It is not uncommon that undertakings in the same business have adopted similar trade names and co-existed for years.  In such cases, the law makes available to an undertaking the defence of honest concurrent use against its competitor, who has registered its trade name(s) as trade mark(s), in the latter’s claims of trade mark infringement.  However, bidding on a competitor’s trade name(s) (and/or variants thereof) which is/are confusingly similar to the bidder’s own trade name(s) as Internet search keywords, for the purpose of directing Internet users to the bidder’s own website, is not an honest concurrent use of the competitor’s trade name(s).  Such was confirmed in Victoria Plum Limited (t/a “Victoria Plumb”) v Victorian Plumbing Limited & Ors [2016] EWHC 2911 (Ch).

Facts of the case

The Claimant and the First Defendant have both been trading as bathroom retailers since 2001 and conducted substantial portions of their respective sales online.  The Claimant had consistently used the trade name “Victoria Plumb”, but altered its trade name to “Victoria Plum” in July 2015.  “Victoria Plumb” is a UK registered trade mark owned by the Claimant.

Towards the end of 2012, the First Defendant began to bid substantially on the terms “Victoria Plum” and “Victoria Plumb” as Google search keywords.  As a result, when Internet users typed in either term for a Google search, the First Defendant’s website would be presented to them as one of the top search results.

The Claimant sued the First Defendant for trade mark infringement.  The First Defendant admitted that the parties’ trade names are confusingly similar.  Yet the First Defendant raised the defence of honest concurrent use, on the ground that the parties had traded directly competing goods and co-existed peaceably for many years.  It also counterclaimed for the tort of passing-off as the Claimant had bid on the term “Victorian Plumbing”.

Court’s rulings

Trade mark infringement in the context of keyword advertising

In determining whether the First Defendant had infringed the Claimant’s trade mark, in the context of keyword advertising, the Court distilled three observations from the case law:

1.        An Internet user who searches by reference to a brand name is likely to be looking for that brand.  In this context, there is a particular propensity for confusion if the resultant advertising is vague as to origin.

2.        Transparency is necessary for keyword advertising to protect the consumer from unclear advertising, which, in context, is liable to mislead.

3.        Bidding on trade marks as keywords which can ensure average Internet users to ascertain whether the goods or services originate from the trade mark owner or an unconnected third-party cannot be objected to.

The keywords bid by the First Defendant are identical (or confusingly similar) to the Claimant’s trade mark, and the services provided by the parties, i.e. bringing together bathroom items for convenient view and purchase via a website, are also identical.  Noting that the Internet user who has searched for the Claimant’s trade mark is likely to be expecting to find links to the Claimant’s website, the Court found that the keyword bidding advertisements by the First Defendant did not enable normally informed and reasonably attentive Internet users, or enabled them only with difficulty, to ascertain the origin of the goods and services advertised.  On a prima facie basis, the First Defendant’s keyword bidding was found to constitute infringement of the Claimant’s trade mark.

The defence of honest concurrent use

In rebutting the prima facie finding, the First Defendant argued that to those consumers who are confused by the similarity between the parties’ trade names, the Claimant’s trade mark does not constitute a unique guarantee of origin, and the Defendants have done nothing to exacerbate confusion.  The First Defendant also alleged that bidding on the Claimant’s trade mark as search keywords constitutes fair competition.

When the Court decides on whether the defence of honest concurrent use should apply, the following principles, as summarised from the case law, will be taken into consideration:

1.        Where two separate entities have co-existed for a long period, honestly using the same or closely similar names, the inevitable confusion that arises may have to be tolerated.

2.        This will be the case where the trade mark serves to indicate the goods or services of either of those entities, as opposed to one of them alone.  In those circumstances, the guarantee of origin of the claimant’s trade mark is not impaired by the defendant’s use, because the trade mark does not denote the claimant alone.

3.        However, the defendant must not take steps which exacerbate the level of confusion beyond that which is inevitable and so encroach upon the claimant’s goodwill.

The Court found that the defence does not apply in the instance case: the defence of honest concurrent use cannot entitle the First Defendant to use the Claimant’s trade mark where the marks used by the Claimant and the First Defendant are different.  The First Defendant never used the Claimant’s trade mark other than by bidding on it as Internet search keywords, which is itself the subject of complaint.  Further, the First Defendant did not claim any right over the Claimant’s trade mark, and recognised it to indicate exclusively the Claimant and not the First Defendant.

Also, the Court considered the use of the Claimant’s trade mark by the First Defendant not an honest one.  The First Defendant had increased the expenditure of bidding on the Claimant’s trade mark since late 2012.  The First Defendant was found aware of the confusing similarity between the parties’ trade names and of the high click rate of its website as a result of increasing expenditure on such bidding.  This practice of increasing expenditure on the bidding had exacerbated the level of confusion beyond that which was inevitable and so encroached upon the Claimant’s goodwill.  The First Defendant was thus held liable for trade mark infringement.

Since the Claimant also committed the same act of bidding on the First Defendant’s name, and the First Defendant was able to establish goodwill in its trade name, the above analyses also apply against the Claimant.  Therefore, the Court allowed the First Defendant’s claim of passing-off against the Claimant to succeed.

Concluding remarks

Keyword advertising is common for businesses nowadays. To avoid attracting liability in trade mark infringement and/or passing-off, one should be very conscious not to bid on other undertakings’ brands or trade marks as Internet search keywords for one’s own website, unless the advertisement is designed to clearly and transparently inform the Internet users that, the link is directed to the bidder’s website instead of that of the competitor brand or trade mark owner, that the goods and services offered on that website originate from the bidder but not the owner, and that the bidder and the owner are distinct undertakings.