Contextual advertising - a free ride for infringers?


Nishchal Anand and Lakshmi Kruttika Vijay

You need a new phone and you want to search for the ‘best available options’. What do you do, and what are the risks? Nishchal Anand and Lakshmi Kruttika Vijay explain.

In this click-button age, the first thing you would do if you lost your phone is go online, open a search engine and type the name of the most common brand of phone you know. But then what happens? The first option that pops up on the search engine is not the most common brand, but the second most common brand of phones.

You are slightly confused and wonder, as it has been a long time since you subscribed to that cool gadget magazine, whether this is now the ‘best available option’. So, you click on the link and purchase the second most common brand of phones, which you now believe is the most common brand.

You have just become a victim of a ‘contextual advertisement’.

Contextual advertising is the practice of some Internet search engines to allow advertisers to bid for ‘keywords’ that an Internet user might enter in a search query. The search engine then matches the advertisement and sponsored hyperlink to the said keyword.

When an Internet user enters the keyword as a search, it triggers the sponsored link to appear on the search results page either to the right or immediately above the natural search results. The keyword can either be generic, descriptive or even a registered trademark (of the advertiser itself or of its competitors).

In India, a country where infringers show scant regard for the law, any loophole is abused to the hilt. One such opportunity provided to infringers is bidding for keywords and the use of Adwords facilitated by various Internet search engines such as Google, Microsoft Bing, etc.

Though this issue has been much deliberated in other jurisdictions such as the US and the European Union, it is only recently that this has been adjudicated upon by the High Court of Madras in India.

Most search engines have policies that suggest that they merely provide a platform for advertisements to be placed through their respective programmes and in no way participate in the selection of keywords or the formulation of the Adwords. Further, the search engines also advise prospective advertisers against creating advertisements that may be illegal or in contravention of applicable laws, including intellectual property laws.

Some search engines have procedures for handling complaints from trademark owners for use of registered trademarks by third parties, whether in the ad text or as a keyword, while others have complaint procedures pertaining to ad text and not registration of the keyword. Policies and procedures differ in each jurisdiction. This gives rise to interesting possibilities with respect to infringement of trademarks by the advertiser as well as Internet service provider (ISP) liability.

Liability of the advertiser

For use of a registered trademark in the ad text: In India, a trademark owner can have a statutory claim against an advertiser for the use of a registered trademark as an ad word. Section 29(8) of the Trademarks Act, 1999, states that an advertisement resulting in an unfair advantage that is contrary to honest practices in industrial or commercial matters, or causes a detrimental effect to a trademark’s distinctive character or reputation, leads to infringement of the trademark.

For use of the registered trademark as a keyword: Though there is no specific provision to prove infringement of trademark by a third party selecting a registered trademark as a keyword, nevertheless, trademark owners can rely upon common law principles such as:

i) Passing off and unauthorised use of the trademark

ii) Misrepresentation

iii) Unfair competition.

However, in order for a trademark owner to succeed, it must effectively prove the ‘doctrine of initial interest confusion’. This allows for a finding of infringement when there is temporary confusion, even if it is dispelled before a purchase is made.

The liability of ISPs

Though ISPs cannot be held directly liable for infringement of a trademark owner’s right, they may be liable for contributory infringement under Section 79 of the Information Technology Act, 2000. This provides that an intermediary/ ISP shall be held liable for infringement if it:

  • Initiates the transmission
  • Selects the receiver of transmission
  • Selects or modifies the information contained in the transmission
  • Does not observe due diligence
  • Conspires or abets or aids or induces the infringement of copyright
  • Fails to expeditiously remove or disable access to infringing material, without damaging any evidence, on receiving notification of the infringement.

However, if upon receiving a complaint from a trademark owner, the search engine fails to expeditiously remove the infringing material, it can be held liable for contributory infringement along with the advertiser. This is similar to the position in the US, where under Section 512 (c) of the Digital Millennium Copyright Act, a service provider must ‘take down’ the infringing material upon receiving notice, or face the consequences of contributory/vicarious infringement upon failure to do so.

The case

There has only been one judgment from any court in India on the current issue. This is the case of Consim Info v Google India Pvt. Ltd, which was considered by the High Court of Madras.

In this case, Consim Info, a leading frontrunner in the business of classified matrimonial advertisements and listings in India, had sought to restrain some of its competitors (the other defendants) from infringing its various registered marks through the sponsored Adwords, keywords and/or suggestion tool services of Google India.

At a preliminary stage, the Madras High Court granted an interim injunction in Consim’s favour, which was later vacated after a direction to Google India to ensure that third parties would not infringe the registered trademarks of Consim through the Adwords service.

Consim later alleged that Google India had not put the court’s directions into practice, and the court was called upon to decide whether the defendants were in fact infringing the various registered trademarks of Consim.

Google India’s main argument was that, in India, its policy already addressed concerns of trademark owners based upon complaints received by them. However, Google India asserted that it could not preclude third parties from using the registered keywords as they constituted a combination of two words (usually an Indian language in conjunction with the word ‘matrimony’), that are descriptive in that particular line of business of classified advertisements seeking marriage proposals.

The other defendants contended that Consim could not claim any monopoly over the constituent words in its registered trademark, which were descriptive in their common line of business.

All of the above detailed contentions were accepted by the court. Importantly, the court observed that Google India’s policy for its Adwords services—while acknowledging concerns of trademark infringement—encourages parties to seek redress inter se without Google India having to act as an arbiter.

The court held that while a search engine has control over the selection of keywords by the advertiser, this control does not extend to searches made by a user, or further awareness as to the registration of trademarks in respect of all goods and services. So while the use of the keyword suggestion tool may amount to a use in the course of trade within the meaning of Section 29 of the Trademarks Act, it does not amount to an infringement of the trademark.

The court also held that it was necessary to give Google India the benefit of the doubt in this peculiar factual matrix, since the use of the search terms—having been held to have been descriptive—could not be construed as infringement, and therefore there was no vicarious or contributory infringement in this case attributed to Google India.

However, Google India was asked by the court to show why its Adwords policy differs in India even though the Internet can be accessed from any part of the world.

Conclusion (and why the subject is still ‘taking shape’)

Contextual advertising is looming large as a contentious issue in India as in other jurisdictions around the world. However, in India, while the laws are in place and the policies seem to have been formulated with much deliberation and foresight, there are several reasons why the issue has not yet been addressed even more extensively by the court.

This has largely to do with the choice of the Adwords in this particular case, and the lack of awareness of the rights of a trademark owner on the Internet in general.

However, what is certain is that service providers such as Google now do realise that with the first of these cases questioning their differential policy to Adword subscribers in India, courts will no longer take no explanation for an answer.

Perhaps then, in the near future, when you—the average consumer—lose your phone, the best available option purchased by you will be the brand you had thought of, and not the one that had been thought of for you by cleverly placed advertising.

Nishchal Anand is an associate at Anand and Anand. He can be contacted at:

Lakshmi Kruttika Vijay is an associate at Anand and Anand. She can be contacted at:

This article was first published on 01 January 2011 in World IP Review

contextual advertising, keywords, ISPs, online, AdWords, Google

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