Note: This is Part 2 of my discussion of the B.C. Court of Appeal’s decision in Vancouver Community College v. Vancouver Career College (Burnaby) Inc. Part 1 can be found here. The initial post considered issues around official marks as well as the first element of the tort of passing off in which the plaintiff must establish that they have acquired goodwill/reputation in a mark. This post considers the remaining two elements: the likelihood of confusion and the likelihood of damage.
As noted in my earlier post, the B.C. Court of Appeal found that the appellant, the Vancouver Community College had considerable goodwill in the mark VCC. I was critical of this decision as it seems to conflate the official marks protection obtained by the Community College with the acronym as a trademark for the purposes of the passing off analysis. The Court of Appeal’s finding regarding the scope of the Community College’s rights in the mark VCC influences its reasoning with respect to the issue of confusion, which is the second element in the tort of passing off.
The alleged passing off in this case arose out of new marketing strategies adopted by the respondent Vancouver Career College in 2009. At that point it adopted VCCollege as a trademark and registered VCCollege.ca as a domain name for its website. The appellant Vancouver Community College objected to the use by the respondent of the acronym VCC in its “internet presence”. It also objected to the Career College’s bidding on keywords that included “VCC” and “Vancouver Community College.” It argued that the result of these activities was passing off. Because the official marks arguments had been separated from the passing off claim, the Court of Appeal considered only the issue of passing off with respect to the use of “VCC”.
The Court of Appeal summarized the essence of keyword advertising for the purposes of this case in these terms: “a bid on a keyword will make it more likely that the bidder’s advertisement with its domain name, linking to its website, will appear on the first search page revealed to the searcher.” (at para 19). The Court acknowledged that bidding on keywords in order to drive traffic to one’s website is legitimate, so long as it stays within the bounds of what is permissible. In the passing off context, the issue is whether the use of the keywords results in consumer confusion. When presented with a link in an ad on a search results page, the searcher has the option of following the link to the website to which it resolves. American case law on keyword advertising has focussed on the issue of confusion, rather than on the simple use of protected words as keywords. These cases have considered how the resulting ads are displayed on the page (e.g., whether they are in a location or font that distinguishes them from search results) and whether their content or presentation is misleading. The Court of Appeal does not address this case law or these issues in its confusion analysis.
The Court of Appeal found that “”VCC” was the keyword that generated the most “clicks” to the respondent’s website, such that the respondent’s advertisements appeared almost always in searches for VCC (over 97% of the time), and the respondent’s text advertisements always displayed VCCollege.ca in the web address line of the advertisement.” (at para 22) However, as I noted in Part 1 of my discussion of this case, VCC is an acronym shared by both the respondent and the appellant. As an acronym, it is a weak mark. The Community College led evidence of confusion among some students searching for the Community College. The trial judge had given this evidence relatively little weight, particularly in a context in which VCC was also the acronym for the respondent’s name. He noted that the respondent’s web site made it evident that it was the site for the Career College.
The Court of Appeal was critical of the trial judge for assessing confusion at the moment at which a student searching for VCC arrived at the landing page for the Career College – as opposed to when the student received the results of a browser search using VCC as a key word. According to the Court of Appeal, the authorities support a finding that first impressions are what matters in the confusion analysis. The Court of Appeal relied heavily upon Masterpiece Inc. v. Alavida Lifestyles Inc., a Supreme Court of Canada (SCC) decision involving an assessment of confusion under the Trade-marks Act. In that case, the SCC appeared to confirm that so-called “initial interest confusion” was actionable. In the internet context, initial interest confusion arises where a party’s trademarks have been used in such a way (in domain names or metatags, for example) that a person searching for the products or services of one company ends up at the website of another by mistake. In the early days of the internet, courts were more likely to find initial interest confusion to be actionable per se; more recently, courts in the United States have given searchers more credit for being able to find their way around the internet, and have looked for other evidence of uses of the marks that contribute to confusion. A searcher who quickly realizes they have made their way to a website other than the one for which they were searching is not confused. However, some have still maintained that initial interest confusion should be actionable because even if the consumer is not confused, they might still decide, once presented with similar goods or services from an alternate source, that they are happy enough to acquire them from that source rather than the one for which they were originally searching. In such circumstances, the use by a defendant of a competitor’s trademarks to draw business away from them is said to cause harm that should be actionable. In Masterpiece, the SCC stated that the diversion of consumers “diminishes the value of the goodwill associated with the trademark and business the consumer initially thought he or she was encountering in seeing the trademark. Leading consumers astray in this way is one of the evils that trademark law seeks to remedy.” (at para 73) While this has been taken by some to address initial interest confusion on the internet, it should be noted that Masterpiece did not deal with either the internet context or with passing off.
Whichever view one takes on initial interest confusion, the problem in this case is that the appellant used the appropriate acronym for its name as a key word and its domain name was one in which it would doubtless be found to have a ‘legitimate interest’ under domain name dispute resolution policies. According to the Court of Appeal, the confusion required for a finding of passing off “is fully established by proof that the respondent’s domain name is equally descriptive of the appellant and contains the same acronym long associated to it.” (at para 71) This approach gives excessive scope to what should be – in the context of passing off – relatively weak rights in VCC. The acronym is obvious and appropriate for both the Vancouver Community College and the Vancouver Career College. While the Community College may have acquired goodwill in the acronym, its highly descriptive nature necessarily limits the scope of the goodwill and does not, without more, allow it to preclude its use by the Career College, itself in business for 20 years. Weak marks deserve limited protection in passing off. Having tolerated the presence of the Vancouver Career College since 1997, the action in passing off with respect to its use of its acronym online seems misdirected.
The Court of Appeal found that the appellant had suffered damage to its goodwill. This flowed in part from “the lack of power to control the use of the marks to which the goodwill attached by unauthorized users” (at para 75). To characterize the Vancouver Career College as an “unauthorized user” of the appropriate acronym for its own name seems problematic. Essentially, the Court of Appeal would carve out an absolute monopoly for the appellant in VCC for use in association with education services notwithstanding the fact that the acronym is shared by two parties with names that are highly descriptive of similar services and that share the same acronym. In such circumstances, it is appropriate to require something more in the respondent’s conduct on which to base a finding of passing off.
Of course, the appellant is not without its nuclear option – the VCC official mark, although it is clear that there are other difficulties with the official marks claim. As noted in Part 1, official marks give the kind of absolute protection for entirely descriptive marks that the appellant is clearly seeking. While the official mark issues in this case have yet to be resolved, it is unfortunate that the passing off analysis seems to have been carried out under the shadow of the official mark. The result is an analysis peculiar to the circumstances of this case that would be dangerous to extend to other cases of passing off.