Click Wars: How South African Courts Have Weighed In On Google Ads And Trade Mark Battles

Introduction

In today’s digital marketplace, the battle for consumer attention is fought not only on store shelves but also on search engines. With Google Ads enabling businesses to bid on competitors’ trade marks as keywords, an important question arises: does this constitute legitimate competition or unlawful exploitation?

Industry estimates suggest that Google processes approximately 16.4 billion searches daily and has more than 5 billion users worldwide, highlighting the immense scale of online competition for visibility. In this environment, digital advertising strategies can significantly influence consumer behaviour and brand visibility.

South African courts have begun to consider where the line lies between fair competition and unlawful exploitation, balancing the protection of intellectual property rights against the benefits of vigorous commercial rivalry. These decisions influence how businesses compete online and whether bidding on a rival’s brand name constitutes a lawful form of comparative visibility or actionable misconduct.

The growth of digital marketing has transformed how businesses reach consumers. Google AdWords (rebranded as Google Ads on 24 July 2018) enables advertisers to bid on keywords so that their advertisements appear when users search those terms. One particularly contentious practice is the bidding on competitors’ trade marks as keywords.

This practice raises questions concerning trade mark infringement, passing off, and unlawful competition, especially where search advertising diverts traffic or risks misleading consumers.

Google generally does not restrict the use of competitors’ trade marks as keywords, although it may restrict the use of trade marks in advertising following a complaint review. Courts have nevertheless scrutinised whether such conduct gives rise to infringement, passing off, or unlawful competition, where consumer confusion or unfair exploitation of goodwill arises.

How Google Ads Work

• Keyword bidding: Advertisers select keywords, including competitors’ brand names, to trigger their advertisements when users search those terms.
• Ad placement: Sponsored advertisements typically appear above or alongside organic search results.
• Google policy: Google generally permits advertisers to bid on competitors’ trade marks as keywords, although it may restrict the use of trade marks in advertising after reviewing a trade mark complaint.

Trade Mark Rights and Keyword Advertising

The Trade Marks Act 194 of 1993 protects registered trade marks against unauthorised use in circumstances contemplated by section 34. Where a registered mark is used as a Google Ads keyword, section 34 may potentially be implicated depending on the nature of the use, the advertisement itself, and whether confusion or unfair advantage arises.

However, the leading South African keyword advertising decision, Cochrane Steel Products (Pty) Ltd v M‑Systems Group (Pty) Ltd [2016] ZASCA 74, was decided under the common law because the mark CLEARVU had not yet been registered.

Where there is no trade mark registration, proprietors may rely on common-law remedies. Passing off is one of the most recognised forms of unlawful competition and constitutes a delict in South African law.

Passing off occurs when one trader represents, directly or indirectly, that its goods or services are associated with those of another trader, resulting in a likelihood of deception or confusion. Proprietors of unregistered marks may therefore rely on passing off principles to restrain deceptive or confusing commercial conduct.

The Cochrane Decision (ClearVu case)

The South African Supreme Court of Appeal considered keyword advertising in Cochrane Steel Products (Pty) Ltd v M‑Systems Group (Pty) Ltd [2016] ZASCA 74.

Cochrane alleged that M‑Systems unlawfully used the mark CLEARVU as a keyword in Google AdWords to direct consumers searching for CLEARVU products to M‑Systems’ competing offerings. Cochrane contended that this conduct amounted to passing off and unlawful competition.

The Supreme Court of Appeal held that, on the facts of the case, the use of CLEARVU as a keyword did not amount to unlawful competition or passing off. The Court emphasised that keyword advertising is not inherently unlawful and that liability depends on whether consumers are likely to be deceived or confused by the advertisement as presented.

Importantly, the Court distinguished between the purchase of a competitor’s trade mark as a hidden keyword and the content of the advertisement itself. The decisive question was whether the advertisement enabled reasonably observant internet users to identify the true origin of the advertised goods or services.

The Court considered a number of factors, including:

• the distinction between sponsored advertisements and organic search results;
• the manner in which the advertisements appeared to consumers;
• whether the advertisements falsely suggested an association with Cochrane; and
• the absence of evidence demonstrating actual consumer confusion.

The Court observed that internet users generally understand that search results may include advertisements from competing suppliers. Because M‑Systems’ advertisements clearly identified M‑Systems as the advertiser and did not falsely suggest an association with Cochrane, the Court found insufficient evidence of deception or confusion.

The decision reflects the broader principle that competition itself is not unlawful. Keyword advertising, much like opening a business next to a competitor, may constitute lawful commercial rivalry provided that the resulting advertisement does not mislead consumers or create a likelihood of confusion.

Conclusion

The South African legal position relating to the use of competitors’ trade marks as Google Ads keywords seeks to balance the protection of intellectual property rights with the promotion of fair competition.

Importantly, in the CLEARVU case the court was not dealing with a registered trade mark. Accordingly, the court was not tasked with considering the rights granted by registration. A trade mark registration may warrant a more nuanced position. Afterall, a trade mark registration grants the proprietor of the mark exclusive use of that mark throughout South Africa for use in relation to the goods or services covered by the registration. The use of the mark as a keyword, albeit hidden, may impinge the rights of the proprietor, whether by way of direct infringement or dilution. This aspect was, however, not considered in the case of CLEARVU.

The current South African position suggests that keyword bidding alone will not ordinarily establish passing off or unlawful competition absent deception, likely confusion, or unfair exploitation of goodwill. The critical enquiry remains whether the advertisement itself is likely to mislead consumers regarding the origin, affiliation, or endorsement of the goods or services being advertised.

Accordingly, businesses may, in appropriate circumstances, bid on competitors’ trade marks as keywords provided that their advertisements clearly identify the advertiser and do not suggest affiliation, endorsement, or origin.

As online advertising continues to evolve, businesses should ensure that competitive advertising strategies remain transparent, accurate, and consistent with both trade mark principles and fair competition practices.

What seems clear is that trade mark proprietors should secure registration of their trade marks, as this approach removes the need for proving a reputation and could offer enhanced enforcement options, given the depth of the enforcement options within trade mark legislation in South Africa.

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.