Australia: Google Adwords Decision: Brand owners won't have the easy option of suing Google if their name is misappropriated by a competitor

Last Updated: 7 October 2011
Article by Michael Sutton

The Federal Court has found in Google's favour, and denied businesses an easy target when defending their brands from misuse under the Google Adwords program 1.

The ACCC brought proceedings against Trading Post Australia Pty Ltd and Google Inc under the Trade Practices Act (the TPA) for misleading and deceptive conduct in relation to the "sponsored links" in Google's search results (as the case related to conduct prior to the introduction of the Competition and Consumer Act (the CCA) on 1 January 2011).

This recent decision related to Google's liability.

The origins of the issue lay in Google's Adwords program. In simple terms, Google sells advertising space through Adwords. An advertiser can buy "keywords" and, when a user of the Google search engine includes that keyword in a search query, a link to the advertiser's business will appear as a sponsored link on the first page of the search results.

Despite agreeing to Terms of Service to the contrary, however, some advertisers have been known to use the Adwords service by buying keywords relating to their competitors. As an example in this case, Trading Post had bought the keyword "Kloster Ford" (a competitor), so when a search query for "Kloster Ford" was entered into the Google search engine, a sponsored link for Trading Post would appear on the first search page.

The ACCC's two main concerns in relation to Google were that Google's search results were misleading and deceptive, or were likely to mislead and deceive, because:

  • Google's search results did not properly distinguish between "organic" search results (i.e. those simply generated by the Google search engine) and "Sponsored Links" which were effectively paid-for advertising, and
  • Google published sponsored links which consisted of a headline containing a trading name or brand name of an advertiser's competitor but, which also served as a clickable link to the advertiser's website. The confusion in this respect was also compounded by the ACCC's first concern.

Perhaps unsurprisingly, the Court decided in Google's favour on both these issues. Reasons for the Court's decision include:

  • a determination that the relevant class of consumers would be those who have a basic knowledge and understanding of computers, the web and search engines including the Google search engine, who would understand that Google used ads to generate revenue
  • it was not necessary that users did not fully understand the way the Adwords program worked
  • users would notice the caption "Sponsored Links", and this caption was always in close proximity to the sponsored links themselves
  • there was a clear enough definition between the organic search results and the sponsored links
  • any confusion of first time users of the Google search engine would be short lived
  • the Adwords program was no more than a service offered by Google which did no more than communicate what the advertiser was representing: Google was not endorsing the sponsored link or the advertiser, and the message being conveyed by the publication of such an ad was from the advertiser, not the publisher
  • Google did no more than represent that an ad was an ad
  • the publisher of any ad (on-line of otherwise), always provides at least some of the facilities that permit the ad to be seen or heard, but this does not mean that the publisher has endorsed the ad, or done anything more than pass it on.

The Court also provided some useful guidance in relation to the application of the publisher's defence under s85(3) TPA (now Schedule 2 s209 CCA).

This section essentially provides for a defence where a defendant establishes that they are a publisher of ads, and proves that the ad was received in the ordinary course of business, and the defendant had no reason to suspect the publication of the ad would contravene the TPA.

Given that the Court had already decided that the publication of the sponsored links by Google had not breached the TPA, Google did not need to rely on this defence. The Court did, however, note that, in relation to certain ads, Google would not have been able to satisfy the Court that it had no reason to suspect the publication of the ad would contravene the TPA. This was primarily because those at Google involved in the sale of Adwords would, in some circumstances, likely be aware that an advertiser was buying keywords relating to a competitor. This would be a useful message for Google and others in the business of publishing ads to take on board.

So What Does This Decision Mean?

Google (and other publishers of ads) will likely be delighted with this decision, brand owners less so. If the Court had found against Google then brand owners would have had an easy target, with deep pockets, to sue if their brand was misappropriated by a competitor and used as a keyword in that competitor's advertising.

We are yet to see whether the ACCC will appeal the decision but, for now at least, brand owners still have a few viable options available to them if they have this type of complaint:

  • invoke Google's trade mark policy to prevent an advertiser from using their trade marks (registered or common law)
  • sue the entity that is actually misusing their brand through misleading and deceptive conduct, and/or
  • make a complaint to the ACCC.

Unless overturned on appeal, suing Google over sponsored links would not appear to be one of them.


1 Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd [2011] FCA 1086

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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