A recent Indian court ruling against Google’s keyword advertising practices has drawn attention after the founders said competitors have long used the system to divert customers and force companies to pay to protect their own brands.
The ruling, handed down by the Delhi High Court on May 22 in a trademark dispute involving bathroom fixtures maker Hindware, found Google liable for trademark infringement for its keyword advertising practices and awarded the company ₹3 million (about $31,600) in nominal damages.
In its 163 pages judgment (PDF), Judge Mini Pushkarna rejected Google’s argument that it was merely a passive intermediary in serving ads on its search platform. The judge said Google, through its AdWords platform, allowed Hindware’s rivals to use “Hindware” as a keyword to target users searching for the mark.
“By Google selling the plaintiff’s trademark (Hindware) as a keyword without any authorization for commercial gain, it is infringing the plaintiff’s right to exclusive use of its trademark under Article 28 of the Trademark Law,” the judge said.
The ruling drew attention on Friday after Indian businessmen, including Zerodha founder Nithin Kamath and Zoho founder Sridhar Vembu, made public supported the rulingarguing that competitors have long used Google’s advertising tools to divert traffic from established brands and force companies to spend money protecting their own names.
Kamath, who said Zerodha had faced the problem for more than a decade, wrote at
Google, for its part, said its trademarked keyword ad policy “does not allow competing advertisers to use trademarked terms in the advertising copy of an ad” and that the policy applies globally.
“We look forward to continuing to align our operations with local legal frameworks while maintaining strict standards to protect the long-term interests of our users,” a Google spokesperson said in a statement to TechCrunch.
India is a key market for Google, with more internet users than any country other than China, making court decisions affecting its search and advertising businesses particularly important.
Legal experts, however, said the ruling’s implications may be narrower than some of the public reaction suggests.
“The ruling itself will require platforms to review their processes to see if their automated tools encourage or offer trademarked terms to advertisers generally,” said Aprajita Rana, partner at AZB & Partners.
However, Rana told TechCrunch that the decision does not have a “far-reaching impact” on the liability of online platforms in India, as courts have already established that internet companies can lose legal protections when they play an active role in illegal activities.
“The important thing here is how providing access to trademarked terms, including in ad selection across online platforms and advertisers and that customers are not aware of, can amount to a participatory activity for the platforms,” Rana said.
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