An Indian court decision poses a threat to Google's revenue model for advertising.

 

The Delhi High Court's recent ruling that Google's Ads Programme falls within the scope of the trademarks act has the potential to redefine the legal landscape of online advertising. This ruling has significant implications as it deems Google's usage of trademarks as keywords to constitute "use" under the act.

The decision, delivered by a bench composed of Justice Vibhu Bakhru and Justice Amit Mahajan, observed that Google actively participates in the utilization of trademarked properties. Google's practice of suggesting competitors' trademarks as keywords to advertisers has resulted in substantial profits through keyword sales.

This case was initiated by logistics company DRS, which raised concerns that searches for its trademark "Agarwal Packers and Movers" were leading to competitor websites. DRS alleged that Google's advertising mechanism exploited its trademark to redirect users to rival sites.

The division bench upheld the initial order and instructed Google to address DRS's complaints and remove offending advertisements. This verdict signifies that platforms like Google must continuously implement innovative systems to address trademark-related concerns.

The ruling was met with reactions from the business community, with Nithin Kamath, founder and CEO of trading platform Zerodha, highlighting the challenge businesses face when advertising against their own keywords due to competitors' ads taking precedence in search results. This situation emerged due to the lack of trademark protection.

The court's assertion that Google is not a "passive intermediary" but operates an advertisement business under its "pervasive control" serves as a significant setback for the tech giant.

The court ruled, "The fact that the said business is conducted online and is intertwined with its role as an intermediary does not grant Google the protection of Section 79(1) of the IT (Information Technology) Act in relation to the Ads Programme."

Although Google contended that its role as an intermediary warranted "safe harbor" protection, the bench found no fault with the earlier ruling by a single judge. This ruling indicated that Google might not enjoy the "benefit of safe harbor under Section 79(1) of the IT Act" if proven to have engaged in trademark infringement.

This verdict raises concerns about the tech giant's advertising activities in one of its major markets.