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High Court victory for accountancy outsourcer in trademark tussle

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A judge has upheld outsourcing specialist AdvanceTrack’s claims that a competitor infringed its trademark via a series of Google advertisements and was liable for passing off AdvanceTrack’s trademark as its own.

6th Sep 2023
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After a two-year dispute that may have wider implications for many small businesses or accounting firms currently using or considering Google internet advertising, a judge has upheld outsourcing specialist AdvanceTrack’s claims that direct competitor GI Outsourcing infringed its trademark.

In a judgment running to almost 40,000 words, Judge James Tindal found that GI Outsourcing, using a third-party marketing agency, had infringed the trademark of AdvanceTrack via a series of Google advertisements.

The judge also upheld AdvanceTrack’s claims that GI Outsourcing was liable for passing off AdvanceTrack’s trademark as its own – breaching laws protecting brands from companies illegally using Google to target their competitors. 

Keyword or ad copy?

The case hinged upon a Google Adwords campaign placed by GI Outsourcing’s marketing firm that ran from March 2021 to May 2021.

By using the Google Adwords auction platform (since rebranded to Google Ads), businesses can bid on specific industry-related keywords – words or phrases that potential customers are likely to type into search engines such as “accounting outsourcing” – so their services appear in the “Ad” section at the top of Google’s search engine results page.

It is relatively common for rivals to bid on competitors’ brand names in the Google Ads keywords section (known in the trade as “brand hi-jacking”), as this is not displayed to the general public – something confirmed in Google Ads’ own policy terms.

However, rivals are not allowed to use competitors’ trademarked terms in the headline or copy of the ads themselves, as this is displayed on the search results page itself, and may cause confusion about which company’s site a potential customer may click on.

A bitter but narrow dispute

Setting the scene for his judgment, Judge Tindal labelled the key factual dispute “bitter, but narrow”: whether GI Outsourcing had deliberately included “Advancetrack” in its advert copy itself, as opposed to just targeting a Google keyword, which GI Outsourcing claimed to have done.

On 23 March 2021, GI Outsourcing’s marketing consultant JE Consulting (JEC), acting on instructions from GI Outsourcing director Tariq Husain, included “advancetrack” as a keyword in a Google AdWords campaign. 

Husain told the court he approved a long list of phrases for the adverts such as “outsourcing for accountants”. These appear as keywords in the original campaign plan and mock advert submitted as evidence, to which he claims he added “Advance Track” as a keyword only but not for in the advert – although Husain admitted in court he left the process entirely to JEC and did not check the final version.

The phrase “Advancetrack” was then included in the text for GI Outsourcing’s internet adverts accessed by that keyword, as demonstrated below via a [relatively poor quality] screenshot used as evidence during the hearing.

A screenshot of GI Outsourcing's Google Adwords campaign
Bailii-AdvanceTrack

As shown, a Google search for “advancetrack” brought up two Google Ads at the top of the search page. The top advert was labelled “Advancetrack Outsourcing”, but was GI Outsourcing’s Google Ad with a link pointing to GI Outsourcing’s website.

On discovering the campaign in April 2021 after a customer mentioned difficulties finding their website, AdvanceTrack managing director Vipul Sheth initially contacted JEC to enquire about the adverts and was told it was an issue with Google. 

When the ads continued to appear, AdvanceTrack took further action, issuing a solicitors’ letter to GI Outsourcing on 13 May 2021. The adverts stopped running on 24 May 2021.

GI Outsourcing told the court the appearance of the term “Advancetrack” in the ad copy itself was an error by JEC – a claim disputed during the hearing by AdvanceTrack. 

While the judge stated that in the balance of probability, GI Outsourcing did not intentionally include “Advancetrack” in its adverts, this did not affect the final verdict. 

Judge Tindal concluded that it would have been difficult for “the average accountant” to ascertain the origin of GI Outsourcing’s adverts and ruled that the outsourcer had infringed AdvanceTrack’s trademark in breach of section 10(1) Trade Marks Act 1994 (TMA). 

In summing up, the judge said GI Outsourcing had tried to use AdvanceTrack’s reputation in the industry and included AdvanceTrack’s brand in error in its advertising text multiple times during the campaign, which he badged “ill-fated”, “clumsy” and “disastrous”.

He added that GI Outsourcing’s failure to address the issue for almost a month when told by JEC at the start of May 2021 gave reasonable grounds for him to suspect that the outsourcing firm knew it was infringing.

While its ill-fated AdWords campaign was running, GI Outsourcing also ran campaigns with keywords targeting three other known outsourcing competitors – although none featured the same ad copy error as the AdvanceTrack ads.

Founded more than 20 years ago by chartered accountant Sheth, AdvanceTrack offers outsourced accounting and audit services to firms and is a member of the Institute of Chartered Accountants in England and Wales (ICAEW) with an annual fee income of £3.5m.

AdvanceTrack is claiming losses of up to £500,000 due to the infringement of its trademark, and although Judge Tindal stated that “on the balance of probabilities” GI Outsourcing gained no advantage (and sustained some disadvantage) from the adverts, he was “minded to award some damages for prejudice or on a royalty basis”.

An exact figure for the damages will be decided via quantum trial in the autumn after the court has received further submissions from both sides. AdvanceTrack has stated that it will donate 100% of the damages to charity.

Case ‘a legal minefield’

Judge Tindal labelled the case a “legal minefield” due to its complexity but added that it may prove useful in future as an example of how not to run a Google Ads campaign.

Commenting on the case, Leanne Hall from patent and trademark law experts Serjeants, stated that before putting similar campaigns in place, businesses should always carry out a search to check whether someone else has registered a trademark.

“As this case has shown, using a competitor’s mark can make you liable for trademark infringement,” said Hall. “Using a registered trademark in an advert that is visible in the search results is not acceptable because it creates a high likelihood that customers will confuse the two brands.”

However, Judge Tindal added that even limiting activity to a keyword may not be enough to avoid liability. “It may be wise for a small business to get advice, especially in these legally as well as commercially uncertain times, as our legal system begins in earnest to detach from the EU.”

*8 September 2023: This article was amended to remove several quotes

Replies (4)

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David Ross
By davidross
07th Sep 2023 09:30

A legal minefield - too right!

And as ever the Lawyers will be the only winners. Note that another expensive Trial is still to be held on the same case in the Autumn

Looks like any attempt to run a Google Ads campaign could be picked on by a competitor who has enough bucks to pursue a law suit.

Thanks (1)
Replying to davidross:
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By pleasehelpmeonip
07th Sep 2023 10:00

Believe me, stay well away from UK Court's even if you think you have a slam dunk case. Quality of Judges now is scary as they are putting Judges with little to zero experience in IP into cases involving complex IP matters. Not good I assure you.
Run away from UK Court's, instead put the money you would have paid a lawyer onto a roulette wheel, you have much more chance of winning.

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Replying to davidross:
By Duggimon
07th Sep 2023 10:51

Seems to me like any google ad campaign in which you actively masquerade as your competitors should be picked up and challenged.

If you google "Xero" then the top result is an ad for Sage, but it does say Sage, they don't pretend to be Xero to trick you. There's a quite distinct and important difference there.

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By pleasehelpmeonip
07th Sep 2023 09:57

I believe that this is the Judge Tindal ;

https://uk.linkedin.com/in/jim-tindal-55314187

I do NOT think that he is a specialist in IP law and that is trouble with UK Court's now, they are
very very short of Judges and putting Judges into areas of law they have very little , if any, expertise in.

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