The IP bar in Canada has long been awaiting a decision from the Federal Court on the issue of the use of trademarks in a competitor’s metatags, and that decision has now arrived, with what to many is a surprising result. The Federal Court’s recent decision in Red Label Vacations Inc. v. 411 Travel Bags Limited 205 FC19 is in my view a departure from where it appeared that the courts in Canada seemed to be heading.
A metatag is a word or phrase placed in the source code of a website that enables it to be found by search engines to assist in indexing and ranking search results. Metatags are concealed in the webpage’s metadata, and are not visible to consumers.
The case presented the first opportunity for consideration by the Federal Court of the issues of trademark and copyright infringement through the use of metatags, and the judicial construction which originated in the United States to deal with scenarios including those in which a competitor’s trademark was used in metatags. The concept is known as “initial interest confusion”. Customers are initially attracted to the defendant’s website through the use of the plaintiff’s trademark(s), which are embedded in the source code of the defendant’s website. The term “initial interest” refers to the fact that once the consumer ends up on the defendant’s website, they generally know where they are, and are therefore arguably no longer confused.
Justice Manson stated in his decision that in Canada, the concept of initial interest confusion has not gained a foothold. This statement surprised many practitioners in Canada, as this theory has been considered and applied by a number of different courts in Canada, especially the British Columbia courts in a series of cases since 2001, and it appeared to be well on its way to being accepted, at least in the context of cases involving domain names.
In the Red Label case, both of the parties were in the business of providing travel information and booking services. The plaintiff owned 3 registered trademarks: redtag.ca, redtag.ca vacations, and Shop. Compare. Payless! Guaranteed.
The Court first considered the copyright complaint, and held that there was no copyright in the metatags, since they did not display the requisite level of skill and judgment, and that there had therefore been no infringement. In addition, the Court held that no substantial part of the plaintiff’s website had been copied.
The Court went on to consider the plaintiff’s position under passing off, trademark infringement, and depreciation of the value of the goodwill in the trademarks. Most importantly, the Court was able to conclude that the use of the trademarks in the metatags did result in misdirected traffic.
However, the plaintiff was unsuccessful in these trademark complaints on the basis that in order to succeed, Justice Manson held that the confusion had to arise once the person was on the website, and not when they were initially misdirected to go to the website. The Court therefore concluded that there was no likelihood of confusion with respect to the source of the goods or services.
Justice Manson held as follows:
The use of metatags in a search engine merely gives the consumer a choice of independent and distinct links that he or she may choose from at will rather than directing a consumer to a particular competitor. Rankings may affect the choice to be made, but nevertheless such a choice exists…If there is no likelihood of confusion with respect to the source of the goods or services on the website (emphasis added) … the consumer is still free to choose and purchase the goods or services from the website he or she initially searched for.”
In light of this finding, no likelihood of deception or confusion was found to exist, and so the trademark elements of the plaintiff’s case all failed.
The result of the case is narrower than decisions on similar facts in a number of United States and European jurisdictions which have considered this issue.
While Canadian trademark law is in general moving expansively to better protect the trademark rights of brand owners, and where the courts are showing increased concern for the interests of consumers, this decision feels like a move in the wrong direction. This reluctance to apply traditional intellectual property concepts to the use of metatags or other search engine optimization techniques will make it more difficult for brand owners to protect their rights. In addition, the case could have a chilling effect on other non-metatag scenarios in which an argument based on initial interest confusion might have been advanced by a plaintiff. On the copyright front, the door may still be open to a similar complaint succeeding, depending on the originality of the trademark or words used in the metatags. It is important to note that the decision is currently under appeal, and so we will be staying tuned for further clarification on this important issue.