Australia: High Court Googles Itself: Google Granted Special Leave to Appeal Finding That it is Liable for Misleading Search Results

Addisons Insolvency Update
Last Updated: 25 June 2012
Article by Justine Munsie

The High Court of Australia today has granted special leave to Google, Inc to appeal the decision of the Full Court of the Federal Court1 which found Google liable for publishing misleading search engine results.

The appeal is likely to be heard in the next few months before the retirement of Gummow J from the court in October.

At first instance, a single judge of the Federal Court found that whilst advertisers who use key words which include the trade marks of their competitors in order to generate advertisements appearing alongside Google's organic search results engage in misleading conduct, Google was not responsible itself for such conduct. The trial judge found that in the absence of any evidence that Google plays a role in the determination of key words, advertisers are solely responsible for the misleading effects of using another person's trade marks, business names or domain names as part of their search engine marketing strategy.

In a significant development in the evolving issue of search engine liability, three judges of the Full Federal Court unilaterally overturned this decision, finding that the role that Google plays in accepting key words, generating search results based on those key words and allowing them to be displayed in response to the entry of a key word, comprising the key word and the website of the advertiser, amounts to misleading and deceptive conduct in contravention of the Trade Practices Act 1974 (Cth)2.

Sponsored links

At issue are four examples of sponsored links for businesses trading as STA Travel, Carsales, AusDog and the Trading Post.

In response to a user's search inquiry using Google, two sets of results will usually appear. The first are the results generated by algorithms used by Google to determine and rank by relevancy the results which directly answer the user's inquiry. In addition to these "organic" search results are sponsored links or advertisements which appear to the top left and or to the right of the organic search results. An example considered in the case was a sponsored link for the STA Travel business which was displayed in response to a search for "Harvey World Travel", as follows:

Harvey World Travel Unbeatable deals on flights, Hotels & Pkg's Search, Book & Pack Now!

Such sponsored links are determined not by Google's algorithms, but by its AdWords program whereby advertisers select key words and enter into an auction for their advertisement to be displayed in certain circumstances.

Judgment at first instance

The trial judge, Nicholas J, found that each of the sponsored links he examined were misleading in that they suggested a commercial association or affiliation between the advertiser and one of its competitors. In the case of the example set out above, the trial judge found that the STA Travel sponsored link had misleadingly represented that:

  1. There was an association between STA Travel and Harvey World Travel businesses;
  2. There was an affiliation between STA Travel and Harvey World Travel businesses;
  3. Information regarding the Harvey World Travel businesses could be found at STA Travel's website;
  4. Information regarding the travel services provided by the businesses associated with the name "Harvey World Travel" could be found at STA Travel's website.

However, his Honour found that only the advertiser and not Google had engaged in the relevant conduct contrary to the Trade Practices Act. His Honour held that Google had not engaged in any misleading and deceptive conduct by publishing the advertisers' sponsored links since it was, and would be understood by users to be, a "mere conduit" for the advertisers' information, "merely passing it on for what it's worth", using the test for liability long established by the High Court of Australia in Yorke v Lucas3 regarding information of one party which is published by another. In coming to his conclusion, the trial judge relied on his own findings regarding the knowledge that ordinary and reasonable members of the class of online search users; namely that they would have understood that:

  • A sponsored link is an advertisement that includes a headline that incorporates a link to a website address displayed beneath the headline;
  • If a person clicks on the headline they will be taken to the website address displayed beneath the headline;
  • The website address displayed beneath the headline will usually be the website address of the advertiser;
  • The identity of the advertiser will usually be apparent from the website address displayed beneath the headline.

The appeal

The key issue in the appeal to the Full Federal Court was whether Google, Inc engages in misleading and deceptive conduct in contravention of section 52 of the Trade Practices Act4 by displaying an advertiser's web address in a sponsored link in response to an inquiry on Google's search engine using search terms which include the name of the advertiser's competitor.

The ACCC argued in particular that the trial judge had failed to have regard, according to the list of circumstances listed above, that Google's key word insertion facility caused a headline with a competitor's name to appear (ie the search term used by the user) displayed next to the advertiser's website and with a clickable link to the advertiser's website.

The Full Federal Court accepted the importance of the facts relied on by the ACCC and determined that Google was itself responsible for the misleading impressions created by the sponsored links. The Full Court held that:

  • No Google user would regard a sponsored link as a statement by an advertiser which Google is merely "passing on"; rather, what appears on Google's webpage is Google's response to the user's query. That it happens to include as a headline a key word chosen by the advertiser does not make it any the less Google's response;
  • Contrary to Google's assertion, its behaviour was not analogous to a billboard owner or owner of a telephone network, or similar service which merely provides advertising space and passes on the advertisers' content, without more.
  • What is misleading and deceptive is the display of the sponsored link in response to the entry of the user's search term in co-location with the advertiser's website address. This is Google's response, effected by Google's search engine. As a consequence, Google is more than a mere conduit: instead, the ordinary reasonable viewer of the search results would conclude that it was Google itself which displayed the sponsored link in co-location with the advertiser's website in response to the search.

In other words, it is Google itself which informs the user, by its response to their search query, that the content of the sponsored link is responsive to the user's query. Such information in the case of sponsored links is misleading and deceptive or likely to mislead or deceive contrary to the Trade Practices Act.

Both the trial judge and the Full Federal Court also found that Google is not entitled to rely on the "publishers" defence5 for the publication of advertisements in the ordinary course of business as Google had failed to prove that it did not know and had no reason to suspect that its advertisements were misleading.

How Google and other search engine providers have fared elsewhere

Consideration of Google's liability for the search results it generates has been given previously in Europe and the USA, most often in the context of trade mark infringement. In those jurisdictions, the courts to date appear to attribute their internet consumers with a greater sophistication of knowledge and awareness of sponsored links as advertising tools than has Australia's Full Federal Court.

In a case examining the use by automobile brokers of the registered trade mark "lexus" in their domain name6, the US Ninth Circuit stated that the relevant consumer in the online market place is reasonably prudent and accustomed to shopping online. The Court held that such internet consumers fully expect to find some sites that are not what they imagine based on a glace at the domain name or search engine summary. Expectations about the sponsorship of a website are not formed, the Court said, until the internet consumer goes through to the landing page of the advertiser and, as such, it is the advertiser's website itself that needs to be looked at as a whole, not just its advertisement.

Similarly, in Network Automation, Inc v Advanced Systems Concepts, Inc7 the purchase by Network Automation, Inc of key words such as "activeBatch", a trademark of Advanced Systems Concepts, Inc, for search engine marketing purposes, was found not to infringe any trademark rights of Advanced Systems Concepts, Inc. There the Court found that the search results and advertisements were not confusingly labelled because they were segregated from the organic search results and appeared in separately labelled sections under the heading "sponsored links".

In Europe, Google has also escaped liability in cases brought against it by Louis Vuitton, Viaticum and Thonet8 who each alleged that by selling their registered trade marks as keywords to other advertisers, Google's sponsored links and AdWords program constitute trade mark infringement. In those cases, the ECJ held in 2010 that an internet search provider which stores keywords that are identical to trade marks of third parties and arranges the display of advertisements on the basis of such keywords is not infringing those trade marks by doing so. The search provider cannot be held liable for the data that was stored at the request of an advertiser unless it has knowledge of the unlawful nature of the data and then fails to remove or disable access to it.

The way ahead in Australia

Google may now ask the High Court to ascribe to Australian internet users a similar degree of knowledge of online advertising as their US and European counterparts in support of its contention that the facilitation and arrangement of automated search results does not amount to misleading and deceptive conduct.


1 Australian Competition and Consumer Commission v Google, Inc [2012] FCA FC 49
2 The relevant provisions of the Act are now contained in the Competition and Consumer Act 2010 (Cth)
3 (1985) 158 CLR 661
4 Now section 18 of the Australian Consumer Law (ACL), being Sch 2 of the Competition and Consumer Act, which prohibits a corporation, in trade or commerce, from engaging in conduct which is misleading or deceptive or which is likely to mislead or deceive.
5 Formerly s85(3) of the Trade Practices Act and now found in s209 of the ACL
6 Toyota Motor Sales, USA Inc v Tabari 610 F.3d 1171 (9th Cir. July 8, 2010). The respondents provided their business, Fast Imports, through their websites "" and "".
7 Network Automation, Inc v Advanced Systems Concepts, Inc 638 F.3D 1137 (9th CIR.2011)
8 C-236/08, being the referral of three conjoined French cases: C-236-08, C-237-08, C-238-08

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Justine Munsie
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions