Founders Utilize Indian Court Ruling to Bolster Criticism of Google’s Advertising Practices

A recent decision by an Indian court regarding Google’s keyword advertising practices has garnered significant attention, especially following claims from the company’s founders that competitors have used this tactic to mislead consumers, compelling firms to spend more on brand protection.

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 due to its keyword advertising techniques. The court awarded Hindware ₹3 million (about $31,600) in nominal damages.

In a comprehensive 163-page ruling (PDF), Justice Mini Pushkarna rejected Google’s argument that it acted merely as a neutral intermediary by displaying ads on its search platform. The judge stressed that Google’s AdWords service allowed Hindware’s competitors to bid on the keyword “Hindware,” redirecting consumers seeking the brand to alternative offerings.

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

The ruling drew substantial attention on Friday, with various Indian entrepreneurs, including Nithin Kamath of Zerodha and Sridhar Vembu from Zoho, publicly supporting the verdict. They contended that rivals frequently misuse Google’s advertising platform to divert traffic from well-established brands, increasing the need for brand protection expenses.

Kamath, reflecting on Zerodha’s ongoing challenges with this issue, tweeted: “When you search for ‘Zerodha,’ our site should rank first. Yet, often, top Google search results feature ads directing consumers to competitors’ sites.”

In response, Google maintained that its Ads policy regarding trademark keywords “prevents competitors from including trademarked terms in ad text,” emphasizing the global nature of this policy.

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

Given that India represents a crucial market for Google, with more internet users than any country except China, court decisions affecting its search and advertising practices carry considerable significance.

Nevertheless, legal experts cautioned that the implications of this ruling may not be as far-reaching as some believe.

“This ruling might prompt platforms to reevaluate their practices to ensure that their automated systems do not indiscriminately promote or display trademarked terms to advertisers,” noted Aprajita Rana, a partner at AZB & Partners.

However, Rana informed TechCrunch that the ruling may not have a “significant effect” on the liability of online platforms in India, as it has been established that internet companies risk losing legal protections if involved in unlawful activities.

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