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Monday, April 18, 2016

Court provides clarity on Google AdWords and use 'as a trade mark'

by James Gonczi, Associate

Justice Katzmann's recent decision in Veda Advantage Limited v Malouf Group Enterprises Pty Limited [2016] FCA 255 has provided clarification on whether use of a competitor's trade mark as a Google AdWords search term, and as text in a sponsored link, constitutes use 'as a trade mark' for the purposes of section 120 of the Trade Marks Act. This is an issue which has had scant judicial consideration in Australia, so her Honour's decision provides useful clarification on the rights of advertisers to use their competitor's trade marks in the course of their online advertising.

The applicant (Veda) is a supplier of credit reporting services. Veda owns several trade marks incorporating the word 'Veda', which were registered in, among other classes, class 36 for various financial services, including credit enquiries (the Veda Trade Marks). The respondent (Malouf) operates several businesses which target people with poor credit ratings and assists customers to dispute and apply to have negative listings removed from credit reports compiled and maintained by credit reporting bodies such as Veda.

In the course of advertising its various businesses via Google, Malouf used at least 86 keywords which consisted of, or incorporated, the word 'veda'. The keywords themselves were not visible to consumers who used the Google search engine and located Veda's sponsored links. However, the sponsored links did include the word 'Veda' in conjunction with various other words in the headings of the sponsored links.

Use 'as a trade mark'

As to the meaning of 'use as a trade mark' her Honour referred to the well-known statement of the Full Court in Coca Cola Company v All-Fect Distributors Ltd (1999) 96 FCR 107 (Coca Cola). In that case the Full Court found at [19] that use “as a trade mark” means use as 'a “badge of origin” in the sense that it indicates a connection in the course of trade between goods and the person who applies the mark to the goods'.

Use of 'veda' in the keywords

Her Honour concluded that the use of a competitor's trade mark in the keywords did not constitute use as a trade mark. Important to her Honour's determination was the fact that the keywords were not visible to customers who viewed the sponsored links. Her Honour dismissed as nonsensical the argument that an invisible word was capable of distinguishing the services of a trader in the sense contemplated by the Court in Coca Cola.

Her Honour distinguished the judgment of Rangiah J from Accor Australia & New Zealand Hospitality Pty Ltd v Liv Pty Ltd [2015] FCA 554 (Accor). In Accor the Court found that use of the phrase "Harbour Lights" in the metatags of a website by a business rival of the exclusive licensee of that trade mark constituted use 'as a trade mark'. However the evidence in that case suggested that the metatags in issue were not entirely invisible if a user knew how to locate them. Moreover, her Honour noted that the decision in Accor was at odds with the decision of Kenny J in Complete Technology Integrations Pty Ltd v Green Energy Management Solutions Pty Ltd [2011] FCA 1319, which rejected the contention that the unauthorised use of registered trade marks as metatags was trade mark use.

Use of 'veda' in the headlines of sponsored links

The position in relation to the sponsored links was more difficult. From at least August 2012 to October 2014 Malouf use word 'Veda' in various hyperlinked advertisement headings, such as:

  • Clean Your Veda File;
  • Fix My Veda History;
  • Fix Veda File;
  • The Veda Report-Centre; and
  • The Veda Report Centre

Malouf argued that the use of 'veda' in these headlines was purely descriptive of the character of the Malouf businesses, namely the repair of Veda credit reports. With two exceptions, her Honour agreed with Malouf's characterisation. However, when it came to both 'The Veda Report Centre' and 'The Veda Report-Centre' her Honour concluded that the use of 'veda' was use 'as a trade mark', designed to indicate a connection between Malouf and Veda. In this respect, her Honour acknowledged that the use of a trade mark may involve a descriptive element, but nevertheless be used as a badge of origin.


This decision provides some useful clarification regarding the rights of businesses to use a competitors trade mark in the context of online sponsored advertising. Businesses can be buoyed by her Honour's conclusions in respect of the use of invisible keywords. However, advertisers who wish to use their competitors' marks must still proceed with caution. This case succinctly demonstrates that there is a fine line between uses that are permissible as a merely descriptive use of services offered, and uses that rise to an indication of the origin of those services. Nuance remains the name of the game, and it is important to consider all possible meanings that the use of a trade mark may convey, as it will not be sufficient that the use of a trade mark is descriptive if it is also capable of being seen as indicating a badge of origin.

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