Founders Capitalize on Indian Court Ruling to Reinforce Critique of Google’s Advertising Practices

A recent ruling by an Indian court regarding Google’s keyword advertising practices has drawn significant attention, especially after the company’s founders alleged that competitors have exploited this approach to mislead consumers, leading to increased costs for businesses aiming to safeguard their brands.

On May 22, the Delhi High Court delivered a verdict in a trademark case involving Hindware, a manufacturer of bathroom fittings, ruling that Google was liable for trademark infringement stemming from its keyword advertising practices. The court ordered Google to compensate Hindware ₹3 million (around $31,600) in nominal damages.

In a detailed 163-page ruling (PDF), Justice Mini Pushkarna rejected Google’s defense that it acted merely as a neutral platform by displaying ads on its search engine. The judge highlighted that Google’s AdWords allowed Hindware’s competitors to bid on the keyword “Hindware,” rerouting consumers searching for the brand to rival products.

“By using the plaintiff’s [Hindware] trademark as a keyword for profit without authorization, Google infringes upon the plaintiff’s exclusive trademark rights under Section 28 of the Trade Marks Act,” the judge emphasized.

This ruling has attracted considerable attention, with numerous Indian business leaders, including Nithin Kamath from Zerodha and Sridhar Vembu of Zoho, voicing their support. They contended that competitors frequently misuse Google’s advertising platform to divert traffic away from established brands, raising the necessity for brand protection expenditures.

Kamath recounted Zerodha’s ongoing challenges with this issue, tweeting: “When you search for ‘Zerodha,’ our site should be at the top. Yet often, the leading Google search results showcase ads directing users to competitors’ sites.”

In reply, Google pointed out that its Ads policy on trademark keywords “prevents competitors from using trademarked terms in ad text,” underscoring the global ramifications of this policy.

“We are dedicated to adhering to local legal requirements while implementing effective measures to safeguard the long-term interests of our users,” a Google representative told TechCrunch.

As India represents a vital market for Google, with more internet users than all countries except China, court rulings affecting its search and advertising practices carry substantial significance.

Nonetheless, legal experts have warned that the implications of this ruling may not be as far-reaching as some perceive.

“This ruling could prompt platforms to reassess their practices to ensure their automated systems do not inadvertently promote or display trademarked terms to advertisers,” explained Aprajita Rana, a partner at AZB & Partners.

However, Rana cautioned TechCrunch that the ruling may not have a “significant impact” on the liability of online platforms in India, as it is already acknowledged that internet companies risk losing legal protections if they engage in unlawful activities.

“The central issue in this case is whether permitting access to trademarked terms—even in the context of ad placements between online platforms and advertisers, which may be unnoticed by consumers—could be considered complicity by the platforms,” Rana added.