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Law timeS • September 20, 2010 FOCUS PAGE 11 use the names or trademarks of competitors have come down in favour of the advertiser. Two recent cases, Private Ca- Courts deliver first word on keyword advertising T BY JUDY VAN RHIJN For Law Times he first judicial pro- nouncements on key- word advertising that magazine or the Yellow Pages. B.C. Supreme Court Justice reer Training Institutions Agency v. Vancouver Career College (Burna- by) Inc. and Chocolat Lamontagne Inc. v. Humeur Groupe-conseil Inc., have both said that the prac- tice doesn't constitute false, de- ceptive or misleading advertising and instead encourage people to use it as a marketing tool. In the Vancouver case dated May 28, the Private Career Train- ing Institutions Agency, a Crown body that regulates private train- ing schools, sought a permanent injunction restraining the Van- couver college from using com- petitors' business names in its keyword advertising strategy. The case gives a description of how Internet search engines collect and store data about web sites. When a user enters a term, the search engine produces a list of web sites ranked according to relevance. However, it's possible for advertisers to purchase key- words grouped around themes aimed at specific marketing goals. They effectively place a bid on words with a connection to their business, including their competitors' names. When the user enters a triggering keyword, the search engine finds the ad that has the highest bid on it and displays it as a sponsored link in a prominent location. If the user selects it, the advertiser must pay according to its bid. The Crown agency's argument against this practice centred on a consumer-protection perspec- tive that noted the strategy is clearly aiming to lead students seeking information about one institution away from it towards the advertiser. It gave two real- life examples of students who had in fact found themselves led astray. But the college argued the practice is the modern-day tech- nological version of the generally accepted marketing practice in which a company places its ads close to a competitor's in a trade Geoffrey Gaul accepted that ar- gument but noted it's important that the sponsored link doesn't replace or displace the organic search results for relevance that appear free of charge. He also emphasized that a user who looks at a sponsored link should be able click a back button to return to the organic search re- sults, where the rightful owner's name will appear. On the question of confu- sion, Gaul said: "We ought to give the average consumer a certain amount of credit. Con- sumers are not generally com- pletely devoid of intelligence or normal powers of recollection, nor are they totally unaware or uninformed about what goes on around them." He noted the overriding consideration was "all the surrounding circumstances" and said he believes potential students are making a serious commitment that requires a high degree of care. He also suggested there may be a benefit in giving potential students the opportu- nity to investigate or consider other institutions. Brian Isaac, a partner at Smart & Biggar/Fetherstonhaugh, says the matter is the first Canadian case to tackle the issue. "It doesn't shed as much light as we would hope," he says. "The point that makes it less interesting is that it deals with the rules of advertis- ing that the colleges are subject to, not the interpretation of trademark legislation. It consid- ers whether it is misleading or deceiving behaviour rather than the question, does it constitute use? The judge rejected that peo- ple were being misled by an ex- ercise of pragmatism. He didn't think students looking for a col- lege would be misled." Sheldon Burshtein of Blake Cassels & Graydon LLP agrees it's hard to extrapolate the Van- couver case to other trademark matters. "There are two issues to the problem, and the cases have been all over the map on both issues. Firstly, for there to be li- ability, there typically has to be a trademark use. Use is defined very specifically and typically requires visual use. In keyword Stacey L. Stevens | David F.MacDonald | Michael L. Bennett bars for school fundraising. The advertiser said its product was an alternative to its competitor. "It was clear to the user that it was positioned as an alternative," says Burshtein. "Once again, there was no real discussion of use, and the judge said there was no real confusion. We now have two cases that say there is no confusion, but does it go to the heart of it?" The outcomes are consistent It's hard to extrapolate the Vancouver case to other trademark matters, says Sheldon Burshtein. advertising, the user never sees how the system works in the search engine. Use is not dis- cussed in this case. The second issue is, is there confusion? The discussion on confusion is not an analysis. It basically says that these courses are $4,000 a piece. It is not a spur-of-the-moment purchase, end of story." The Quebec case, which fol- lowed in July, involved compa- nies that were selling chocolate with pronouncements in the European Court of Justice and some cases in the United States that have said that as long as there's no misrepresentation, keyword advertising with a competitor's mark is allowable. The Vancouver case was highly selective of the American cases it cited. It referred to some U.S. matters that allow the practice but not to another group that don't. "It didn't even select all the ones that favoured the prac- tice," says Burshtein. "In fact, they're all trial decisions. There has been an appellate decision on the U.S. Second Circuit in Rescuecom Corp. v. Google Inc. The court said that the practice did constitute a use and that it wouldn't preclude the possibility that there could be a problem. Trust [ It's all an open game." For his part, Isaac says he con- tinues to look at U.S. decisions because there's still no definitive Canadian case. "The Canadian case is not a depreciation-of- goodwill case. We are still con- cluding what would be reason- able for a searcher to do on the Internet. How do consumers perceive these searches? There have been some surveys filed in court cases in the U.S. and there is some ongoing independent work by academics on what the perception is of search results. Surprisingly, they are finding that a significant percentage of respondents who answered ques- tions really didn't understand the distinction between sponsored links and organic results." Burshtein, too, says the issue continues to develop. "What at the end of the day will turn this? Ten years ago, users of the net didn't know how it worked. These days, we all use the net on a daily basis. Users are lot more sophisticated and less likely to be confused. In some cases they will be when there is misrepresenta- tion. Courts will probably fold misrepresentation and confusion together at some point. That's the key test." LT Every time you refer a client to our firm, you're putting your reputation on the line. It's all about trust well placed. For over 70 years Thomson, Rogers has built a strong, trusting, and collegial relationship with hundreds of lawyers across the province. As a law firm specializing in civil litigation, we have a record of accomplishment second to none.With a group of 30 litigators and a support staff of over 100 people,we have the resources to achieve the best possible result for your client. 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