Reed Executive Plc v Reed Business Information Ltd [2004] RPC 40
Referred to
175
Judgment
NICHOLLS J:
Introduction
[1] The applicant is a company which conducts business as a manufacturer of security fencing and related
products. The respondent is a company which competes with the applicant in the industry of perimeter
security and fencing. The applicant's complaint is that the respondent uses the applicant's trademark
"ClearVu" for its internet advertising.
[2] The applicant claims that in 2008 it developed and successfully pioneered a type of fencing which allows
optimal visibility but which is, for all intents and purposes, impenetrable. The applicant's brand name for this
fencing is "ClearVu". It is allegedly well known throughout South Africa and represents business worth
hundreds of millions of rands. In 2012, the respondent commenced the manufacture and sale of a similar
product using the name "MSecure".
[3] The applicant seeks a final interdict restraining the respondent from using the trademark "ClearVu" as a
keyword in the Google AdWords System, or as a metatag. There is no trade mark registered over "ClearVu"
and accordingly the relief is based not on a statutory infringement, but on the common law interdict of
unlawful competition. In argument, the applicant contended for an interim interdict pending the registration of
the
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trade mark in the alternative. The respondent denies that it is using the word "ClearVu" as a metatag but
admits that it bids on the word on Google AdWords, which it says is a lawful and common business practice.
In light of this concession, the case was argued only on the issue of keywords and the cause of action on
metatags was seemingly abandoned. To understand the issues in this case, an explanation of how the
Google AdWords Systems operates is necessary.
Google AdWords System
[4] When an internet user performs a search on the basis of one or more words on the Google search engine, it
will display the results which best correspond to that word in decreasing order of relevance. These are the so
called "natural" or "organic" results of the search. The second type of link is a "sponsored link". This
constitutes a form of advertising where a commercial entity has paid for their advertisement to appear once
certain words, known as "keywords", are entered into the search engine.
[5] The Google AdWords System grew out of Google's recognition of the importance of the internet as a
marketing tool and how lucratively this could be exploited. Google therefore "sells" advertising space on the
top of the page (or the right hand side of the page), above the natural results. Any commercial entity, by
means of the reservation of one or more keywords, can obtain an advertising link to its site when an internet
user enters one or more of the keywords into a search request. Google refines the system from time to time
but the essential elements remain unchanged.
[6] The system enables an entity to pay a fee to display an advertisement in these sections. This advertising
space is highly sought after. The advertisement is triggered by the use of one or more keywords in a given
search. The ranking of the advertisements, an all important aspect, is determined by various factors but
primarily a priceperclick. This is when an internet user "clicks" on the advertisement to take him through to
the advertiser's website. An advertiser can, at any time, improve its ranking by fixing a higher maximum price
perclick for a keyword than another commercial entity who has nominated the same keyword.
[7] The fee is calculated primarily on the basis of a maximum priceperclick which the advertiser has agreed to
pay and the number of times that the link was clicked on by internet users. The priceperclick is negotiated
for each keyword exploited by an advertiser. There might be several keywords, each having a different price
tag for a resulting "clickthrough" to the advertiser's site.
[8] The applicant's complaint is that a search for "ClearVu" will result in the respondent's advertisement being
displayed because it has selected "ClearVu" as a keyword. The applicant contends that whenever an internet
user searches via Google for "ClearVu" it is because the internet user is looking for the applicant's product.
Instead, the respondent's advertisement (for its MSecure product) pops up, prominent in relation to the
search results.
[9] Moreover, the applicant alleges in its supplementary affidavit that the applicant's trade mark "ClearVu"
appears in the text of the respondent's advertisement. This allegedly reinforces the representation that the
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respondent's business and products are connected or associated with the applicant and its "ClearVu"
product. The applicant asserts that this is nothing other than a competitive act calculated to confuse or
deceive customers and designed to take business away from the applicant and divert it to the respondent.
[10] To add insult to injury, to ensure that the applicant's advertisement has a higher ranking and appears in a
preferable position to that of the respondent, the applicant has to raise the priceperclick for the use of its