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Google loses ‘safe harbour’ for offering brands as part of its AdWords programme

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Ranjan Narula of RNA Technology and IP Attorneys reviews crucial Indian case law with key ramifications for Google’s advertising strategy and a significant impact on advertisers

The Google Ads programme is currently the centre of controversy between Google and Indian logistics firm DRS. Cross-appeals were filed by DRS and Google against the order of the Delhi High Court that found Google to be an active participant in running the Google Ads programme. Both appeals were heard together, and the court held that Google encourages advertisers to use trademarks as keywords for display of the Ads to the target audience. The court, however, in the context of ‘search engine functioning’ and from the point of view of ‘internet user’, held that the use of trademarks as keywords per se does not constitute infringement of the trademark.

The grievance of DRS is:

  • That Google actively encourages the use of its registered trademarks as keywords for third parties to display their sponsored links pertaining to websites that infringed its trademarks;

  • That use of its trademark ‘AGARWAL PACKERS AND MOVERS' as keywords infringes the trademarks;

  • That use of its trademark as keywords results in diversion of internet traffic from its website to that of its competitor. Therefore, use of its trademarks as keywords infringes its trademarks; and

  • That Google profits from persons infringing its trademarks by ensuring that their advertisements were reflected on the search engine results page (SERP).

Google argued that:

  • It merely permits the advertisers to use keywords for display of sponsored links; it does not select the keywords;

  • Use of the keyword in the Ads programme does not amount to 'use' under the Trademark Act;

  • Even if it is accepted that a keyword is use of a trademark within the meaning of the Trademark Act, the use is by the advertiser seeking to display sponsored results, and would not amount to use of the trademark by Google; and

  • As an intermediary, it has a safe harbour under Section 79 of the Information Technology (IT) Act.

Court ruling

  • It is difficult to accept that Google is a passive service provider and merely permits the advertisers to use keywords without using it itself. A review of the Ads programme clearly indicates that Google's role is anything but passive. It is an active participant in promoting use of trademarks as keywords for the purpose of its Ads programme. It actively suggests keywords that would result in the display of Ads, which are likely to result in higher clicks. The PPC (pay per click) revenue model suggests that the choice of the sponsored link to be displayed is based on the probability to generate the highest revenue, which is a function of the bid amount per click and the number of clicks. Google, by virtue of operating the search engine over a period of time, is in a position to suggest keywords which would result in the higher probability of clicks (visits to the website/webpage of the advertiser);

  • The court further observed: “We are unable to accept the view that use of trademarks as keywords in the Ads programme is use only by the advertisers and not Google. We reject the substratal premise that Google's participation in the Ads programme is limited to merely providing the tools and the technical framework for advertisers to use the keywords”;

  • The allegations of infringement are in relation to the Ads programme which is run by Google. Prima facie, Google is an active participant in use of the trademarks of proprietors and was selecting the recipients of the information of the infringing links;

  • The trademarks are monetised by Google by using them as keywords for displaying the paid Ads on the SERP. In one sense, Google effectively sells the use of the trademarks as keywords to advertisers. Prima facie, it encourages them to use trademarks, as keywords for display of the Ads to the target audience;

  • Google is not a passive intermediary but runs an advertisement business, of which it has pervasive control. Merely because the said business is run online and is dovetailed with its service as an intermediary, does not entitle Google to the benefit of Section 79(1) of the IT Act, insofar as the Ads Programme is concerned;

  • The court however ruled that the use of trademarks as keywords per se is not infringement of the trademark (by Google) in the context of search engine functioning. The court observed: “A search engine is not a directory service. The assumption than an internet user is merely searching the address of the proprietor of the trademark when he feeds in a search query that may contain a trademark, is erroneous. An internet user may be looking for information that may be relevant to the trademark. He may be looking at reviews relating to the products or services covered by the trademark. He may also be looking at competitors or other persons who provide or deal with similar goods or services”; and

  • The court concluded the question of whether use of trademarks as the keywords itself would result in confusion must be viewed from the perspective of a person who is ignorant of the functioning of the search engine that he uses, and would proceed on a blind belief that every advertisement on the SERP is covered and associated with his search query.

The author is of the view that this conclusion presupposes a uniform level of sophistication among all internet users. As an example, data shows that senior citizens are vulnerable and easy targets of cyber frauds, considering they are generally non-tech savvy and trust humans more than technology.

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