Navigating the Complexities of Keyword-Linked Advertising

When you search for a brand online, the first few results often aren’t organic listings but paid advertisements. Some of these ads belong to direct competitors who have bid on trademarked keywords to appear when users search for another company’s brand. This practice, known as keyword-linked advertising, sits at the intersection of digital marketing and intellectual property law, creating a legal battleground where businesses, search engines, and trademark owners frequently clash.

What is keyword-linked advertising? 🔗

Keyword-linked advertising allows businesses to bid on specific keywords through platforms like Google Ads to display their advertisements when users search for those terms. Advertisers select keywords related to their products or services, and when someone searches for those keywords, the advertiser’s ad appears prominently on the search results page, typically marked with an “Ad” label.

The controversy arises when advertisers bid on keywords that are registered trademarks of other companies. For instance, a competitor might bid on “MakeMyTrip” as a keyword so that their travel booking service appears when users search for that specific brand. While Google’s policy allows anyone to bid on trademarked terms as keywords, restrictions exist on how those trademarks can be used in the actual ad text and landing pages.

The trademark infringement debate in India 🔗

In India, the question of whether using a trademark as a keyword constitutes infringement has generated considerable judicial attention. The legal framework rests primarily on Section 29 of the Trade Marks Act, 1999, which defines what constitutes trademark infringement.

Key provisions of Section 29 🔗

Section 29(6) specifies that a person uses a registered trademark if they use it on business papers or in advertising. This provision became central to determining whether invisible keyword usage qualifies as trademark use. Additionally, Section 29(8) states that a registered trademark is infringed by advertising that takes unfair advantage and is contrary to honest practices or is detrimental to its distinctive character.

Indian courts have grappled with whether keyword usage, which remains invisible to end users, constitutes “use” under the Act and whether such use creates consumer confusion.

Landmark cases shaping the legal landscape 🔗

The Consim Info Pvt. Ltd. v. Google India case marked the first detailed examination of keyword advertising and trademark infringement in India. The company, which operated online matrimonial services, held registered trademarks for terms like Bharatmatrimony and Tamilmatrimony. The Madras High Court held that using these trademarks as keywords fell under the Act’s provisions.

In the DRS Logistics case, the Delhi High Court examined whether using a registered trademark as a keyword would amount to infringement. The court held that even though keyword usage is invisible to users, it diverts traffic from the trademark owner’s website to competitors, potentially confusing consumers about the origin of goods and services.

However, a significant shift occurred in December 2023 when a Division Bench of the Delhi High Court delivered its judgment in MakeMyTrip India Pvt. Ltd. v. Google LLC. The court ruled that using trademarks as keywords does not constitute infringement because keywords are not used as source identifiers. The court determined that mere use of a trademark as a keyword, without causing confusion or misleading users about the source of sponsored links, does not violate trademark law.

The consumer confusion test 🔗

Central to trademark infringement analysis is the likelihood of confusion among consumers. Courts examine whether the average consumer might be misled into believing that the advertised products or services originate from or are endorsed by the trademark owner.

Indian courts have noted that the typical Indian consumer cannot be treated the same as consumers in developed nations where internet literacy is higher. This recognition has led judges to advocate for stricter safeguards to prevent consumer confusion in India.

The confusion test considers multiple factors including the overall appearance of the advertisement, the clarity of the landing page, whether the ad clearly identifies the advertiser as distinct from the trademark owner, and whether the usage appears designed to mislead consumers or gain unfair advantage.

Google’s role and liability 🔗

Google has consistently defended its position by arguing that it functions merely as a technical platform. The company contends that advertisers, not Google, make decisions about which keywords to bid on and what ad content to display. However, Indian courts have questioned this stance.

In the DRS Logistics case, Justice V. Kameswar Rao observed that Google provides different levels of protection in different jurisdictions. While Google restricts trademark usage in ads in the European Union, it does not apply the same restrictions in India. The judge suggested that Google should implement similar protective measures in India to prevent consumer confusion.

The court also examined whether Google could claim protection under Section 79 of the Information Technology Act, 2000, which provides safe harbor to intermediaries. Courts have indicated that if Google plays an active role in keyword selection or ad display beyond purely technical functions, it may not qualify for intermediary protection.

Balancing competition and trademark protection 🔗

Keyword advertising raises fundamental questions about fair competition in digital markets. On one hand, allowing competitors to bid on trademarked keywords promotes market competition and gives consumers more options. On the other hand, it potentially allows businesses to free-ride on the reputation and goodwill that trademark owners have built through significant investment.

The recent Division Bench judgment recognized this balance by holding that there is nothing illegal in using trademarks as keywords if it does not result in confusion or mislead users to believe that sponsored links are associated with the trademark proprietors.

Comparative advertising and honest practices 🔗

Section 30 of the Trade Marks Act permits certain uses of registered trademarks that do not constitute infringement. This includes comparative advertising where a mark is used to identify competing goods or services, provided the use is in accordance with honest practices and does not take unfair advantage of the trademark’s reputation.

Courts have recognized that some level of competitive advertising serves the public interest by providing consumers with information about alternatives. The challenge lies in distinguishing between legitimate comparative advertising and deceptive practices designed to mislead consumers.

Practical implications for businesses 🔗

For trademark owners, the evolving jurisprudence means they must actively monitor how their trademarks are being used in keyword advertising. Simply holding a registered trademark does not automatically prevent competitors from bidding on those terms. Instead, trademark owners must demonstrate that such usage creates consumer confusion or takes unfair advantage of their reputation.

For advertisers, the legal landscape requires careful navigation. While bidding on competitor trademarks as keywords may be permissible, using those trademarks in ad text or creating landing pages that mislead consumers about the source of goods or services can trigger infringement liability. Advertisers should ensure their ads clearly identify who they are and avoid creating confusion about affiliation or endorsement.

Search engine policies and guidelines 🔗

Google’s trademark policy states that it does not allow ads that infringe trademark rights. However, the policy treats keyword usage and ad text differently. In most regions including India, Google does not restrict the selection of trademarks as keywords, but it does investigate complaints about trademark use in ad titles and text.

In the European Union and EFTA regions, Google applies more restrictive policies focused on eliminating consumer confusion about the origin of advertised goods and services. Trademark owners can submit complaints to Google about unauthorized use of their marks in ads, and Google will review whether the combination of keyword and ad text creates confusion.

The path forward 🔗

As digital advertising continues to evolve, Indian courts and policymakers face the challenge of developing clear frameworks that balance multiple interests. The law must protect trademark owners’ legitimate rights while fostering competitive markets and ensuring consumers can access information about alternatives.

The recent trend toward examining keyword advertising on a case-by-case basis, focusing on actual consumer confusion rather than mechanical application of trademark rules, represents a pragmatic approach. This method allows courts to consider the specific circumstances of each case, including the sophistication of the target audience, the clarity of the advertisements, and the intent of the advertiser.

Businesses operating in the digital advertising space should stay informed about legal developments and implement best practices to minimize infringement risks. This includes clearly identifying their brand in advertisements, avoiding misleading claims, and respecting the boundary between competitive advertising and unfair exploitation of others’ trademarks.

What do you think? Should Indian law allow competitors to bid on trademarked keywords to promote market competition, or does this practice unfairly exploit the goodwill built by trademark owners? How can courts effectively balance the need for competitive digital markets with the protection of intellectual property rights?

References

1. https://www.redpoints.com/blog/google-adwords-trademark-infringement/
2. https://support.google.com/adspolicy/answer/6118?hl=en
3. https://indiankanoon.org/doc/297137/
4. https://indiankanoon.org/doc/84096/
5. https://www.mondaq.com/india/trademark/1192864/use-of-a-trademark-as-a-keyword-on-google-ad-program-infringement-or-not
6. https://www.worldtrademarkreview.com/article/courts-examine-keyword-advertising-trademark-infringement
7. https://www.lakshmisri.com/insights/articles/keywords-as-trademarks-not-a-source-identifier/
8. https://sagaciousresearch.com/blog/use-of-third-party-trademarks-as-keywords-in-online-advertisements
9. https://www.mirandah.com/india-high-court-sheds-light-on-the-use-of-trademarks-as-keywords-in-ads/
10. https://www.hselaw.com/news-and-information/legalcurrents/google-search-ads-and-the-risk-of-trademark-infringement/