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Rivals' keyword marketing activity censured by High Court

Out-Law News | 24 Nov 2016 | 4:04 pm | 2 min. read

Online marketing activity carried out separately by two rival bathroom retailers respectively infringed trade mark and passing off rights, the High Court in London has ruled.

The case related to keyword advertising on Google's search engine by Victoria Plum and Victoria Plumbing. Keyword adverts appear when words an advertiser has paid to be associated with are searched for by users.

Mr Justice Carr said Victoria Plum's trade mark rights were infringed by competitor Victoria Plumbing when Victoria Plumbing bid for and then displayed keyword adverts for its business on Google's search engine. The adverts triggered when users typed words identical or similar to the 'Victoria Plumb' trade marks owned by Victoria Plum into the search engine, according to the judgment. Victoria Plum's former name was Victoria Plumb.

However, the judge also ruled that Victoria Plum was itself liable for passing off when it bid for keyword adverts based on the term 'victorian plumbing', which makes up part of a web address operated by Victoria Plumbing.

Victoria Plumbing had built up sufficient goodwill in the 'victorian plumbing' name to be able to bring a passing off claim against Victoria Plum, he said.

In dealing with Victoria Plum's trade mark infringement claims, Mr Justice Carr rejected claims that Victoria Plumbing's marketing activity was based on "honest concurrent use" of "confusingly similar" terms.

Victoria Plumbing took "steps which exacerbate the level of confusion beyond that which is inevitable" in a way which were not consistent with its "duty to act fairly in relation to the legitimate interests of the trade mark proprietor", Mr Justice Carr said.

The judge took into account the fact that Victoria Plumbing decided to "increase by a very substantial amount its spending on bidding" on keyword terms protected by Victoria Plum trade mark rights in late 2012, without an explanation of the reasons for that decision being advanced by a witness in the case, and because Victoria Plumbing "has always known that its name was confusingly similar to the brand name".

A further factor counting against Victoria Plumbing was "the propensity for confusion of users" searching for Victoria Plum, or Victoria Plumb, and "the extensive confusion shown by the unusually high click through rates", he said.

In upholding Victoria Plumbing's counterclaim for passing off by Victoria Plum, Mr Justice Carr said it was his view that most consumers would have been confused as to the origin of Victoria Plum's keyword adverts in a way which unfairly exploited the goodwill built up by Victoria Plumbing in the 'victorian plumbing' name.

In the UK, the law of passing off allows companies to protect goodwill in relation to their products or services from misappropriation or abuse by rivals. 'Goodwill' essentially recognises the value to that company of creating its business reputation. Passing off is a common law legal doctrine, meaning that it has been laid down and developed by the courts and can be used to protect unregistered trade marks if certain conditions are met.

Mr Justice Carr said: "In my judgment, internet users who enter 'Victorian Plumbing' are likely to be looking for [Victoria Plumbing's] website. When presented with Victoria Plumb advertisements for a business unconnected with that of [Victoria Plumbing], it seems to me that there is a propensity for confusion. There is nothing in those advertisements to indicate the absence of a connection between the parties. Some users are likely to have clicked through to [Victoria Plum's] website, and their confusion is likely to have continued."

"The fact that many users may not be confused is not an answer. I consider that a substantial proportion of the relevant public are likely to have been misled into believing that [Victoria Plum] is, or is connected with, [Victoria Plumbing], and that this constituted a misrepresentation by [Victoria Plum]. In the circumstances I believe that there is a likelihood of damage," he said.

Intellectual property expert Iain Connor of Pinsent Masons, the law firm behind Out-Law.com, said: “This is a vital case as it demonstrates that the issue of keyword advertising is still a problem for brand owners and also shows that the court will provide remedies to those affected competitor advertising which causes confusion in the market place.”