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B.C. Court Clicks With Internet Advertising Keyword Case

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Thursday June 10, 2010
Google has grown to become the world’s leading Internet company based largely on accurate search results, yet its financial success owes much to tiny advertisements that are posted as sponsored links alongside the "organic" search results.  The determination of which sponsored links appear on a Google search result page comes in part from a keyword advertising system in which marketers bid on specific words. Whenever a user clicks on the sponsored link, the marketer pays Google the bid amount.  Each click may only cost a few pennies, but with millions of clicks every day, the keyword advertising business is a multi-billion dollar business for Google and has been emulated by competitors such as Yahoo and Microsoft.

Keyword advertising has been a huge commercial success fueling many ad-supported websites, but it has not been without legal controversy.  The practice has generated a steady stream of cases addressing whether the use of a competitor's keyword raise potential trademark or misleading advertising issues.  For example, is Coca-Cola permitted to bid on the Pepsi keyword so that when an Internet user searches for Pepsi they are presented with a sponsored link for Coke?

The issue has been litigated in other countries, but my weekly technology law column (Toronto Star version, homepage version) notes that late last month a B.C. court provided the Canadian perspective for the first time. 

The case pitted the Private Career Training Institutions Agency, a regulatory body that oversees career training institutions that operate throughout the province, against Vancouver Career College (Burnaby) Inc., which provides a variety of post-secondary educational services under various business names, including Vancouver Career College, CDI College, and the Vancouver College of Art and Design (VCC).

The agency applied to the court for an order blocking VCC from engaging in misleading advertising.  The claim arose from keyword advertisements on Google and Yahoo in which VCC purchased the keywords of competitors.  

VCC was an aggressive Internet advertiser, having entered bids on more than 7,000 keywords.  The court was presented with considerable evidence that VCC regularly purchased keywords of competitor institutions so that searches using terms of those institutions would generate VCC as the lead sponsored link.

The agency began to receive complaints from competitors over the VCC practice and even fielded a claim from one student who said she had mistakenly registered for a course at VCC after searching for Vancouver Community College, though oddly the registration came after a 90-minute in-person interview and the completion of an admissions test.

At the heart of the case was whether VCC had engaged in deceptive practices. VCC argued that its Internet advertising strategy is essentially a modern-day version of the common marketing practice of a company placing its advertisement in close proximity to a competitor's advertisement.

The court sided with VCC, concluding that its use of competitor names in its keyword advertising strategy was unlikely to deceive potential students.  The judge noted "where a student erroneously chooses to examine a VCC Inc. ‘sponsored link' website instead of the website of the institution they originally wanted, I am satisfied the information readily available on the various VCC Inc. websites is more than adequate to inform the student that they are examining a VCC Inc. institution and not the one they were initially searching for."

Given the importance of keyword advertising to the financial success of companies such as Google and Yahoo, the case is an important win for legitimizing increasingly common Internet advertising practices and serves as a reminder to Internet users that they should pay attention when they click.
Comments (8)add comment

michael webster said:

www.franchise-info.ca
In the European cases, wasn't the defendant Google?

Was there a European case in which the defendant was a) bidding on trademark key words, but b) clearly not intending to sell counterfeit products?
June 10, 2010

Keenan said:

VCC?
Hell, forget their Internet advertising, I would take issue with their use of 'VCC' and 'Vancouver Career College' being obnoxiously similar to 'Vancouver Community College'.
June 10, 2010

Michael Kirkland said:

VCC but not VCC?
I'd have to agree with Keenan - They were quite obviously trying to make people confuse them with the real VCC. That they were doing it on the internets shouldn't make a difference.

Now, the Vancouver Community College isn't exactly the most prestigious school in Vancouver, but it is generally recognized as legitimate. Private schools aren't thought of in Canada the same way as they are in the US. With a few exceptions (none of which include "Inc." in their name), they're given about as much credibility as a diploma you printed yourself.
June 11, 2010

Lyric said:

Google Has Eyes
Speaking of Google, are you going to start a thread soon on the Streetview Wi-Fi data-gathering caper?
http://news.cnet.com/8301-13578_3-20006100-38.html
June 12, 2010

austrotrabant said:

European AdWords Cases
@Michael Webster. Well by now 5 cases got decided in three decisions by the ECJ. While in one case in Google France the advertiser advertised/sold counterfeit goods and indicated this already in the text of the ad ("Buy LV imitations" etc.) in most European Keyword cases the name/trademark/sign of the claimant however was shown in the text of the ad.

So to answer your questions, yes have been cases in which a competitor was bidding on the name/TM/sign of the proprietor and while not selling counterfeit goods.

In case you are interested in the topic please take a look at my blog which is dedicated to just this topic (www.austrotrabant.at) or contact me!
June 14, 2010

michael webster said:

www.franchise-info.ca
@austrotrabant

Thanks for the reply, I did look at your site where you are doing your doctoral research "Trademark and Unfair Competition Aspects of "Keyword Advertising" from the Advertisers Perspective".

Pretty interesting topic - good luck with and thanks for the response.
August 07, 2010

Brooker said:

...
On rhetoric: a response to Fuchs and Fuchs from Exceptional Children provided by Find Articles at BNET
June 11, 2011

Brooker2 said:

...
You back time going Maurers

On rhetoric: a response to Fuchs and Fuchs from Exceptional Children provided by Find Articles at BNET.
June 11, 2011

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