An important facet of marketing for many businesses is the ability to attract online consumers by directing as many of them as possible to their websites. While Google and other popular search engines have ways of "ranking" websites for specific search terms, businesses can promote their way up the list by purchasing "AdWords" (for Google) which will elevate the status of their website to "sponsored links" when search terms using those AdWords are used.

This creates an interesting problem regarding the use of competitors' brands and product names and how far businesses can go to attract custom away from competitors to their own sites.

The Federal Court has reviewed this issue in three recent cases, Mantra v Tailly (see eAlert Google Adwords in recent European and Australian decisions), Kennards Hire v Caruso Nominees and ACCC v Trading Post Australia, Google Inc & Ors.

The Court has held that purchase of an AdWord incorporating a competitor's trade mark can be a trade mark infringement, answering the question of whether the mere purchase of an AdWord (which is not actually used on the purchaser's website) constitutes "use" of that mark for the purpose of trade mark infringement.

Mantra v Tailly

The Federal Court held that use by Tailly of Mantra's registered trade marks in domain names registered by Tailly, and at the websites hosted at those domain names, to advertise services closely related to those in which Mantra's trade marks were registered, constituted trade mark infringement. The Federal Court ordered that Tailly be restrained from using Mantra's registered trade marks as a "search engine keyword".

Kennards Hire v Caruso Nominees & Ors

In the recent case of Kennards Hire v Caruso Nominees and Others, the Federal Court held that, by purchasing Google AdWords for the words "Kennards Hire" and "Kennards", Caruso Nominees and its sole director David Caruso had infringed Kennards Hire's trade marks. The Court held so despite the fact that Caruso Nominees did not use Kennards Hire's registered trade marks on the website corresponding to the sponsored links in question, at which it advertised its own equipment hire services.

The Court also found that Caruso Nominees had breached the Trade Practices Act by misleading consumers who conducted searches for the AdWords and who clicked on the sponsored link to the respondents' website or visited the physical premises of the respondents' business into believing that the website or premises were owned by or affiliated with Kennards Hire. The Federal Court also held that by engaging in this conduct, Caruso Nominees had also made false representations in contravention of the Trade Practices Act.

The Federal Court permanently restrained the respondents from purchasing or using Kennards Hire's registered trade marks as AdWords to advertise their business or website.

ACCC v Trading Post Australia, Google Inc & Ors

Google's liability for allowing traders to purchase AdWords that comprise their competitors' registered trade marks is under present consideration by the Federal Court in a proceeding commenced in 2007 by the ACCC against the Trading Post Australia, Google Inc and Others.

While the Trading Post Australia accepted that it had engaged in misleading and deceptive conduct by purchasing AdWords for the names of car dealerships against whom it competes in the automotive sales industry, the case has continued against Google Inc and Others with the Federal Court to shortly hand down its eagerly anticipated decision.

While this case does not concern whether the conduct alleged amounts to trade mark infringement, it will give traders a good idea about whether Google has any liability for allowing competitors to purchase AdWords that infringe of another traders registered and un-registered intellectual property rights.

The message for all businesses remains the same:

  • register trade marks to protect your business and product names
  • purchase AdWords for key words relevant to your business to increase your visibility for online searches
  • be vigilant in monitoring the use of your trade marks by competitors in domain names, on websites, and in AdWords.

As the above cases demonstrate, the Courts are now prepared to take a firmer stance to stamp out behaviour of businesses trying to trade off the goodwill of their competitors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.