Katzmann J “gets” the Internet and helps to bring Australian trade mark law well and truly into the 21st century: buying keywords for search engine advertising is not trade mark use. some instances of the use of the trade mark in the sponsored links, however, did infringe.

Malouf is business which helps people who get a bad credit report repair or correct that report.

Veda is a credit reporting agency. Amongst other things, it has registered VEDA in class 36 as a trade mark for:

Financial services; provision of credit risk, financial and asset information and reports; credit scoring and risk assessment services; information provision, advice, research, appraisal, analysis, credit enquiry and consultation ….[1]

Malouf bought advertisements for its business on Google search results pages using the Google AdWords program. Through that program, the advertiser selects terms – keywords – for which, when someone does a “Google” search including one of those keywords, they will pay to have their advertisement appear as an advertisement – a sponsored result – in the search results pages.[2] The keywords Malouf chose included VEDA and 85 other terms using it such as “contact veda”, “veda credit score” etc. Mr Malouf explained his strategy:

So, with Veda approximately anywhere from 20 to 40 per cent — which is published on their website — of people may have an adverse credit history with a credit reporting body. A lot of them don’t know that they’ve got bad credit. So, potentially, one in five customers that are trying to contact Veda may be our target market. … [W]e want to have our ad showing up — anyone trying to contact Veda — because, potentially, one in five of those customers may be wanting to fix their credit file.

Over time, the advertisements Malouf paid to place took 3 forms. Until October 2014, they were along the lines of these sponsored links:

Malouf Sponsored Link type 1
Malouf Sponsored Link type 1

After September/October 2014, the sponsored links did not feature “Veda” in the text.

This gave rise to two main issues: (1) did the use of “keywords” infringe and (2) did the uses in the actual advertisements (sponsored links) infringe?

Keywords

Katzmann J held that Malouf’s “purchase” of keywords using VEDA did not infringe Veda’s trade marks.[3] It was not use as a trade mark. Her Honour gave 3 reasons:

First, all Malouf did was select the keywords and provide them to Google. In doing that, objectively, it was not using the words to distinguish its services from those of other providers. “Rather, it has used them to identify internet users who may have an interest in using [Malouf’s] services.”

Second, anyone could acquire the keywords, not just Malouf. This was not determinative, but it was a consideration. What it meant was that anyone, including any of Malouf’s competitors could also “buy” the same keyword(s). Thus, the keywords were not performing the function of a trade mark: distinguishing (identifying) the trade source to the exclusion of all others.

Thirdly, and perhaps most significantly, the keywords were invisible to consumers. Katzmann J explained:

… the proposition that using words which are invisible and inaudible, indeed imperceptible, to consumers is using them as a trade mark makes no sense. How could the keywords be understood to be used to distinguish the services of one trader from those of another when the keywords are indiscernible? How could it appear to consumers that, by Malouf’s designation of the Veda keywords to Google, the words are used to denote a connection in the course of trade between Malouf’s services and the services provided by another trader, or to distinguish its services from the services of others, when the consumers have not seen or otherwise perceived the keywords?

Also, when the consumer did not search on the term VEDA alone, how would he or she know which term(s) generated the search results?

At this point, Veda relied on Accor. Katzmann J, however, pointed out, first, that Accor involved metatags, not keywords. More significantly, her Honour noted Accor was inconsistent with Kenny J’s ruling in Complete Technology where Kenny J had said:

I do not accept that the use of any of CTI’s Registered Trade Marks in Green Energy’s metatags would constitute a trade mark infringement for the purposes of s 120(1). Metatags are invisible to the ordinary internet user, although their use will direct the user to (amongst other websites) Green Energy’s website. Once at the Green Energy website, then, in the ordinary course, the internet user will be made aware that the website is concerned with Green Energy’s services. It cannot, therefore, be said that the use in a metatag of CTI’s Registered Trade Marks is a use that indicates the origin of Green Energy’s services.Thus, metatag use is not use as a trade mark …. (emphasis supplied by Katzmann J)

Katzmann J agreed with Kenny J’s analysis.

Katzmann J then rejected Veda’s reliance on 2 New Zealand cases and the CJEU’s decision in Google France. They were decisions in a different context and, in any event, the English courts since Google France had held that keywords did not infringe.

Sponsored links

Whether the sponsored links which used Veda in their text infringed turned on the nature of the actual use.

Malouf had used expressions like[4] “Clean Your Veda File”, “Fix My Veda History”, “Get Your Veda Report File”, “Veda Credit File Repairs”, but also “The Veda Report Centre” and “The Veda-Report Centre”.

Katzmann J held that the uses like “Clean Your Veda File” were descriptive and used in a descriptive rather thant trade mark sense:

In all but the advertisements featuring “The Veda Report Centre”, I am not satisfied that Malouf has used the Veda Trade Marks as trade marks. Rather, it seems to me that they have been used to describe the object to which its services are directed — fixing, cleaning or repairing Veda credit files or reports — not as a badge of the origin of its business and therefore not as a trade mark. …. the Veda Trade Marks have not been used by Malouf to distinguish its services from those provided by others but to describe the kind or character of the services it provides. ….

The Veda Report Centre, however, was a different case. That was used as a badge of origin to market the Malouf business under the Veda name.

The second conclusion seems to me, with respect, uncontroversial. I also personally agree with the first conclusion that the descriptive uses were not infringements too. In the “old days”, that would have been beyond controversy as the case law clearly established that use of the trade mark Yeastvite in an expression such as “Substitute for Yeastvite” was not use as a trade mark – use of a registered trade mark to refer to the products which the trade mark owner marked with the trade mark was not trade mark use. What the North Americans call “nominative fair use”.

The wrinkle here is that, with the introduction of s 123 into the Act, the High Court has left open the question whether that “old” law is still “good” law.[5] Following that, a number of Full Courts – in which the question did not arise because the goods in question were in fact pirate or counterfeit goods, not genuine goods – have proceeded on the basis that the “old” rule no longer applies.[6]

Even if the Full Court (assuming there is an appeal) continues down that, with respect, heretical path, all may not be lost as Malouf did invoke s 122 in its defence. In reaching her Honour’s, with respect eminently sensible conclusion, Katzmann J did note that it was unclear from the case law how s120 related to s 122. In any event, her Honour found that Malouf could rely on the s 122 defence except in relation to the usage “The Veda Report Centre”. Katzmann J rejected Veda’s arguemnt that the sheer number of keywords showed a systematic and targetted attempt to undermine the registered trade mark. Almost all of those uses were not infringements.

As with the trade mark infringement case, the allegations of misleading or deceptive conduct all failed except in respect of the “Veda Report Centre” usage in the sponsored links.

Lid dip: James McDougall

Veda Advantage Limited v Malouf Group Enterprises Pty Limited
[2016] FCA 255


  1. Veda also has registrations for VEDA ADVANTAGE, VEDACHECK and VEDASCORE.  ?
  2. Hal Varian explained how AdWords advertising works in 2009 and with more polish in 2014.  ?
  3. The claim was brought under s 120(1), the allegation under s 120(2) was abandoned during the trial.  ?
  4. The full list is at [161] of her Honour’s judgment.  ?
  5. See E. & J. Gallo Winery v Lion Nathan Australia Pty Limited (2010) 241 CLR 144; [2010] HCA 15 at [33] – [34].  ?
  6. The cases are discussed by Allsop CJ in Scandinavian Tobacco at [65] – [71].  ?