It seems no matter the type of advertising medium used (ie, online, television, radio or newspaper) generally, advertisers remain liable for publication of misleading or deceptive advertisements. Google Inc (Google) has won its six year legal battle with the Australian Competition and Consumer Commission (ACCC) after the High Court unanimously held that it had not engaged in misleading and deceptive conduct by publishing sponsored links which included the name of an advertiser's competitor or a competitor's product on search results.
Throughout the period 2005 to 2008, the Google search engine would provide users with two types of results in response to their keyword searches. The first was 'organic search results' (i.e. links to web pages) and secondly, and relevantly, 'sponsored links'. A sponsored link is a form of advertisement created by, or at the direction of advertisers, willing to pay Google for advertising text which directs users to a website of the advertiser's choosing. The sponsored link is triggered in response to a user's keyword search in the Google search engine.
The key issue in the High Court Special Leave appeal was whether Google had engaged in misleading or deceptive conduct1 by publishing or displaying eleven Google AdWord Ads, or sponsored links, that falsely represented an affiliation between customers of Google's AdWords program and competing businesses. Importantly, the appeal did not concern whether the advertisers to whom the sponsored links belonged, had engaged in misleading or deceptive conduct.
A brief chronology of this matter is set out below.
The Federal Court Decision
In July 2007 the ACCC commenced proceedings in the Federal Court of Australia against Google under Part VI of the Trade Practices Act 1974 (Cth) (TPA) (now the Competition and Consumer Act 2010 (Cth) (CCA)) seeking declarations and injunctive relief against Google and another party2. The ACCC claimed that:
- Google had engaged in conduct contrary to section 52 of the TPA (now section 18 of Schedule 2 of the CCA) by "failing to sufficiently distinguish between organic search results and sponsored links"; and
- Google had engaged in conduct contrary to section 52 of the TPA by publishing or displaying particular sponsored links.
The case concerned sponsored links for STA travel, Carsales.com.au, Ausdog training and the Trading Post (the Advertisements) which had been produced by the advertisers. An example of a sponsored link in issue in the Federal Court proceeding was that which appeared in response to searches for 'Harvey World Travel'. The sponsored link displayed the banner Harvey World Travel with a link to the website of its competitor 'STA Travel' appearing in smaller font below. Instead of taking users to the 'Harvey World Travel' website, the link took users to the website of 'STA Travel', who had paid Google to use the AdWords program.
In the decision of His Honour Mr Justice Nicholas the Federal Court agreed that the Advertisements amounted to misleading or deceptive representations, however it held that the representations had been made by the advertisers, not by Google. The Federal Court considered that Google had acted merely as a 'conduit', communicating the Advertisements without endorsing or approving them.
Nicholas J held that:
- the Advertisements contained representations that were likely to mislead or deceive;
- Google did not 'make' the representations conveyed by the Advertisements, rather Google acted merely as a conduit, passing on the Advertisements of others without endorsing or approving them; and
- ordinary and reasonable people (who have access to a computer connected to the internet but would not necessarily have a detailed familiarity with the search engine) would have understood that sponsored links were advertisements and were different from organic search results.
The Trading Post Pty Ltd matter settled, but the Google proceeding continued.
The Full Federal Court Decision
The ACCC appealed to the Full Federal Court, which found that Google had misleadingly represented that there was a connection between the competitor business and the business for which the user of the search engine was searching for. Allowing the appeal, the Full Federal Court unanimously held that Google had engaged in misleading and deceptive conduct by publishing the sponsored links. The Full Federal Court considered the sponsored links as being Google's response to users submitting a search term to the search engine, and that Google's technology was responsible for the search results and that Google had an active role in the misleading and deceptive conduct3.
Accordingly, their Honours found that:
- Google's conduct was that of a principal and not merely as a conduit; and
- the reaction of the ordinary and reasonable member of the relevant class is not solely determinative of the issue, because the circumstances show that Google was more than a mere conduit.
Further, the Full Federal Court also observed that Google had:
- designed the 'keywords' facility as part of the AdWords program which allowed advertisers to nominate search terms which would produce the search results, and
- reviewed the keywords chosen by advertisers and had ultimately determined whether the advertisements would be published.
As such, ordinary users would not see Google as merely 'passing on' the advertisers information.
In the High Court
Google successfully sought leave to appeal the decision of the Full Federal Court to the High Court. The issue before the High Court was whether, in all the circumstances, Google (as distinct from the advertisers to whom the sponsored links belonged) had engaged in misleading and deceptive conduct by publishing or displaying the sponsored links. The ACCC argued that Google was the maker/creator of the sponsored links and relied on the fact that Google used its technology to display the sponsored links to search requests made by Google's users. It argued that Google had done more than merely pass on the sponsored links to users, and that Google had inserted search terms chosen by users of the Google search function as headlines in the sponsored links, and was responsible for the clickable headline containing the name of the competitor and URL of another trader and the advertiser's URL.
Google argued that the fact that it displayed the sponsored links in response to users' search requests was not enough to conclude that Google had itself made the misleading representations conveyed.
In reaching its decision, the High Court highlighted the fact that:
- the AdWords program allowed advertisers, and not Google, to:
- create the sponsored links and the content contained therein; and
- specify the keywords which would trigger the sponsored links;
- Google has no control over search terms entered by users;
- it would be difficult, in practice, for Google to identify different keywords and sponsored links as being misleading or deceptive; and
- Google's display of sponsored links in response to users' search terms was dictated solely by the AdWords program and the keywords nominated by advertisers.
The High Court considered that the display of sponsored links (together with the organic search results) did not mean that Google was the maker, author, creator or originator of the information in a sponsored link. The High Court considered that the technology that causes the sponsored links to be displayed simply assembles information provided by Google users for the purpose of displaying advertisements. The High Court also considered that the ordinary reasonable user of the search engine would understand that the representations made by the sponsored links were those of the advertisers, and were not adopted or endorsed by Google. Accordingly, it held that Google had not engaged in misleading and deceptive conduct.
By way of analogy, Google was said to be no different to any other publishing intermediary such as newspaper publishers or radio or television broadcasters when advertising.
For Online Advertisers
The decision is an important reminder for businesses who use online advertising, and/or who display third party material on their websites.
There is nothing wrong with adopting a competitor's name or trade mark as a search engine key-term. However businesses should:
- ensure that, if they use an online advertising program and create a search-term link to a competitor's name, the advertisement should not suggest an affiliation between a competitor's and the advertiser's businesses;
- the advertisement should not display the competitor's name or trade marks (e.g. STA Travel advertisement displaying the name 'Harvey World Travel');
- the advertiser's website should not use a competitor's business name or trade marks (unless used for 'comparative advertising' and only with proper signage removing any suggesting of affiliation); and
- if your business website allows third party postings (e.g. reviews or blogs), ensure that the website contains an appropriate disclaimer (i.e. that the posts are not made on behalf of the business) . However you should also monitor third party postings to ensure that any misleading or deceptive content is removed promptly.
For Online Publishers
This decision is authority for the view that advertisers will be liable for misleading or deceptive online advertisements rather than publishers. However, this position is not absolute. Where an online publisher exercises a high level of involvement or discretion in relation to the creation, or endorsement, of the content of an advertisement, then that publisher may not be considered to be a 'mere conduit' for the advertiser.
Accordingly, online publishers such as website operators, social media administrators and search engine providers should be conscious of their level of involvement and interaction with the content and display of advertisements. If an online publisher is considered to have adopted or endorsed a misleading or deceptive advertisement, they too can find themselves in hot water.
Other cases concerning the liability of Google
This case has been closely watched in Australia and around the world, as it has implications for the responsibility and liability of online search engines and hosts of third party content. Interestingly, the liability for search engines in other areas of the law, such as defamation, is not as clear. Google's liability as a publisher of defamatory content and misleading and deceptive conduct has been the subject of a number of other cases in Australia and world wide.
In Australia, Google has been found liable as a publisher for defamatory content.4 In November 2012 the Victorian Supreme Court found Google liable for publishing defamatory material concerning Milorad Trkulja, a music promoter, which linked him with criminal figures in Melbourne.5
The issue was that a Google search of 'Michael Trkulja' presented users with images and articles which suggested that Mr Trkulja was a prominent figure in the Melbourne criminal underworld and was involved with crime in Melbourne. The Court found that Mr Trkulja had established an entitlement to damages against Google in respect of the Google 'image' search results. It was held that these images implied that Mr Trkulja was so involved with crime in Melbourne that his rivals had hired a hit man to murder him.
Google has also faced a number of defamation claims around the world as a result of its 'auto-complete' function, a number of which have been upheld. Most recently, an Australian surgeon, Dr Guy Hingston, filed a defamation suit against Google in the US District Court in California claiming that Google's 'auto complete' search function displayed defamatory search suggestions, implying that he was bankrupt. In Switzerland, Google was found not liable for defamation for the auto complete function, as the Court considered that these were not statements made by Google.6 Google's liability for its auto-complete function may soon be tested in Australia.
How we can help you?
This decision highlights that there is a very fine line for publishers between 'adopting or endorsing' an advertisement and being a 'mere conduit' for the advertiser. It is unclear as to exactly what activities will constitute either conduct. To this end, if you operate in the online community you will need to carefully consider the extent of your involvement across all forms of mediums used to advertise products and services.
1 At the commencement of the proceedings,
section 52 of the Trade Practices Act (Cth) was the
relevant provision. From 1 January 2011, the relevant provision is
section 18 of Schedule 2 – The Australian Consumer Law to the
Competition and Consumer Act 2010 (Cth).
2 Australian Competition and Consumer Commission v Trading Post (2011) 197 FCR 554.
3 Australian Competition and Consumer Commission v Google Inc (2012) 201 FCR 503.
4 Trkulja v Google (No 5)  VSC 533.
5 Trkulja v Google (No 5)  VSC 533.
6 Jura Cantonal Court, decision of February 12 2011, CC 117/2010 (confirming the Civil Court of First Instance, decision of August 5 2010), available at www.jura.ch/Htdocs/Files/Justice/Documents/CC2010117.pdf?download=1.
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.