Perimeter security barrier company Cochrane Steel has failed in its bid to overturn a high court judgment on South Africa’s first ever Google AdWords case.
In August 2014, Cochrane Steel launched a final interdict at the high court in Johannesburg to try stop its rival M-Systems from bidding on the “ClearVu” search keyword in Google AdWords.
ClearVu is a high-security fencing system that is sold in South Africa by Cochrane Steel. Meanwhile, Google AdWords lets business owners bid on words for text adverts that appear alongside searches for certain keywords.
At the time, the high court heard that M-Systems did not use the “ClearVu” term directly in its ad but rather as a hidden keyword.
After hearing the case, judge CH Nicholls ruled in October 2014 that M-Systems was not guilty of passing off the ClearVu brand by bidding on “ClearVu” keyword.
Nicholls, at the time, further found that M-Systems’ use of keyword advertising did not cause confusion among Internet users. Nicholls also resorted to interpretations of common law because Cochrane Steel’s bid to register the “ClearVu” brand in South Africa had not been completed yet.
Cochrane Steel then moved to appeal the ruling at the supreme court.
But the supreme court of appeal upheld the high court judgment on Friday last week.
“It follows that the appeal must fail and in the result it is accordingly dismissed with costs,” the judgment said.
Like the high court, the appeals court found that M-Systems’ use of keyword advertising in terms of the ClearVu brand does not cause confusion among Web users.
“If the advertisement contains no reference to the appellant (Cochrane Steel) the consumer ought reasonably to conclude that the result is not related to the appellant or its products or services,” the court found.
“But even if the consumer went one step further and clicked on M-Systems’ website, its branding would have left the consumer in no reasonable doubt as to the identity of the trader whose services were on offer.
“It is thus unsurprising that the appellant has been unable to adduce any evidence of actual confusion… I do not think the appellant has proved its likelihood,” the judgment said.
Another key finding by the appeals court was that M-Systems’ use of the “ClearVu” keyword in Google AdWords did not constitute unlawful competition.
The aim of Internet advertising using keywords is “in general, to offer to Internet users alternatives to the goods or services of trade mark proprietors”.
Because Cochrane Steel has to register ClearVu as a trademark, the court said “the use by one trader of the unregistered trademark or trade name of another is not unlawful under the common law except to the extent that that use gives rise to passing off”.
“It follows that the attempt by the appellant to ground a cause of action based on unlawful competition in these circumstances is ill conceived.”
M-Systems’ legal representative, Darren Olivier of Adams & Adams, said on Monday that the latest ruling on the matter brings South Africa in line with similar court decisions in New Zealand, the UK, Canada and Australia.
“It creates clarity that keyword bidding on competitor trademarks on its own (without more) is not passing off and unlikely to be trademark infringement thus enabling alternative products to be advertised during Internet searches,” Olivier said.
“It also means that search engines enabling companies locally and abroad to target South African internet users do not need to alter their keyword advertising models to comply with local laws,” he said.
However, Olivier said that “Internet advertisers still need to be cautious to avoid any likelihood of confusion and for it to be clear that the sponsored link or advert is interpreted by the internet user for what it is — an advert.”
Olivier further said that advertisements and their associated link should also not themselves be unlawful by, for instance, using a registered trademark.
Cochrane Steel’s legal team could not be reached for comment about the supreme court of appeal’s ruling at the time of writing.
