Courts examine keyword advertising as trademark infringement

Google’s parent company, Alphabet Inc, has a market cap of close to $1.5 trillion, and it generates a substantial portion of its revenue from advertising on its various platforms and services, primarily Google. As part of the search engine’s advertising service, clients choose keywords that trigger the display of their ads when searched for by users. While the service’s policy does not allow advertisers to make unauthorised use of third-party trademarks in the title and text of their ads (brand owners may request that these are taken down by Google), the use of marks as keywords is not subject to restriction by Google in the territory of India. However, recent judgments from the Indian courts have shone a spotlight on the question of whether unauthorised use of trademarks as keywords constitutes infringement.

Case law

The judgments came down to two questions:

• whether making reference to a registered trademark on the Google Ads programme amounts to use of a mark; and
• if yes, whether such use amounts to infringement.

In DRS Logistics (P) Ltd & Anr v Google India Pvt Ltd & Ors (CS(COMM) 01/2017), the High Court of Delhi examined whether use of a registered trademark as a keyword would amount to infringement and/or passing off at an interim stage. It was held that using a registered trademark as a keyword ― even if not violating Google’s policies in India ― confuses end users as to the origin of goods and services. The court also held that the keyword (along with the overall effect of the advertisement including the title, text and URL) needs to be investigated on the basis of the facts and circumstances of each case. The court opined that use of a registered trademark (belonging to a third party) as a keyword (usage of which is not privy/visible to the end-user) would constitute use under the Trademarks Act 1999. Such use would cause a diversion of traffic from the website of the brand owner to that of the advertiser, amounting to passing off the goods and services of the advertiser as those of the trademark owner.

However, no findings on whether such use would amount to infringement emerged; the court merely directed Google to review each case individually, restricting or allowing the use of the keyword in question. The order (21 April 2022) has been appealed before the Division Bench of the High Court of Delhi.

Turning to the second issue, in a subsequent order (27 April 2022) issued in MakeMyTrip India Pvt Ltd v Booking.com BV & Ors (CS(COMM) 268/2022), a single judge of the High Court of Delhi, once again at the interim stage, held that use of a registered trademark as a keyword through Google Ads classifies as infringement. The judge found that use of a registered trademark, even if it is in a manner not visible to consumers, was an attempt to divert business from a brand owner’s website to the website of an infringer, and amounted to taking “unfair advantage of the registered mark”. Further, the court also noted that such an action amounted to passing off under common law, stating that, “the concept of ‘deceit’ which forms the fulcrum of an action for passing off is clearly present in cases such as this one”. Here, too, an appeal has been filed by Booking.com and Google challenging the findings of the single judge, which is pending adjudication.

Analysis

In adjudicating disputes pertaining to the unauthorised use of a third-party trademark as a keyword for Google Ads, while use of a mark as a keyword has been restrained at an interim stage, to date, no judgment has been passed by the courts subsequent to trial. That said, as borne out by the foregoing, interim injunctions are being granted against third parties in India who are using registered third-party marks as keywords. Further, directions are also being issued to Google to ensure that such marks are not being used as keywords on its Ads service.

Given that in several foreign jurisdictions it has been held that use of a trademark as a keyword does not amount to infringement, several affected parties, including Google, are challenging such orders by filing appeals citing a myriad of defences, including:

• the fact that the consumer does not experience/directly encounter the third party’s registered trademark on the search result page;
• citing prevalent accepted industry practice;
• highlighting that online consumers are a discerning class who do not click and make purchases on the basis of the first link that pops up in the search results; and
• the role of competition in the realm of online advertising.
   

The majority of cases pertaining to keyword advertising are pending before the High Court of Delhi, and in this context, the court has also afforded an opportunity to Google to deliver a presentation to the court elucidating the finer nuances of its advertising service. It bears mention that data on internet traffic and customer survey results on confusion vis-à-vis keyword advertising would also be appropriate for the courts’ consideration. Given the upward trajectory of the online business model in India (and elsewhere), this is an area to track, and it will be interesting to see how Indian courts rule in the days ahead.