CANADIAN TRADEMARKS AND KEYWORD ADVERTISING: THE UNSETTLED DEBATE OVER TRADEMARK KEYWORDS by Michelle Kerluke B.A., Simon Fraser University, 2012 L.L.B (Hons), University of Sussex, 2015 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF LAWS in THE FACULTY OF GRADUATE AND POSTDOCTORAL STUDIES (Law) THE UNIVERSITY OF BRITISH COLUMBIA (Vancouver) August 2016 © Michelle Kerluke, 2016 Abstract The most expensive keywords in Google AdWords by average cost-per-click in 2015 was “mesothelioma attorneys tx” priced at $272.00. Keyword advertising is a lucrative business for advertisers and search engines. This thesis will contribute to the academic discussion on unauthorized trademark use in keyword advertising in Canada. Third party advertisers are bidding on competitors’ trademarks without authorization to trigger their sponsored advertisement when the keyword is included in a consumer’s Google search. Trademark infringement has been alleged against Google in the United States and the European Union for the role played by Google AdWords. Canadian trademark law received the first case on keyword advertising in 2015. Keyword advertising is a rapidly developing field: but deep uncertainties remain for the ideal scope of keyword advertising and the ability of ss 19, 20 and 22 of the Canadian Trade-marks Act to provide what will be argued as the ideal scope of keyword advertising. In this thesis I argue that the proper scope of keyword advertising is to prohibit the unauthorized bidding on registered trademark keywords and non-comparative phrases. A doctrinal analysis will be conducted of the current interpretation of ss 19, 20 and 22 of the Canadian Act to determine the extent to which those provisions can provide the ideal scope of keyword advertising. The key issues addressed are trademark use, a likelihood of confusion and depreciation of the value of goodwill of a trademark. A comparative analysis of case law and legislation from the United States and European Union pertaining to trademark use in keyword advertising will supplement the discussion of the Canadian law where there has been a lack of judicial opinion on the subject matter. Based on the current interpretations of ss 19, 20 and 22, it is unlikely that the provisions will provide the ideal scope of keyword advertising. Therefore recommendations to reform the Canadian Trade-marks Act will be set out to address the gaps in ii the law. The recommended legislative reforms will also include a provision on the extent of search engine liability for unauthorized trademark use in keyword advertising. iii Preface This dissertation is an original, unpublished, intellectual product of the author Michelle Kerluke. iv Table of Contents Abstract .......................................................................................................................................... ii Preface ........................................................................................................................................... iv Table of Contents ...........................................................................................................................v List of Figures ................................................................................................................................. x List of Abbreviations ................................................................................................................... xi Acknowledgements ..................................................................................................................... xii Chapter 1: Introduction ................................................................................................................1 Chapter 2: Background .................................................................................................................4 2.1 Scope of the Research ........................................................................................................ 4 2.2 Methodology ...................................................................................................................... 5 2.3 Research Questions ............................................................................................................ 8 2.4 Research Contributions ...................................................................................................... 8 2.5 Trademark Infringement & Keyword Advertising: Current Perspectives ....................... 10 2.5.1 A Likelihood of Confusion ....................................................................................... 11 2.5.2 A Likelihood Of Depreciation .................................................................................. 14 2.6 Judicial Approach to Keyword Advertising: US, EU & Canada ..................................... 15 2.6.1 United States Court of Appeals ................................................................................. 16 2.6.2 The European Court of Justice .................................................................................. 16 2.6.3 The Supreme Court of British Columbia, Canada .................................................... 17 Chapter 3: What is Keyword Advertising? The Benefits, Drawbacks & Trademark Use ...19 3.1 Introduction ...................................................................................................................... 19 v 3.2 Keyword Advertising ....................................................................................................... 21 3.2.1 Self-Service Online Advertising ............................................................................... 24 3.2.1.1 Keyword Advertising: The Basics ..................................................................... 24 3.2.2 Google AdWords ...................................................................................................... 26 3.3 Keyword Advertising: The Benefits and Drawbacks ...................................................... 33 3.3.1 The Benefits .............................................................................................................. 33 3.3.1.1 Comparative Advertising ................................................................................... 33 3.3.1.2 Market Exposure for Small Businesses ............................................................. 35 3.3.1.3 Consumer Search Experience ............................................................................ 36 3.3.1.4 Trade Liberalizer ................................................................................................ 38 3.3.2 The Drawbacks ......................................................................................................... 40 3.3.2.1 Trademarks: Use, Confusion and Goodwill ....................................................... 40 3.3.2.2 Trademarks: Goodwill and Free-Riding ............................................................ 44 3.3.2.3 Consumer Trust and Intention ........................................................................... 45 3.4 The Ideal Scope of Keyword Advertising ....................................................................... 47 3.4.1 Supporting Arguments .............................................................................................. 50 3.4.2 Moving Forward ....................................................................................................... 54 Chapter 4: Canadian Trade-Marks Act Sections 19 & 20: Assessing the Ability to Provide the Ideal Scope of Keyword Advertising ...................................................................................55 4.1 Introduction ...................................................................................................................... 55 4.2 Trade-marks Act: Section 19 ........................................................................................... 58 4.2.1 Elements of Section 19 ............................................................................................. 59 4.2.1.1 Use ..................................................................................................................... 59 vi 4.2.1.2 Used as a Trademark .......................................................................................... 61 4.2.1.3 Within Canada ................................................................................................... 62 4.2.1.4 Goods or Services .............................................................................................. 62 4.2.2 Application of Section 19 to Keyword Advertising ................................................. 63 4.2.2.1 Use in Association with Services & Google ...................................................... 64 4.2.2.2 Use in Association with Services & the Third Party Advertiser ....................... 65 4.3 Trade-marks Act: Section 20(1) ....................................................................................... 66 4.3.1 Elements of Section 20 ............................................................................................. 67 4.3.1.1 Use ..................................................................................................................... 67 4.3.1.2 Confusion ........................................................................................................... 68 4.3.2 Application of Section 20 to Keyword Advertising ................................................. 71 4.3.2.1 Vancouver Community College v Vancouver