A recent Indian court ruling on Google’s keyword advertising practices has received new attention after its founders said competitors have long been using the system to steal customers and force companies to pay to protect their brands.
On May 22, the Delhi High Court ruled on a trademark dispute with bathroom fixtures manufacturer Hindware. Google was held liable for trademark infringement for its keyword advertising practices and paid the company 3 million rupees (about $31,600) in nominal damages.
In the 163-page judgment (PDF), Justice Mini Pushkarna rejected Google’s argument that it was merely a passive intermediary serving ads on its search platform. The judge said Google, through its AdWords platform, allowed Hindware’s competitors to use “Hindware” as a keyword to target users searching for the brand.
The court said, “Google violated the plaintiff’s right to exclusive use of the trademark under Article 28 of the Trademark Act by selling the plaintiff’s (Hindware) trademark as a keyword without any permission for commercial gain.”
The ruling attracted attention last Friday when Indian entrepreneurs, including Zerodha founder Nithin Kamath and Zoho founder Sridhar Vembu, publicly supported the ruling. Competitors have long argued that Google’s advertising tools have been used to divert traffic from existing brands and force companies to spend money protecting their own names.
Kamath, who said Zerodha has been facing this problem for over a decade, wrote to
Google said its advertising policy for trademarked keywords “does not allow competing advertisers to use trademarked terms in their ad text” and that this policy applies globally.
“We look forward to continuing to operate in compliance with local legal frameworks while maintaining rigorous 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 other country except China, so court decisions affecting its search and advertising business are particularly important.
But legal experts said the ruling’s implications may be narrower than some of the public’s reactions.
“The judgment itself will require platforms to reexamine their processes to ensure that automated tools are recommending or serving trademarked terms to advertisers,” said Aprajita Rana, partner at AZB & Partners.
Nonetheless, Rana told TechCrunch that the decision does not have a “widespread impact” on the liability of online platforms in India. That’s because courts have already proven that Internet companies can lose legal protection if they take an active role in illegal activities.
“What is important in this case is how providing access to trademarked terms, even in the ad curation between online platforms and advertisers that are unknown to customers, can impact the platform’s engagement activity,” Rana said.
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