Online Trademark Infringement – The Return of “Initial Interest Confusion”

The doctrine of “initial interest confusion” has again surfaced in Canada, and once again in the context of online advertising, confusing domain names and passing off (common-law trademark infringement). We’ve been tracking the development of this subject over the past couple of years beginning with “A Brief History of Passing Off, Websites and Initial Interest Confusion in Canada”, and more recently in “Initial Interest Confusion in Canada: Recent Developments”. The British Columbia Court of Appeal (“BCCA”) has now provided appellate guidance that resolves some previous inconsistencies and confirms that initial interest confusion can, in fact, ground a claim for passing off or trademark infringement in Canada. As we described in our last post on the topic, in Vancouver Community College v Vancouver Career College (Burnaby) Inc. 2015 BCSC 1470, the trial court was faced with facts common to the highly competitive world of e-commerce: the defendant, Vancouver Career College, had strategically bid on, and purchased “VCC” as a keyword used to optimize their presence in search results. However, “VCC” was a common law trademark long in use by the plaintiff, Vancouver Community College. So, when consumers used “VCC” to search for the plaintiff, they were directed to search results linking directly to the defendant’s websites, and not the plaintiff’s. The defendant’s use of “VCC” thereby piqued the interest of consumers searching for the plaintiff in the defendant’s competing services, at least initially. Confusing right? Somewhat surprisingly, the trial court found that this kind of “initial interest confusion” does not ground a claim for trademark infringement. Specifically, the trial court held that trademark infringement will only occur if the consumer is still confused once they have landed on the defendant’s website. In other words, if the consumer’s initial confusion disappears once they land on the defendant’s website and then can clearly see that the defendant is not the plaintiff, then the defendant will not have infringed the plaintiff’s trademark. On Appeal, the BCCA unanimously reversed the trial court’s decision, citing back to first principles of trademark law as set out by the Supreme Court of Canada in Masterpiece Inc. v Alavida Lifestyles Inc., 2011 SCC 27. In keeping with our prediction back in October of 2015 on this point, the BCCA held that confusion is to be assessed at the consumer’s first impression of a trademark, even in an online context. Therefore, in the circumstances, the BCCA found that confusion may be assessed at the stage when the consumer first encounters the trademark on the search engine results page. Opportunities to avoid the effects of confusion that take place after this initial encounter (like the exploration of the defendant’s website linked to the search result) are irrelevant to the assessment of confusion. The BCCA also confirmed that it is unlawful to use the trademarks of another in one’s domain name if, on the face of the domain name alone, the consumer is unable to distinguish the trademark from the owner of the domain name. The BCCA found that simply adding “ollege” to VCC in the defendant’s domain name “VCCollege.ca” did not sufficiently distinguish between the plaintiff and the defendants as it is equally reminiscent of both parties. The BCCA did not go so far in this case as to find that bidding on key words that are the trademarks of others amounts to passing off. The Court confirmed that the practice of bidding on keywords, in and of itself, is not delivery of a message so it does not cause confusion. What causes confusion is how a defendant uses the keyword and the message conveyed to the consumer. It is now clear that "initial interest confusion" can ground a claim for trademark infringement in Canada, and in particular in the online context. E-commerce providers should ensure that any use of a competitor’s trademark in online advertising or in their domain name is not likely to confuse the average internet user searching for their competitor, even if only for an instant. Furthermore, while it may be safe to bid on the trademarks of your competitors for use in keyword advertising, the content of sponsored links and the manner in which they are displayed can get you into trouble.