Keywords businesses use to identify themselves to search engines could contravene trademark laws if they are a misrepresentation to the public, a B.C. court has ruled.
In a January 26 decision, the BC Court of Appeal determined that the VCC acronym used by Vancouver Community College was being misrepresented as an acronym for Vancouver Career College in online searches.
The case is unique because it involves the use of official marks for search engine keywords. Search engines like Google (Nasdaq:GOOG) sift through Internet web pages, identifying important words in URLs and website links. These keywords are later used to identify content on web pages relevant to people’s searches.
Vancouver Community College launched a civil suit against Vancouver Career College claiming that the career college’s use of the VCC acronym was a violation of the community college’s official mark and contrary to the Trade-marks Act.
The appeals court overturned a 2015 trial court’s decision that found Vancouver Career College had done nothing wrong in using the acronym. The trial judge’s original ruling stated that Vancouver Career College’s use of “VCC” prior to it becoming an official mark in 1999 allowed continued use. The trial judge dismissed the action, ruling that none of the components of “passing off” were met.
Passing off is a common-law tort that aims to defend unregistered trademark rights from misrepresentation by protecting a trader’s goodwill, which includes intangible assets like brand names.
To establish a passing-off claim, three requirements must be met: the plaintiff must have goodwill and be recognized by the mark, the public must have been deceived by the misrepresentation and potential or actual damages must have been sustained.
The trial judge in the earlier case ruled that Vancouver Community College did not own the goodwill in the VCC acronym, finding that the VCC acronym was generic and could be used by anyone.
In appealing the ruling, Vancouver Community College argued that it should not be required to establish the uniqueness of the mark. The BC Court of Appeal agreed.
“The appellant … contends the judge erred in principle in requiring it to establish a secondary meaning in ‘VCC’ as if the acronym was a generic term used by many firms,” said Justice Mary Saunders. “I consider the judge erred in fact on the issue of goodwill in ways that are obvious and material to the outcome.”
The appeal judge referred to precedent set in the province of identifying higher learning institutions by their initials, citing the University of British Columbia (UBC) and Simon Fraser University (SFU).
Justice Saunders also disagreed with the trial judge’s decision on whether, by using the VCC acronym, Vancouver Career College had created confusion for prospective students of Vancouver Community College.
The trial judge reasoned that misrepresentation had not occurred in that the first impression of the acronym VCC could not arise on a Google search but only once the searcher reached the website. Because the website would then correct any confusion from the search, the trial judge ruled, the requirement to establish passing off was not met.
“In my view, it was an error for the judge to discount the likelihood of confusion before the searcher arrives at the landing page of the website,” Saunders said.
The appeal court judge ruled that interference with Vancouver Community College’s goodwill was sufficient to establish damages.
The appeal court ruled in favour of Vancouver Community College and an injunction was placed on Vancouver Career College. The career college was permanently restrained from using VCC or VCCollege in online materials.
Lindsay Meredith, marketing professor at SFU’s Beedie School of Business, said he fears that if official marks can apply to keywords it will render Internet searches less effective.
“I don’t know how the Internet would function if we came down hard on keyword trademarks,” said Meredith, “but I’m afraid of the answer.”
Meredith used the example of the Kleenex brand. While Kleenex is a trademark name, it is also used as a general term for tissues. Meredith questioned how Google and other search engines would work if websites and businesses couldn’t non-maliciously use acronyms as keywords.
