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

A recent Indian court ruling on Google’s keyword advertising methods has garnered significant attention, particularly after claims from its founders that the system has been misused by competitors to mislead consumers, forcing businesses to allocate resources to safeguard their brand identities.

On May 22, the Delhi High Court delivered a verdict in a trademark case involving Hindware, a bathroom fittings company, declaring Google responsible for trademark infringement due to its keyword advertising practices. The court awarded Hindware ₹3 million (around $31,600) in nominal damages.

Justice Mini Pushkarna, in her comprehensive 163-page ruling (PDF), rejected Google’s defense that it only acted as a neutral intermediary by displaying ads on its search engine. The judge emphasized that Google’s AdWords service permitted Hindware’s competitors to bid on the keyword “Hindware,” thereby targeting consumers searching for the brand.

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

The ruling gained attention on Friday when various Indian entrepreneurs, including Nithin Kamath of Zerodha and Sridhar Vembu from Zoho, publicly commended the decision. They contended that competitors frequently exploit Google’s advertising platform to redirect traffic from well-established brands, necessitating increased investments in brand protection.

Kamath, reflecting on Zerodha’s ongoing challenges with this matter, tweeted: “When searching for ‘Zerodha,’ our site should be the top result. Yet, often, the leading search results on Google feature ads that direct customers to a competitor’s site.”

In response, Google communicated that its Ads policy regarding trademark keywords “prohibits competitors from using trademarked terms in the ad text,” underscoring the global scope of this policy.

“We are committed to complying with local legal requirements while implementing rigorous measures to protect the long-term interests of our users,” a Google representative told TechCrunch.

Given that India is a crucial market for Google, with more internet users than any country except China, court decisions impacting its search and advertising strategies have far-reaching implications.

However, legal experts warned that the implications of this ruling might not be as substantial as many believe.

“This ruling will likely encourage platforms to reevaluate their practices to ensure their automated systems do not indiscriminately promote or display trademarked terms to advertisers,” remarked Aprajita Rana, a partner at AZB & Partners.

Nonetheless, Rana informed TechCrunch that the ruling may not have a “far-reaching impact” on the liability of online platforms in India, as it has been established that internet companies risk losing legal protections if they engage in unlawful activities.

“The central issue in this case revolves around whether granting access to trademarked terms—even in the context of ad placements between online platforms and advertisers, which consumers may not perceive—could be interpreted as complicity by the platforms,” Rana added.