Australia: Google to appeal to Australian High Court over misleading and deceptive ads

Focus: Defending brands from misuse by competitors under Google Adwords Program
Services: Commercial, Intellectual Property & Technology
Date: 16 May 2012

A recent decision may provide businesses with an easy target when defending their brands from misuse by competitors under the Google Adwords Program in Australia: Google 1.

The Full Federal Court of Australia has unanimously upheld an appeal by the Australian Competition & Consumer Commission (ACCC) stating that by publishing four advertisements on result pages of its Google Australia website, Google engaged in conduct that was misleading or deceptive, or likely to mislead or deceive, in contravention of the then section 52 of the Trade Practices Act 1974 (Cth) (now s18 of the Australian Consumer Law).

We wrote about the original decision here.


When an Internet user enters a term into the Google search engine, a Google algorithm determines which results appear in response to the particular search term and which advertisements also appear on the results page.

The case involved the publication of eleven advertisements using Google's AdWords platform in which advertisers reproduced competitors' names and trade marks as keywords.

The ACCC alleged that Google was responsible for the placement and content of the advertisements, and was engaging in misleading and deceptive conduct in contravention of s52 of the Trade Practices Act.

At first instance a single judge of the Federal Court held that although a number of the advertisements were misleading or deceptive, Google was not responsible for the advertisements.

This was because users of the Google search engine would understand that it was the advertisers that made the representations and Google merely communicated these representations.

The ACCC appealed the primary judge's decision. The key issue for determination on appeal was whether the primary judge erred in finding that Google did not "make" the representations contained in the advertisements.

The appeal

On appeal, the ACCC argued that in relation to Harvey World Travel, Honda, Alpha Dog and Just 4x4 Magazine sponsored advertisements, Google was not a mere conduit. By taking an active role in preparing, creating, approving, disseminating and publishing the advertisements, and controlling the content of results, Google had itself made misleading and deceptive representations. When Internet users clicked on the sponsored advertisements they were directed to competitors' websites.

Google contended that it was not responsible for the advertisements created on its AdWords platform, arguing instead that consumers would understand that advertisements were statements by an advertiser, not Google.

The judgment

The Full Federal Court confirmed that a party may engage in misleading and deceptive conduct without any intention to mislead or deceive, but that it is a question of fact as to whether a publisher has engaged in misleading and deceptive conduct or has merely acted as a conduit.

The judgment emphasised that a user of the Google search engine asks a question of Google and obtains a response from Google. Google's response provides the user with search results and links that are triggered by Google using its algorithms. The Court noted that: "Google did not merely repeat or pass on a statement by the advertiser: what is displayed in response to the user's search query is not the equivalent of Google saying here is a statement by an advertiser which is passed on for what it is worth".

The Court found that Google's conduct in response to the interaction of users with the Google search engine was misleading. It is Google that determines the ranking of sponsored links on the results page displayed in response to the search query by a user. It is not the advertiser that determines this ranking.

It did not matter that the advertiser may have breached the terms and conditions of the Adwords Program by choosing keywords of its competitors, the conduct that was misleading and deceptive was not solely the advertiser's conduct but also Google's.

Where to now?

This decision is a significant blow to Google's argument that it is a mere communicator of content and advertisements (as distinct from being the author of that matter).

In Australia at least, Google has now been held responsible for what appears in its AdWords search results. Google has been ordered to implement an Australian Consumer Law compliance program.

The judgment suggests that the onus should be upon Google to show that Google has no reason to suspect that its ads are not misleading. Whilst a request by an advertiser for keywords that are the same as another well-known brand would likely (but not always) ring alarm bells with those processing the request at Google, and cause them to make further enquiries, there would be many scenarios in which those at Google administering the Adwords program would not be aware that an advertiser was trying to misappropriate a competitor's brand. If Google has to make the relevant enquiries to reasonably determine whether this is the case, it would be a time consuming and costly process.

Brand owners, on the other hand, will be delighted as they may now have an easy target to sue if their brand is misappropriated by a competitor and used as a keyword in that competitor's advertising in a manner that is likely to mislead or deceive.

If this decision stands, it would provide a brand owner with broader rights and remedies against Google than those they currently have under Google's trade mark infringement policies.

Google has sought special leave to appeal before the High Court of Australia so this matter may yet be finally decided by the High Court.

Take away

Companies that advertise online need to avoid use of competitors' names and trade marks as keywords and in advertisements as this will expose them to action under the Australian Consumer Law and/or trade mark infringement.

Although the judgment distinguished the circumstances of the present case from more traditional forms of advertising, publishers, advertisers and broadcasters still need to be aware that they can be held responsible for the content of advertisements if they do more than merely pass on the advertiser's message.

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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Stuart Green
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