Canadian court rejects the concept of initial interest confusion

01 September 2015

In Vancouver Community College v. Vancouver Career College (Burnaby) Inc., the Supreme Court of British Columbia issued a decision which addressed at length, for one of the first times in Canada, the issue of keyword advertising in the context of an action for passing off. Consistent with previous cases which addressed similar issues, such as the use of a competitor’s mark in metatags, the Court found that the use of a competitor’s trademark in keyword advertising did not constitute passing off. In doing so, the Court rejected the idea of initial interest confusion as a basis for a finding of a likelihood of confusion.

As background, search engines, such as Google or Yahoo!, offer a service whereby website operators can pay to have links to their website appear in search results as sponsored links alongside the search engine’s organic results. Website owners can bid on certain keywords, including the trademarks of others, which then act as a trigger when searched causing a sponsored link to appear in the search results. The sponsored links are displayed in a prominent but separate section from the search engine’s organic results. 

The central issue in the case was whether the defendant's use of the mark VCC in its keyword advertising constituted passing off of the defendant’s services for those of the plaintiff. The evidence at trial was that the plaintiff had used the VCC trademark between 1965 and 1990 at which time use of the mark ceased until 2013 when use recommenced.  In the meantime, in February 2009, the defendant started a marketing campaign aimed at increasing the profile of the college. As part of the campaign, the defendant purchased VCC as a keyword for the search engines Google and Yahoo!, although it did not otherwise use this term in its public materials and the term was not visible in the search results.   

Ultimately, the plaintiff failed to satisfy the first element of the test for passing off which requires that the plaintiff establish goodwill or reputation in the VCC mark. However, the most interesting part of the decision comes from the Court’s analysis of the second element of the test whereby a plaintiff must establish that the defendant caused confusion through a misrepresentation.  

In considering this issue, the Court looked at what happens when a person searches online for career training institutions in British Columbia. When such a search is conducted, the user enters a search term into a search engine such as Google or Yahoo! and, rather than being taken directly to a specific website, the user is presented with a list of search results which contain both organic and sponsored results.  The user is then able to review the search results before making a decision to click on an organic or sponsored link and be taken to a specific website.

It is well-known that the issue of confusion is to be considered from the perspective of the “first impression” of an ordinary consumer of the goods or services of the parties. In the Court’s opinion this “first impression” cannot arise when the user is presented with the search results but can only arise when the user accesses a website identified by the search. The Court held that the relevant consumer understands that it is necessary to actually see a website in order to determine whose site it is. In this case, when a user reached the defendant’s site, it was clearly identified as such and there was no use of the plaintiff’s marks on the site. As such, there was no likelihood of confusion based on the user’s “first impression.” In so finding, the Court rejected the concept of initial interest confusion, the essence of which is that confusion can arise in the mind of the consumer before a good or service is actually purchased.

This decision follows the recent decision from the Federal Court in Red Label Vacations Inc. v. 411 Travel Buys Limited 2015 FC 19, where the Court found that the use of a competitor’s trademarks in metatags did not constitute passing off or trademark infringement. Despite these findings there remains a level of uncertainty as to how a court may treat keywords in Canada on a case-by-case basis, be it in the visible or non-visible form. The precedential value of this case may be somewhat limited given the fact scenario and resulting analysis. Accordingly, it is unlikely that the issue of keyword advertising in Canada has been firmly settled. 


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