Despite its borderless nature, the internet is not a lawless zone, and businesses need to consider some emerging legal issues when conducting sales and marketing activities in cyberspace.

KEYWORD ADVERTISING, an increasingly popular marketing tool, involves the purchase of a particular search term from a search engine (such as Google or Yahoo!), so that entering that term as part of a search string triggers the appearance of the keyword purchaser's advertisement on the search results page. Google's signature keyword advertising system, Google AdWords, is an example of such a system.

In order to increase its search engine advertising exposure, a business will usually purchase commonly-searched keywords. However, these keywords are often trade marks owned by third parties. The practice of 'buying' someone's registered trade mark as a search term has caused consternation among trade mark owners, both in Australia and overseas.

Does keyword advertising (using another's trade mark) breach the Trade Marks Act?

If the purchased keyword is identical to a registered trade mark, or is substantially identical or deceptively similar to a registered trade mark, and it triggers an advert for a product similar to the product to which the trade mark relates, the trade mark owner may bring an action for infringement under the Trade Marks Act 1958.

However, in Australia at least, it is not clear whether the trade mark owner would succeed in such an action. This is because there is some uncertainty as to whether, in such circumstances, the keyword purchaser is actually using the mark 'as a trade mark', that is, as a badge of origin (which is one of the requirements under the Act).

Further, even if the trade mark owner can establish that use in this context is use 'as a trade mark', in certain circumstances, there may be a further defence under the Act that such use is unlikely to confuse or deceive the user into associating the advertised product with the trade marked word.

The argument here is that web users are accustomed to seeing advertising on search engines, and will not necessarily associate the triggered advert with the keyword used in the search. This may be especially so if the advert is clearly labelled as distinct from the results themselves, such as in Google AdWords, where adverts appear in a sidebar under the heading 'Sponsored Links'.

What other actions could a keyword purchaser face? Even if a keyword purchaser can avoid liability under the Trade Marks Act, it may still need to contend with actions brought under the Trade Practices Act 1974. In particular, a trade mark owner may attempt to rely on section 52 (which prohibits misleading or deceptive conduct) and section 53 (which provides that a company must not represent that it has a sponsorship, approval or affiliation that it does not have).

Indeed, the ACCC recently wrote to the Trading Post, expressing concern that the Trading Post's purchase of a competitor's name, 'Stickybeek', as a keyword, was "potentially misleading, as internet users might mistakenly believe that [the Trading Post's] autotrader website was affiliated with Stickybeek's business". Although the Trading Post did not admit that its conduct breached the Trade Practices Act, it has since agreed to stop using competitors' names and trade marks in sponsored links on the internet.

Although Australian courts have yet to consider this issue, the ACCC's warning to the Trading Post is timely, and indicative of its view that purchasing a competitor's name or trade mark as a keyword may breach the Trade Practices Act" even in circumstances where the search engine's search results page clearly distinguishes between sponsored and non-sponsored results.

Accordingly, until this issue is settled by the courts, it may be prudent to refrain from purchasing your competitors' names or trade marks as search engine keywords.

Web copyright

The internet has dramatically increased the ease with which digital material can be copied, stored and disseminated. However, this accessibility also means that the copyright implications of seemingly innocuous actions can be easily overlooked. A business may be unaware that its rights in its website content are being infringed or, conversely, that material on its own website infringes a third party's copyright.

The Copyright Act 1968 provides that copyright subsists in certain works on their creation (and without any additional registration requirement). Works protected under the Copyright Act that are commonly found on the internet include literary works (textual content), artistic works (pictures and logos), sound recordings (music files and podcasts) and cinematographic films (videos). In general, copyright is owned by the creator of the work, who is granted exclusive rights to certain dealings with the work. These include the right to reproduce, adapt, publish and communicate that work to the public.

Copyright is infringed when any person, without the licence or consent of the copyright owner, exercises (or authorises the exercise of) one or more of these exclusive rights in relation to the whole of or a substantial part of the work. For example, by copying some text or a logo from another person's website and displaying it on its own site, a business is reproducing and communicating the material to the public. If the business does not have a licence from the owner to do this, it may be infringing that person's copyright.

You should take measures to protect yourself from infringing a third party's copyright by:

• ensuring that you obtain the necessary licences to deal with copyright material before it is placed on your website;
• complying with any terms of use attached to the material; and
• ensuring that if you hyperlink your website to an external site, you verify the legality of that site and its content, and you comply with its terms and conditions.

You should also take steps to protect your rights in relation to your own website content by:

• obtaining an assignment or licence of copyright in material created by your website designers so that you can control your website content and future amendments to it;
• displaying the copyright symbol, the name of the copyright owner and year of publication on your website;
• placing a set of website terms and conditions on the site (which, among other things, should state that users must obtain permission before copying material from your site); and
• ensuring that access to material that is not for general public use is only available to duly authorised persons.

Spam and privacy

The internet facilitates the rapid and broad dissemination of information, and is therefore an appealing medium for businesses to reach potential customers. Furthermore, information about current and potential customers constitutes invaluable marketing data.

Businesses need to remain aware, however, that legislative regimes exist in Australia which not only regulate the sending of unsolicited electronic messages (spam), but also protect the privacy of individuals about whom certain businesses hold information.

What does the Spam Act do? The Spam Act 2003 prohibits the sending of commercial electronic messages (CEMs) without the recipient's consent. Broadly, a CEM includes an email, SMS or other electronic message that purports to supply, advertise or promote goods and services or opportunities of a commercial nature.

A recipient's consent may be express, or may be inferred from conduct, business and other relationships. In certain circumstances, consent may also be implied from the conspicuous publication of an electronic address. There are also certain exemptions under the Act, including where an electronic message contains purely factual information.

The practical effect of the Act is that it makes it illegal to 'cold prospect' by email in most circumstances. The Act also requires that CEMs contain a functional unsubscribe facility, as well as accurate identifying information about the sender. The Act further prohibits the use, supply or acquisition of addressharvesting software, and the use of electronic address lists produced using such software, for the purposes of sending unsolicited CEMs.There are heavy penalties for breaching the Spam Act.

Privacy Act

The Privacy Act 1988 regulates the way in which certain businesses collect, store, disclose and use personal information. These obligations are conveyed through the National Privacy Principles.

If you are a small business and meet certain criteria, you may be exempt from the requirements of the Act. However, even if you are exempt, you may wish to consider voluntarily complying with the requirements of the Act, in order to maintain the confidence of your customers in the way you deal with their personal information.

What should you do?

In order to comply with these Acts, you should ensure that:

• your business only sends CEMs with recipients' express or inferred consent;
• all CEMs contain a functional unsubscribe facility and accurate sender information;
• you are not using address harvesting software or harvested address lists for the purposes of sending CEMs; and
• you comply with the National Privacy Principles in your collection, storage, disclosure and use of personal information (including by informing individuals of the purposes of collection and to whom information will be disclosed, and by maintaining and abiding by a privacy policy).

About the Author

Paul Kallenbach is a Senior Associate with lawyers, Minter Ellison, in Melbourne.

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