South Africa: Adwords: The ASA Has A Clearvu Too

Last Updated: 14 April 2015
Article by Gaelyn Scott

Most Read Contributor in South Africa, September 2016

The 2014 South African case of Cochrane Steel Products v M-Systems Group (Pty) Ltd made the headlines because it was South Africa's first keywords case and we wrote about that case too. It dealt with the issue of whether Cochrane, which sells security fencing under the trade mark Clearvu, could stop its competitor, M-Systems, from bidding on words like 'clear vu' as Google AdWords, something it did to ensure that people who search ClearVu get to see M-Systems' GoogleAds.

The court, following international precedents including the Louis Vuitton and Interflora cases in the EU, as well as the Intercity v Nakedbus case in New Zealand, held that there was nothing inherently wrong from a trade mark law perspective with a company using a competitor's trade mark as a keyword, provided that this use didn't result in any consumer confusion. As there was no confusion here, Cochrane's case failed.

But the case was unusual. First, it dealt with passing-off rather than trade mark infringement. That's because Cochrane had not yet managed to secure a trade mark registration, with M-Systems having opposed the trade mark application for ClearVu. Second, Cochrane claimed that the court should recognise what can best be described as a form of passing-off lite, something that's called 'leaning on', and something that simply requires reputation but not confusion. The court declined to do so.

The case took another unusual turn recently when Cochrane, obviously unhappy with its defeat in the High Court passing-off case, decided to lodge a complaint with the Advertising Standards Authority. The ruling of the ASA Directorate was handed down on 3 February 2015.

The ASA started off by summarising the relevant facts as follows: Cochrane started advertising its patented security fence in 2006; Cochrane applied to register the name ClearVu as a trade mark; M-Systems, which had started selling its competing product in 2012 and had then started bidding on words like 'clear vu' as Adwords, opposed the trade mark application; the trade mark opposition proceedings were still pending.

The ASA then described Cochrane's complaint somewhat awkwardly as being one that related to M-Systems' 'reliance on Google's Adwords to have its own advertisements appear as GoogleAds when consumers search for specific items or words, including the words "ClearVu", " clearvu" or "clear view".'

The ASA took the easy way out, holding that it didn't have jurisdiction to hear the matter. But not, as one might expect, on the grounds that the matter had already been determined by the High Court – although the ASA did refer to the High Court proceedings, it said very little about them, other than making the observation that Cochrane had claimed that the issues in the High Court case were different from those before the ASA.

Rather, the ASA reached its decision not to deal with the matter as follows. It said that the ASA can only deal with advertisements, and that the ASA's jurisdiction only relates to the content of published advertising. It said that the term 'advertisement' is defined in Clause 4.1 of Section 1 of the ASA Code to mean 'any visual or aural communication, reference or notification which is intended to promote the sale...of any goods or services.'

This case, said the ASA, did not deal with an advertisement at all. What it dealt with instead was M-Systems' policy of bidding on Adwords like 'clear vu'. The ASA put it as follows: 'It appears as if the complainant is not taking issue with the actual content or claims of the respondent's GoogleAds that appear when one does a search for "clearvu", but rather with the fact that the respondent uses the keyword "clearvu" to ensure that its sponsored link appears as one of the GoogleAds.'

The ASA did have to acknowledge that it has in an earlier case held that 'the content of the GoogleAds that appear as sponsored links' are advertisements as defined, but it said that 'this, however, does not extend to the keywords (AdWords) selected by any particular advertiser.'

The ASA fortified its stance that there is a clear distinction between the keyword used and the GoogleAds advert that the keyword brings up, by referring to Webopedia. This publication apparently makes it clear that 'the Adword is not regarded as the advertisement itself, but rather as a trigger that ensures that one's advertisement is displayed.' The ASA also referred to Google's own website regarding Adwords, which the ASA said quite makes it quite clear that 'the "ad" would be regarded as advertising, and not the "search terms" opted for'.

Finally the ASA made the point that, even though Google's Terms and Conditions for Adwords (which M-Systems would have agreed to) say that the service must not infringe any advertising codes of practice, this does have the effect of extending the scope of the ASA Code to include AdWords bought on a 'behind the scenes' basis.

So Cochrane is still unable to stop its competitor from using its trade mark Clearvu as a keyword, something which has the effect that people searching for that trade mark get to see ads for M-Systems' competing product. It sounds so unfair! But it does mean that South African law regarding keyword usage of trade marks is in line with the law in other parts of the world.

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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