Intercity Group (NZ) Ltd v Nakedbus NZ Ltd  HC
Did use of a competitor's mark in Google AdWords infringe
the trade mark?
Was the mark used descriptively in advertising or as a trade
I and N are the no. 1 and 2 long distance bus companies in NZ,
with I being the original monopoly.
I owns INTERCITY®. There were many prior disputes between
them in relation to "inter city" use.
N purchased 87 Google AdWords containing "inter city"
and used the phrase in advertising which was displayed when the
search term was entered into Google. The phrase also appeared on
I sued N claiming trade mark infringement, passing off and
breach of the Fair Trading Act 1986.
N asserted that its use was use of a descriptive term and not
trade mark use.
COURT DECISION AND REASONING
The NZ Trade Marks Act differs from Australian and European
trade mark legislation in requiring that "the sign is used in
such a manner as to render the use of the sign as likely to be
taken as being use as a trade mark" (s 89(2). N's use of
the mark in its Google AdWords was not use when consumers were
searching because the words are invisible to the consumer. As there
was no use for trade mark purposes, there was no infringement.
Although there was no trade mark infringement, the use of the
competitor's trade mark as keywords for Google AdWords purposes
was misleading and deceptive conduct in breach of the Fair Trading
I produced survey evidence showing that consumers used
"inter city" to search for I's website, not as a
generic search term. For generic searches, they used
"bus" plus the departure and destination locations. The
Court accepted this evidence. Accordingly, N's use in
advertisements and on its website was deliberate trade mark use.
N's use was not honest (for the s 95 defence) and therefore the
use was infringing.
N has appealed the decision.
Purchase/use of Google AdWords comprising the registered trade
mark of a competitor is not infringement. However, the trade mark
owner is likely to have a remedy under the Fair Trading Act 1986
for misleading and deceptive conduct.
Even quite descriptive words and apparently descriptive use can
be infringing when the evidence establishes that consumers use the
relevant words to search for the infringer's competitor rather
than for the goods or services generally.
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.
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