Western Canada Business Litigation Blog

Search and Ye May Find Something Else: Use of Competitors’ Names in Keyword Advertising and Domains

Posted in Civil Litigation, Torts
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Introduction

In Vancouver Community College v Vancouver Career College (Burnaby) 2017 BCCA 41, the British Columbia Court of Appeal found that Vancouver Community College (“VCC”) had established the tort of passing off against Vancouver Career College (“Career College”) for using “VCC” and “VCCollege” as part of Career College’s internet presence, overturning the trial judge on each component of passing off and awarding a permanent injunction to restrain Career College from using “VCC” or “VCCollege” to represent itself on the internet, including the domain name “VCCollege.ca” The court also considered for the first time whether or not the use of competitors’ marks in keyword advertising constituted passing off.

Background

VCC was appealing its initially unsuccessful attempt to have Career College cease use of VCC’s recognizable initials.  VCC had claimed passing off as a result of the respondent Career College’s use of the domain name VCCollege.ca, and breach of the official marks of VCC, but also contended that Career College’s practice of bidding on the keywords “VCC” and “Vancouver Community College” was confusing enough to satisfy the second component of passing off, and further breached its official mark. The trial judge found against VCC on each component of the tort of passing off, and dismissed the claim for breach of VCC’s official marks.

The Tort of Passing Off

To establish the tort of passing off, a party must prove goodwill in the trade name at stake, and that a misrepresentation was made by the defendant that is likely to confuse the public by presenting or suggesting a connection between the plaintiff and defendant. Damage to the plaintiff is presumed due to the plaintiff’s loss of control over their reputation resulting from the misrepresentation.

In this case, goodwill was easily established by showing that a sufficient portion of the marketplace knew that “VCC” indicated Vancouver Community College. The second component is likely confusion of the public through a misrepresentation. The trial judge found that the first impression of the trade name was formed only after the consumer had clicked through to the defendant’s website, so any confusion in the domain name “VCCollege.ca” was irrelevant. The Court of Appeal overturned that to find that “VCCollege” was equally as descriptive of VCC as of Career College and contains the acronym “VCC”, so the domain name “VCCollege.ca” was a misrepresentation likely to cause confusion. Finally, damage was sufficiently established by proving interference with VCC’s goodwill.

The Court did not think it had the necessary evidence before it to determine whether a breach of the official mark had occurred. It referred that matter back to trial for consideration after laying out the framework upon which it should be decided.

Keyword Advertising

Keyword advertising involves predicting which words a target consumer will enter into a search engine, and engaging in competitive bidding on those words. The highest bidder for each word will have their title and description displayed at the top of the search results, which ensures higher traffic to their website. The keyword itself may or may not be displayed in the search result. In recent years, it has become more and more common to bid on a competitor’s trade name, to ensure that one’s website is not only included in an internet search for the competitor’s, but may actually rank ahead of it in the search results.

A previous case against Career College considered its use of the words “VCC” and “VCCollege” in keyword advertising in the context of misleading advertising under the Private Career Training Institutions Act, [SBC 2003] c. 79.  In Private Career Training Institutions Agency v Vancouver Career College (Burnaby) Inc, 2010 BCSC 765, the court determined that Career College’s use of keyword advertising was not misleading advertising under the legislation. The use of a competitor’s name or mark in keyword advertising alone was not intended to mislead, and that it provided choice to the consumer which was considered a benefit.

In this case, VCC attempted to claim that bidding on the words “VCC” and “Vancouver Community College” was sufficient to satisfy the second component of the tort of passing off. The Court did not agree, finding that, “merely bidding on words, by itself, is not delivery of a message. What is key is how the defendant has presented itself, and in this the fact of bidding on a keyword is not sufficient to amount to a component of passing off…”

Relevance

The BC Court of Appeal has given a strong indication of how keyword advertising will now be treated in the context of passing off cases.  Whether or not bidding on the keywords “VCC” and “Vancouver Community College” can be considered a breach of an official mark was referred back to trial for determination, so that is yet undecided. What is known, however, is that the mere act of bidding on a competitor’s trade name as a keyword for one’s website will likely not result in a finding of passing off.

With thanks to articling student Caitlin MacDonell for her assistance.