Founders Use Indian Court Ruling to Renew Critique of Google’s Advertising Practices

A recent Indian court ruling regarding Google’s keyword advertising practices has garnered significant attention, particularly after claims from its founders that competitors have misused the system to mislead consumers, forcing businesses to invest in safeguarding their brand identities.

On May 22, the Delhi High Court ruled in a trademark dispute involving Hindware, a bathroom fittings company, concluding that Google was liable for trademark infringement due to its keyword advertising methods, and awarded Hindware ₹3 million (around $31,600) in nominal damages.

In her comprehensive 163-page judgment (PDF), Justice Mini Pushkarna rejected Google’s defense that it merely acted as a passive intermediary by displaying ads on its search platform. The judge highlighted that, through its AdWords service, Google permitted Hindware’s competitors to bid on “Hindware” as a keyword, thus targeting consumers who were searching for the brand.

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

The ruling gained momentum on Friday when several Indian entrepreneurs, including Nithin Kamath of Zerodha and Sridhar Vembu of Zoho, openly commended the judgment. They argued that competitors frequently misuse Google’s advertising platform to redirect traffic away from established brands, forcing companies to invest in brand protection efforts.

Kamath, reflecting on Zerodha’s ongoing challenges with this issue, mentioned on X: “When searching for ‘Zerodha,’ our site should rank first. However, often, the top search results on Google lead to ads directing customers to a competitor’s site.”

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

“We remain committed to complying with local legal regulations while taking stringent measures to protect the long-term interests of our users,” a Google representative told TechCrunch.

As India remains a crucial market for Google, hosting more internet users than any other country save China, court decisions impacting its search and advertising practices are notably significant.

However, legal experts warned that the ramifications of this ruling may be less extensive than commonly believed.

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

Nevertheless, Rana informed TechCrunch that the ruling may not produce a “far-reaching impact” on the liability of online platforms in India, as it has been established that internet companies potentially forfeit legal protections if implicated in illegal activities.

“The core issue in this case revolves around how allowing access to trademarked terms—even in the context of ad placements between online platforms and advertisers that consumers do not recognize—could be interpreted as participation by the platforms,” Rana added.