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Banks' current account switch advertising could result in keyword trade mark infringement, warns expert

Out-Law News | 19 Aug 2013 | 4:39 pm | 2 min. read

A lack of consumer awareness of the legal entities behind some of the UK's biggest banking brands may influence whether or not current account providers can legitimately use rivals' trade marks to promote their offerings to consumers, an expert has said.

Intellectual property law specialist Iain Connor of Pinsent Masons, the law firm behind Out-Law.com, said that a new battle over the use of keyword advertising online could be about to hit the financial services sector as the Government makes it easier to switch banks.

From 16 September current account holders will be able to take advantage of a new service offered by 33 banks and building societies that will allow them to switch more easily between providers of current accounts. Just 2.5% of current account holders switched providers last year, according to a report by the BBC.

The new standardised switching service offers a guarantee to users that they will not face any charges or interest on their old or new accounts due to failings in the switching process if they inform their new current account provider of such mistakes. Many banks are already promoting incentives to customers to open new current accounts with them through the switching regime.

Connor said that the use of someone else's trade mark in an online keyword advertising campaign, such as through Google's AdWords system, may be legitimate. The AdWords system allows companies to buy the right for their ads to appear beside the natural results when certain terms are searched for.

Whether or not the use of someone else's mark within such a promotion amounts to trade mark infringement depends, largely, on whether a reasonably well-informed and reasonably observant internet user would be able to distinguish that the trade mark owner is not behind the product or services offered by the advertiser, he said.

"With the industry-led, and Government-pressured, switching initiative soon to launch, banks are more likely to engage in marketing campaigns to attract rivals' customers to switch to them," Connor said. "Indeed there is already evidence of this happening. In the online world this may involve keyword advertising through Google AdWords."

"Banks have not traditionally engaged in the activity of using rivals' trade marks as part of their own keyword advertising campaigns to promote their current account offerings. Unlike in other markets where customers have been much more likely to switch between energy suppliers, mobile phone operators or car insurance providers, for example, there has been a low proportion of current account holders actively switching between banks. This may at least partly explain the reluctance of banks to aggressively promote their own offerings on the back of rivals' marks," he said.

"In the context of the consolidation of the banking sector over the last 15 years, with the conversion of some major building societies into banks and the subsequent purchases made by the larger banking groups of smaller players in the market, customers may not appreciate which is the legal entity which owns a particular financial institution. This is significant because, in an online environment if there is a plethora of keyword advertising campaigns for banking services, the sponsored links appearing in the advertising 'golden box' may not allow consumers to distinguish the origin of one bank's current account from that of another," Connor said.

"Aggressive marketing campaigns by banks could create the potential for customer confusion and result in a potential breach of trade mark rights," the expert added.

There are a number of banking brands in operation in the market which are owned by larger parent companies. When marketing these brands, the parent company is keen for them to be seen by the market as independent often because they service local markets. For example, NatWest, Ulster Bank and the Royal Bank of Scotland are all subsidiaries of the Royal Bank of Scotland Group. Lloyds Banking Group owns the Lloyds TSB, Halifax, Bank of Scotland and Cheltenham & Gloucester brands.

Keyword advertising could, for example, be legitimately used by Lloyds Banking Group to promote all of its brands but consumer confusion could arise if one of the Lloyds brands was used by a competitor.