South Africa: AdWords: We're All On The Same Page

Last Updated: 17 May 2016
Article by Delene Bertasso

Most Read Contributor in South Africa, November 2016

A recent Australian decision on keyword usage of a registered trade mark is in line with decisions in many other countries, including South Africa.

The facts in the case of Veda Advantage Limited v Malouf Group Enterprises (Pty) Ltd (2016) FCA 255 were straightforward. Veda is a company that compiles credit reports and has trade mark registrations for the trade mark Veda in class 36 for financial services. Malouf is a company that helps people remove their negative credit ratings. In the course of its business, Malouf used a number of keywords (think Google AdWords) that incorporated the trade mark Veda. These keywords located sponsored links (advertisements) that also incorporated the trade mark Veda in their headings.

So, had the trade mark registrations for Veda been infringed? The court started off by deciding whether or not Malouf's use of Veda was "trade mark use". The court defined trade mark use as use that takes place to indicate a connection in the course of trade between the goods and the company that applies the trade mark. To put it differently, the trade mark must be used as a badge of origin.

The court went on to hold that Malouf's use of the name Veda in the various keywords was not trade mark use. It based this finding on the fact that keyword use is invisible use; in other words, use that is not apparent to the consumer. In the process, the court differed from an earlier Australian decision known as the Harbour Lights case, in which the court held that metatag use is trade mark use. So, according to the court in the Veda case, Malouf's use of the trade mark Veda in keywords did not infringe the trade mark registrations for Veda.

But what about the usage of the trade mark Veda in sponsored links (advertisements)? The court felt that, here, the situation was not quite as clear. The trade mark Veda was used in sponsored links in various forms, such as "Clean your Veda file". The judge accepted that this was descriptive use; in other words, use that described Malouf's business. This usage therefore did not infringe the trade mark registrations.

Other forms of sponsored link usage such as "The Veda Report Centre" were, however, different. According to the judge, use of this nature was trade mark use; that is, use suggesting a connection in the course of trade with Veda. So, in this instance, there was trade mark infringement.

The Veda decision is in line with various cases in Europe, such as Google v Louis Vuitton, Interflora v Marks & Spencer and Amazon v Lush. The approach in these cases has been that keyword usage of another company's registered trade mark is lawful if there's no confusion as to the origin of the goods. The thinking here is essentially this: most people know how the internet works; they understand that a search for one brand will also bring up results relating to competitor brands, and this won't confuse them. The Veda decision is also in line with the Naked Bus case in New Zealand, in which the court again highlighted the fact that keyword usage is invisible usage.

The Veda decision is also in line with the one South African decision on the matter of keyword usage, Cochrane Steel Products (Pty) Ltd v M-Systems Group (Pty) Ltd and Another 2014 BIP 248 (GJ) Ltd (which we covered in a previous ENSight). In this case, Cochrane, the owner of the trade mark ClearVu for fencing, sued a competitor called M-Systems for acquiring Google AdWords like "clearvu". These AdWords directed people searching those terms to advertising material for M-Systems rather than for Cochrane. The case was based on passing off rather than trade mark infringement because the trade mark ClearVu, although well used and well known, had not yet been registered (M-Systems had in fact opposed the application).

The judge in the Cochrane case said this: "AdWords are a familiar feature of the internet and consumers are used to distinguishing them from natural search results." The judge went on to find that there would be no confusion, saying that "a consumer who searches for ClearVu is confronted with a multiplicity of suppliers ... It is highly unlikely that the reasonably observant consumer would be confused and deceived into thinking they were all the advertisements of the applicant."

It's good to know that we're basically all on the same page.

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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