Simpsons Solicitors

MADWORDS: Google not liable for its paid keyword referencing service

September 22nd 2011

The Federal Court of Australia has dismissed the claim of the Australian Competition and Consumer Commission (“ACCC”) that Google, by way of its AdWords service, had engaged in misleading and deceptive conduct.

Background

Google provides a paid keyword referencing service, known as AdWords, which allows advertisers to promote themselves by purchasing certain words or phrases. These keywords can either be used on a website itself, as a domain name or a meta-tag. When a consumer enters any such keyword in the Google search engine, the relevant advertisement appears on top of the first search results page, in the “sponsored links” / “ads” section.

The hidden vice of the AdWords is that Google allows advertisers to purchase keywords that are or incorporate competitors’ brands. This attracts customers away from the websites of legitimate brand owners.

Who is liable?

The Courts in Australia have recognised that the purchase or use of AdWords incorporating a trade mark of a competitor can amount to both trade mark infringement and misleading or deceptive conduct.

In 2007, the ACCC launched legal proceedings against Trading Post Australia and Google. Trading Post Australia used names of competing businesses “Kloster Ford” and “Charlestown Toyota” as AdWords to direct consumers to its own website. It was found liable for misleading and deceptive conduct.

The ACCC also alleged that, by publishing the results pages with these AdWords, Google had itself engaged in misleading and deceptive conduct. In response, Google raised a defence that it was a “prescribed information provider”, and the so-called “advertiser’s defence” – that it was engaged in the business of advertising and did not know that AdWords purchased by Trading Post amounted to an infringement of consumer legislation.

The Federal Court of Australia found Google not liable.

Interestingly, in 2010, Google avoided liability for the same issue in Europe, where the European Court of Justice held that by allowing third parties and competitors to bid on trademarked keywords Google did not infringe trade mark law and that safe harbour provisions for internet service providers also applied to Google in this regard.

What does this mean for businesses?

The Court’s decision means that businesses have to be even more vigilant in protecting their goodwill. Brands should be registered as trade marks and secured by way of AdWords.

For inquiries relating to trade mark law please contact Mindaugas Skavronskas.

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