Court upholds internet advertising strategy of career training institution

Educational institutions operate in a marketplace.  They compete for the attention of prospective students and teachers.  They try to establish a brand – a unique identity in the industry of education – while fulfilling an essential role in the growth of our society, which isn’t easy to do.  (I remember seeing t-shirts at McGill with “Harvard” written across the chest, with text below that read: “America’s McGill”.) 

Career training institutions in British Columbia generally engage the public with a direct message: we will give you the practical skills you need to establish a future.  And given the investment students make by enrolling, the way that message is communicated should be subject to the same kind of restrictions that protect consumers in any other industry. 

These institutions operate within a sophisticated legal matrix.  A career training institution is, at its core, a “person” or corporation that provides training or instruction.  To protect students and maintain certain standards, the government passed the Private Career Training Institutions Act (BC) (BC Laws), which imposes a series of rules regarding registration and accreditation and establishes the Private Career Training Institutions Agency as the regulator.  Here is an overview from the Ministry of Advanced Education. 

In Private Career Training Institutions Agency v. Vancouver Career College (Burnaby) Inc. (CanLII), the British Columbia Supreme Court dealt with an accusation by the Agency that VCC Inc., which provides a variety of post-secondary educational services under various business names registered with the Agency,  had contravened (and continued to contravene) an Agency bylaw prohibiting misleading advertising.  Specifically, the Agency had sought an injunction against VCC Inc. preventing it from using the business names of other member institutions in connection with its internet advertising strategy.  

The Agency has the authority under the Act to enact bylaws prohibiting certain types of advertising.  On June 1, 2009, the Agency passed Bylaw 29, which provided as follows: 

An Institution must not engage in advertising or make a representation that is false, deceptive or misleading. Deceptive advertising includes but is not limited to an oral, written, internet, visual, descriptive or other representation that has the capability, tendency or effect of deceiving or misleading a consumer. 

Bylaw 29 also requires that each institution use its registered operating name in its advertising. 

The case centered around a form of internet advertising known as “keyword advertising”, which is known (though not necessarily by name) to anyone who uses a popular search engine like google or yahoo.  Gaul J. does a fairly impressive job of describing it in layperson terms: 

Internet search engines collect and store data about websites, including keywords contained in the website and the location of the website. When a user enters a query into a search engine such as Google or Yahoo, the search terms are compared to the website information stored in the search engine. The search engine then produces a list of websites, which are ranked according to relevance, as determined by the search engine.

One way in which a website operator can attempt to increase the traffic to their website is through the use of pay-per-click advertising. The relevant form of pay-per-click advertising in the case at bar is keyword advertising (“Keyword Advertising”). This service allows the website operator to pay search engines for links to their websites to appear as “sponsored links” alongside the search engine’s normal or “organic” search results. 

You may know where this is heading.  Two years ago, VCC Inc. began using the business names of other institutions as triggers for its keyword advertising, meaning that VCC Inc.’s school names would pop up as sponsored links when the name of a different institution was searched.  The decision cites examples of VCC Inc.’s competitors using having a similar practice (e.g. try googling “Vancouver Career Centre” and watch what pops up as a sponsored link) but it is unclear how common this is in other industries. 

Several weeks after Bylaw 29 was passed, the Agency sent all of its member institutions a copy of the following interpretative guideline: 

With respect to internet advertising, the PCTIA Board agreed by motion at its meeting of June 18, 2009 that the use of another institution’s trademarks, logo, or business name, or anything confusingly similar, by a registered institution in any metatags (website or html), search engine AdWords, adCenter keywords, or any similar medium for advertising purposes shall constitute false, deceptive or misleading activity within the meaning of Bylaw 29(1), and is prohibited.  [Emphasis added.] 

Some time later, the Agency received two related complaints from students.  The first student complained that she searched “Vancouver Community College” and clicked on a sponsored link for the “Vancouver Career College”.  The registered for a course at the latter without realizing that it was the wrong institution.  The second student did something similar. 

The Agency asserted that this practice involves deceptive internet advertising that temporarily misleads students by inviting them to one site when they had clearly intended to go to another site.  This violates Bylaw 29, even though those students who are are temporarily misled are subsequently informed of their mistake and are able to correct it.  In the other corner, VCC Inc. maintained that this is essentially a modern-day version of the generally accepted marketing practice of a business placing its advertisement close to a competitor’s advertisement.  

The court spent some time searching for the best meaning of “misleading” in other cases but ultimately zeroed in on the issue of whether the adoption and use of competitors’ names in keyword marketing is misleading.  Gaul J. reasoned that enrolling in such a program is an important decision, and a certain level of scrutiny is expected from a prospective student: 

In the present case, the services that are being advertised through VCC Inc.’s online advertising campaign are post-secondary education courses which can range from 3 to 18 months in terms of study commitment and cost between $4,000 and $24,000. Embarking upon an educational program involves a serious decision and, in my view, the extent of the financial and personal commitment expected of prospective students requires that they should, and can be expected to, exercise a high degree of care in making their decisions as to which school they should attend.   [Emphasis added.] 

Gaul J. effectively ignored the Agency’s reference to the two misled students as a relevant example, denying that they exercised sufficient care in selecting a program.  More importantly, he held that VCC Inc.’s strategy of including competitors’ names in keyword advertising does not improperly direct students to their websites and misdirect them from competitors’: 

[I] accept VCC Inc.’s argument that its practice of using Keyword Advertising is no different than the time-honoured and generally accepted marketing practice of a company locating its advertisement close to a competitor’s in traditional media (e.g., placing its Yellow Pages advertisement next to or in close proximity to a competitor’s telephone number  in the same directory so that potential customers of that competitor discover there is another company offering a similar product or service and that they, the consumer, have a choice). 

Career training institutions should be aware of exactly what types of advertising strategies are prohibited, and students should understand the basic level of care expected of them in selecting the appropriate institution.