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Keyword Advertising: Challenging the Traditional Concept of “Use” under Malaysian Trade Mark Law

  • Pek San Tay (a1)

Abstract

Keyword advertising involves the sale of keywords, sometimes comprising the trade marks of others, by search engine providers so that the keyword purchasers' advertisements are triggered as sponsored results whenever Internet users type in any of the keywords as search terms. This method of online advertising is new and novel and has been embraced widely by many businesses. However, its legality, particularly in the sale of keywords comprising the trade marks of others, has been challenged in a number of major jurisdictions. This article examines the approach of the courts in the U.S. and the UK with regard to the practice of keyword advertising with particular emphasis on the concept of “trade mark use.” With these foreign decisions serving as a useful guide, this article analyses and evaluates whether the practice of keyword advertising is legal under Malaysian trade mark law as embodied in the Trade Marks Act 1976.

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1 As a commercial activity, the practice of keyword advertising generates a huge revenue for search engine providers. For instance, Google's revenue for the first quarter of 2008 is US$5.19 billion, with 99% of the revenue coming from online advertising. On this, see “Google Announces First Quarter 2008 Results” at www.google.com/intl/en/press/pressrel/revenues_q108.html [Last accessed October 27, 2008].

2 In the United States of America, plaintiffs have also included allegations of unfair competition, contributory infringement and trade mark dilution. In Australia, the Australian Competition and Consumer Commission have instituted legal proceedings against Google for misleading and deceptive conduct in relation to keyword advertising.

3 EC, Council Directive No. 89/104/EEC of December 21 1998 to approximate the laws of the Member States relating to trade marks, [1989] OJ at L40/1.

4 In France, the main trend is that the sale of competitors' trade marks as keywords amounts to trade mark infringement while German and Italian courts have in several instances held that such activities were legal. On this, see Blakeney, Simone, “Adverse to Adwords? An overview of the recent cases relating to Google Adwords” [2007] CTLR 83.

5 The French Supreme Court, in three separate keyword advertising litigation against Google, namely, Google v Viaticum Ltd (unreported, March 10, 2005 (C d'A Versailles)), Google v Cnrrh (unreported, March 23, 2006 (C d'A Versailles)) and Google v Louis Vuitton Malletier (unreported, February 4, 2005 (C d'A Paris)), referred three questions to the ECJ:

i) Do the Trade Mark Directive 89/104 and the Community Trade Mark Regulation 40/94 prohibit search engine providers of sponsored links services from referencing keywords that are identical or that imitate a trade mark and displaying, based on the keywords, links to websites which offer products which are identical or similar to that of the trade mark owner?

ii) In a situation where the trade marks are well known, would the answer to (i) above be different?

iii) If the trade mark owner cannot prohibit such use, could the sponsored links provider be regarded as an intermediary service provider within the meaning of EU Directive 2000/31 so that its liability does not arise until after it has been informed of the unlawful use of the trade mark?

An unofficial translation of the three questions is available at http://class46.blogspot.com/2008/05/ecj-finally-querried-about-trade-marks.html [Last accessed October 27, 2008].

6 ProfessorBodenhausen, GHC in his text Guide to the Application of the Paris Convention for the Protection of Industrial Property (Geneva: BIRPI, 1968) stated that “use of the mark is generally understood as meaning the sale of goods bearing such mark.” (at p.75)

7 Metatags are HTML codes written by the website developer but are not visibly displayed on the website.

8 As a consequence of keyword advertising litigation against search engine providers, Google AdWords and Yahoo! Search Marketing have adopted various policies to reduce possible conflicts with trade marks and to handle trade mark complaints. For Google AdWords, see “Trademark Complaint Procedure” at http://www.google.com/tm_complaint_adwords.html [Last accessed October 27, 2008] and for Yahoo! Search Marketing, see “Trademarks: Raising concerns about domains in the domain match program” at http://searchmarketing.yahoo.com/en_HK/legal/trademarks.php. [Last accessed October 27, 2008].

9 414 F.3d 400 (2nd Cir, 2005).

10 414 F.3d 400 (2nd Cir, 2005) at 412.

11 354 F.3d 1020 (9th Cir, 2004).

12 354 F.3d 1020 (9th Cir, 2004) at 1028 [32].

13 354 F.3d 1020 (9th Cir, 2004) at 1028 [32].

14 354 F.3d 1020 (9th Cir, 2004) at 1024.

15 The doctrine of initial interest confusion was first applied to the Internet by the US Court of Appeals for the Ninth Circuit in Brookfield Communications, Inc v West Coast Entertainment Corp 174 F.3d 1036 (9th Cir, 1999). Initial interest confusion arises when a customer is initially confused and this confusion leads to an interest in a competitor's product. Although the confusion is dispelled before an actual sale occurs, initial interest confusion impermissibly capitalises on the goodwill associated with a mark. This doctrine is controversial in the US and some courts have not looked upon it favourably.

16 Apart from discussing initial interest confusion, the Court of Appeals also discussed the eight-factor test to determine the likelihood of confusion formulated by the Ninth Circuit in AMF Inc v Sleekcraft Boats 599 F.2d 341 at 348-349 (9th Cir, 1979).

17 This point was reiterated by the US District Court for the Northern District of California in Google Inc v American Blind & Wallpaper Factory, Inc 2007 US Dist. LEXIS 32450.

18 330 F. Supp. 2d 700 (ED Va, 2004).

19 330 F. Supp. 2d 700 (EDVa, 2004) at 702.

20 330 F. Supp. 2d 700 (ED Va, 2004) at 702.

21 See U-HaulInternational, Inc v WhenU.com, Inc 279 F. Supp. 2d 723 (ED Va, 2003) and Wells Fargo & Co v WhenU.com, Inc 293 F. Supp. 2d 734 (ED Mich, 2003).

22 1-800 Contacts. Inc v WhenU.com 309 F. Supp. 2d 467 (SDNY, 2003).

23 330 F. Supp. 2d 700 (ED Va, 2004) at 703.

24 3 3 0 F. Supp. 2d 700 (ED Va, 2004) at 704.

25 2006 US Dist. LEXIS 13775.

26 425 F. Supp. 2d 402 (SDNY, 2006).

27 425 F. Supp. 2d 402 (SDNY, 2006) at 415.

28 456 F. Supp. 2d 393 (NDNY, 2006).

29 456 F. Supp. 2d 393 (NDNY, 2006) at 400.

30 456 F. Supp. 2d 393 (NDNY, 2006) at 400–401.

31 456 F. Supp. 2d 393 (NDNY, 2006) at 402.

32 456 F. Supp. 2d 393 (NDNY, 2006) at 402.

33 456 F. Supp. 2d 393 (NDNY, 2006) at 403.

34 2007 US Dist. LEXIS 32450.

35 [2008] EWHC 361.

36 [2004] EWCA Civ 159.

37 [2004] EWCA Civ 159 at [20]–[41].

38 [2004] EWCA Civ 159 at [62] and [68]–[72].

39 The other two Court of Appeal judges, who were Lord Justice Rix and Lord Justice Auld, concurred.

40 [2004] EWCA Civ 159 at [140].

41 [2004] EWCA Civ 159 at [142].

42 [2004] EWCA Civ 159 at [149].

43 [2004] EWCA Civ 159 at [149]–[150].

44 [2004] EWCA Civ 159 at [149]. However, in an earlier case, Roadtech Computer Systems Ltd v Mandata Ltd [2000] ETMR 970 , the English court held that the defendant, in using the plaintiff's “Roadrunner” trade mark in its metatags and website, was liable for trade mark infringement.

45 [2008] EWHC 361.

46 [2008] EWHC 361 at [12].

47 [2008] EWHC 361 at [38].

48 [2003] ETMR 19.

49 [2003] ETMR 19 at [48]. This is also reflected in the tenth recital to Directive 89/104/EEC, which provides that “[T]he function of a trade mark is in particular to guarantee the trade mark as an indication of origin.”

50 The ECJ in Arsenal took the view that trade mark use was not a necessary element of infringing use for the purpose of Directive 89/104/EEC but English courts have been reluctant to depart from the traditional view that trade mark liability would only arise if the use indicated the trade origin of the product. On this, see R v Johnstone [2004] ETMR 2 and Reed Executive plc & Ors v Reed [2004] EWCA Civ 159.

51 [2003] ETMR 19 at [51].

52 [2008] EWHC 361 at [69].

53 [2008] EWHC 361 at [63].

54 [2008] EWHC 361 at [65].

55 [2008] EWHC 361 at [82].

56 [2003] ETMR 19.

57 [2008] EWHC 361.

58 [2003] ETMR 19 at [54].

59 [2008] EWHC 361.

60 Using a trade mark is a common and important means of acquiring trade mark rights, although it is not mandatory under both the Paris Convention for the Protection of Industrial Property (Paris Convention) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) that a trade mark must actually be used in order to qualify for registration. On this, see Article 5 paragraph C(1) of the Paris Convention and Article 15(3) of TRIPs.

61 One of the requirements in section 38 of the Trade Marks Act 1976 is that the plaintiff in an infringement proceeding must establish that the defendant has used his trade mark without his permission.

62 Section 46 of the Trade Marks Act 1976 allows an aggrieved person to apply to the court to expunge a trade mark on the ground of non-use of the mark.

63 [1984] FSR 413. This case was referred to by both the Malaysian Court of Appeal and High Court in a number of cases, including Meidi (M) Sdn Bhd v Meidi-ya Co Ltd, Japan & Anor [2008] 1 CLJ 46 (Court of Appeal), U-Re Auto Sdn Bhd v York Pacific Holdings Ltd [2004] 3 CLJ 172 (Court of Appeal) and Compagnie Generale Des Eaux v Compagnie Generale Des Eaux Sdn Bhd [1996] 575 MLJU 1 (High Court).

64 Section 38(1)(a) of the Trade Marks Act 1976, which deals with trade mark infringement, provides that “[a] registered trade mark is infringed by a person who, not being the registered proprietor of the trade mark or registered user of the trade mark using by way of permitted use, uses a mark which is identical with it or so nearly resembling it as is likely to deceive or cause confusion in the course of trade in relation to goods or services in respect of which the trade mark is registered in such a manner as to render the use of the mark likely to be taken … as being use as a trade mark”.

65 Article 15(1) of TRIPs provides that “[a]ny sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark.” In the US, courts have held that in proving whether a trade mark was “used in commerce” for the purpose of a trade mark infringement claim, it must be shown that the defendant had employed the plaintiff's trade mark as an identifier of the defendant's products. See, for instance, United We Stand America, Inc v United We Stand, America New York, Inc 128 F.3d 86 (2nd Cir, 1997), U-Haul International, Inc v WhenU.com, Inc 279 F. Supp. 2d 723 (ED Va, 2003), Wells Fargo & Co v WhenU.com, Inc 293 F. Supp. 2d 734 (ED Mich, 2003). In Europe, the ECJ in Arsenal interpreted “trade mark use” for the purpose of an infringement claim as use that would jeopardise the guarantee of origin function of the goods. The approach in the UK judiciary is more conservative in that the infringing use must be for the purpose of indicating trade source. On this, see Rob Sumroy and Carina Badger, “Infringing ‘Use in the Course of Trade’: Trade Mark Use and the Essential Function of a Trade Mark” in Phillips, Jeremy and Simon, Ilanah, eds., Trade Mark Use (Oxford: Oxford University Press, 2005) at 171173 .

66 See also Widmaier, Uli, “Use, Liability, and the Structure of Trademark Law” (2004) 33 Hofstra L. Rev. 603 at 684 .

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Keyword Advertising: Challenging the Traditional Concept of “Use” under Malaysian Trade Mark Law

  • Pek San Tay (a1)

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