students flowed from their own imprudence and that they had not been led astray by anything other than their own oversight. If a student erroneously chooses to examine a VCC sponsored-link website, the Court was satisfied that the information readily available on the VCC websites is sufficient to inform the student that the website belongs to a VCC institution and not the institution named in the search terms. In the Court’s opinion, an Internet search does not force, trick, or tell a consumer to examine those entities located in the sponsored links. A consumer who chooses to investigate the sites of those other parties does so of his or her own volition. Having done so, the consumer is able to quickly and easily retreat from that inquiry and return to the original search results page with no harm done.

The Court further agreed with VCC’s contention that its practice of using keyword advertising is no different than the time-honoured and generally accepted marketing practice of locating an advertisement close to that of a competitor in traditional media. Accordingly, the decision vindicates the advertising solutions provided by Google and Yahoo and cautions businesses to bid high for their own trademarks and trade-names to ensure that their businesses take precedence in search results for their own products and services.