Founders Use Indian Court Ruling to Bolster Criticism of Google’s Advertising Tactics

An Indian court’s recent ruling on Google’s keyword advertising practices has attracted significant attention, particularly after claims from the company’s founders that competitors exploit this strategy to mislead customers, leading to increased costs for businesses trying to safeguard their brands.

On May 22, the Delhi High Court delivered a judgment in a trademark case involving Hindware, a manufacturer of bathroom fittings, holding Google accountable for trademark infringement due to its keyword advertising techniques. The court mandated that Google pay Hindware ₹3 million (around $31,600) in nominal damages.

In a detailed 163-page judgment (PDF), Justice Mini Pushkarna rejected Google’s argument that it was merely an unbiased platform displaying ads on its search engine. The judge pointed out that Google’s AdWords allowed competitors of Hindware to bid on the keyword “Hindware,” misdirecting consumers searching for the brand to rival products.

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

The ruling has stirred considerable interest, with many Indian business leaders, including Nithin Kamath of Zerodha and Sridhar Vembu of Zoho, voicing their support. They contended that competitors often take advantage of Google’s advertising platform to siphon traffic from well-established brands, underscoring the necessity for increased expenditures on brand protection.

Kamath shared Zerodha’s ongoing challenges regarding this issue, tweeting: “When you search for ‘Zerodha,’ our site should be at the top. Sadly, the top Google search results often showcase ads that direct users to competitors’ sites.”

In response, Google stated that its Ads policy on trademark keywords “prevents competitors from using trademarked terms in ad text,” underlining the global significance of this policy.

“We are dedicated to adhering to local legal regulations while implementing effective strategies to safeguard our users’ long-term interests,” a Google spokesperson told TechCrunch.

Given that India is a vital market for Google, with more internet users than all countries except China, court decisions affecting its search and advertising methods hold great significance.

However, legal experts have warned that the ramifications of this ruling may not be as broad as believed.

“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.

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

“The critical issue in this case is whether allowing access to trademarked terms—even concerning ad placements between online platforms and advertisers, possibly unnoticed by consumers—might be considered collusion by the platforms,” Rana added.