The Delhi HC ruled that Google had violated Hindware’s trademark by allowing the sanitaryware brand’s rivals to advertise on search keywords like “Hindware”
By monetising the keyword, Google exploited the commercial pulling power of Hindware's trademark without authorisation, the court said
The HC also rejected the tech giant’s counter arguments that Google was merely an intermediary and that keywords are invisible backend triggers
The Delhi High Court (HC) has imposed a fine of ₹30 Lakh on big tech giant Google for violating the trademark of sanitaryware major Hindware.
In an order dated May 26, a single-judge bench of Justice Mini Pushkarna found that the big tech major allowed other companies to bid on the Hindware keyword on Google Ads, thereby infringing upon the sanitaryware giant’s trademark.
Simply put, when users searched terms like “Hindware” or allied keywords like “Hindware Sanitary”, its competitors’ websites appeared as the first search result above Hindware’s own. In its plea, Hindware had argued this constituted unfair competition and trademark dilution.
The HC has also permanently restrained Google LLC and Google India from using the company’s registered trademarks as an advertising keyword. It also observed that the big tech giant’s keyword auction system constitutes trademark infringement under the Trade Marks Act, 1999.
The HC rejected Google’s defence that it is only an intermediary and hence entitled to safe harbour protection.
At the heart of the matter is the decade-old commercial lawsuit filed by the sanitaryware company in 2013 against rivals Cera and Grohe as well as a separate case against Google. In its petition, Hindware had claimed that Cera and Grohe had purchased the keyword of its trademarked brand through Google AdWords, thereby violating its trademark.
Eventually, Hindware settled its case with rival brands Cera and Grohe, but the case continued as Google India and Google LLC continued as the only contesting defendants.
In its May 26 order, the court observed that Google was earning revenue by auctioning trademarked keywords to competing brands, and hence violated Hindware’s trademark by exploiting its “commercial pulling power” without authorisation.
The tech giant had argued that keywords act as invisible backend triggers on its platform that consumers never see, and hence do not constitute trademark violation.
However, the court rejected the argument, stating, “It is not necessary that the registered trademark physically appears in an advertisement for the same to be used ‘in advertising’. The use of a trademark as a keyword to trigger display of an advertisement of goods or services would be use of the mark ‘in advertising’.”
Invoking safe harbour provisions, Google had also argued that it was an intermediary protected by Section 79 of the IT Act as it merely provided an advertising space, while the keywords and elements of the ads are determined by advertisers.
However, Justice Pushkarna noted that Google is an active participant and not merely an intermediary. The judge further added that Google, by not restricting the use of trademarks as keywords by competitors, had failed to exercise due diligence as per the intermediary guidelines.
While keyword bidding on search terms related to competitors is a common practice, the Delhi High Court appears to have now put the same under legal scrutiny. It has also given brands a route to pursue legal action against competitors involved in these practices, triggering implications for the digital marketing sphere.
Hailing the verdict, Zerodha cofounder and CEO Nithin Kamath said that Google was enabling competitors to divert traffic that should have legitimately gone to Hindware. He also added that Zerodha has also lost business due to competitors engaging in this practice.
“A lot of brands, just to capture the traffic that should have come to them organically, end up bidding on their own keywords … If you own a business and have a trademarked name for your business, you still have to pay Google just to hopefully make your name too expensive for your competition to run ads on it,” Kamath said in a blog post.
Source: Inc42 - Startups
