Consim Info Pvt. Ltd. filed yet another complaint against Google Inc. last month, only this time it’s before the Competition Commission of India (CCI) for ‘engaging in discriminatory and retaliatory practices relating to AdWords’. In a statement to the Economic Times, the complainant alleged that Google abused its dominant position in online advertising and it requested the Commission to impose measures for ensuring fair competition. The anti-competitive practice in question is the display of links of its competitor, Shaadi.com and Jeevansathi.com as ‘sponsored links’ next to the generic search results when ‘Tamil Matrimony’ (the complainant’s trade name) is keyed in. This complaint comes after an unfavorable interim ruling by the Madras High Court in 2010 to a petition for an injunction against Google for the sale of its trade name as keywords (such as Bharat Matrimony & Tamil Matrimony) to its competitors for triggering ads. The Court dismissed all charges of contributory trademark infringement against Google as the protected words (i.e. Tamil & Matrimony) were ‘descriptive’ of the trade and it lacked the intention to infringe Consim’s trademark (read Prashant’s post here for an in-depth analysis of the judgment).
Back to the complaint, Google made a whopping $28 billion from AdWords in 2010 alone and it enjoys a humongous 85% share in the online search engine market. Despite having to defend several allegations of antitrust and trademark violations, in a bold move Google revised its trademark policy in 2010 with a view to allow larger pool of keywords for advertising. Now the Commission has to examine whether this policy could lead to anti-competitive behavior.
Google's Trademark Policy in Advertising
Google’s AdWord creates a platform for online advertisers to bid for search terms to trigger their ads as ‘sponsored links’ next to the generic search results. The list of sponsored links is drawn based on similarity between the search terms and keywords bid by advertisers with the highest bidder ranked one on the list and so on. So, it is possible for Shaadi.com to be ranked higher than Tamilmatrimony.com for placing a higher bid. Precisely for this reason the trademark owners argue against a free-for-all biding in keywords as it allows competitors to use their protected words to trigger their ads thereby taking advantage of their goodwill. This is akin to saying that Shaadi.com and Jeevansathi.com are misappropriating the goodwill of Tamil Matrimony when their ads are displayed when searched for the latter. On the other hand, Google is reluctant to expand the width of trademark protection to proprietors of the mark. They fear that any restrictions on the use of keywords would allow trademark proprietors to monopolize and control information to the users.
According to their latest policy, Google undertakes to investigate complaints from proprietors for the use of their marks as keywords or in the ad text or both, depending on the extent of trademark protection that each country provides. In countries which offer stronger protection, Google removes ads which use protected words as both keywords and in the ad text. Australia and Brazil are noticeable ones in this category. In jurisdictions with moderate trademark standards including India, Google investigates complaints from owners for the use of protected words in the ad text alone. Lastly, countries like the U.S and the U.K offer weak protection as certain advertisers are exempted from liability for using protected words in their ad campaigns. This class of permitted advertisers includes resellers, sellers of parts corresponding to the trademark, informational sites and the like. Microsoft’s Bing and Yahoo! also allow biding on protected marks by resellers, informational sites and for generic use and comparative advertising under few circumstances.
Jeevansathi.com and Shaadi.com were absolved of any liability only because the protected words were descriptive of the trade and hence saved under Section 35 of the Trade Marks Act, 1999. Section 35 exempts the use of protected words for a bona fide description of the trade. In India, Google investigates complaints only in the ad text and keywords are left out. The Madras High Court, however, did not make any distinction between the use of protected marks in the ad text and invisible keywords. Therefore, Google is legally bound to investigate the use of protected marks in keywords in addition to ad text.
At present, Google does not investigate into situations in which non-trademarked keywords trigger ads when searched for a protected mark. While the trademark owners raise serious objections to this, the Madras High Court absolved Google of this burden because it is impossible for them to be aware of registered marks of all jurisdictions. Although the Court accounted for logistics in dealing with Google’s role, it also cautioned against permitting the use of arbitrary and fanciful words in the keyword suggestion tool. For instance, Apple Inc. should not be allowed to bid for ‘Microsoft’ as a keyword. Google would be vicariously liable if the ad is not disabled even after it has been brought to its notice by the trademark owner. It is precisely for this reason that the trademark policies of all these search engines shift the burden on the advertisers to ensure that the selected words does not violate the IP rights of any third party.
In few jurisdictions, courts have appreciated the merit in the argument that the display of competitors’ ads is likely to cause confusion among users. On the other hand, the Madras High Court, in its entire analysis, laid emphasis mostly on the ‘use of the mark’. Applying this standard, Google is safe as long as it ensures that the exact mark is not used as a keyword. Illustratively, an ad by the name ‘Make my Trip’ for terms ‘Trip Advisor’ would not be an infringement of the latter’s trademark as long the keywords used are ‘trip’ or ‘trip’ and ‘advisor’ instead of ‘trip advisor’.
On a separate note, Consim failed to establish that its competitors took unfair advantage of its goodwill contrary to honest practices in their trade in terms of Section 29(8). Furthermore, Section 30 of the Act expressly encourages the use of a registered mark as long as such use is an honest practice in that trade and does not take any unfair advantage of the goodwill. The only restrictions on the use of protected words in online advertising seem to be limited to protecting the legitimate rights of the owner and nothing more.
The Question of Unfair Competition
(i) Abuse of Dominant Position: Advertisers, trademark holders and more importantly, the consumers are the major stakeholders in an online ad campaign. Arguably, Google is in a position of dominance capable of affecting the consumers and the advertising market. As per Section 4(2)(a) of the Competition Act, 2002, Google is prohibited from imposing any unfair or discriminatory terms in the provision of advertising services. This, however, should not be misunderstood as imposing an obligation on them to promote competition through advertising in any particular trade.
The Trademark Act, 1999 prohibits competitors from profiteering from the goodwill of others except for honest trade practices. Therefore, Google would be secondarily liable if it allowed advertisers to benefit unfairly from the reputation of a well-known mark. Google’s advertising policy might have affected a few trademark owners like the case at hand. This, however, is certainly short of violating their legitimate rights, as is evident from the above.
When it comes to advertisers, Google cannot prevent Shaadi.com from using characters that are descriptive of their trade. Any other restrictions not founded in trademark law could give arbitrary powers to Google to unreasonably deny the use of certain words. At the same time, preventing Bharat Matrimony from bidding for their protected marks to trigger their ad would be discriminatory. While it is for the Director-General to investigate into any malpractices relating to the auctioning of any keywords, Google’s policy does not seem to impose any conditionalities on advertisers apart from cautioning them to indemnify in case of any violation of rights. Seen this way, it is indeed anti-competitive to prevent the use of protected words as keyword despite when there is no confusion.
Needless to say, free-for-all biding of keywords would allow ads by competitors which enable consumers to make an informed choice. Hence, the existing policy promotes competition in advertising beneficial to consumers. Moreover, the explanation to sub-section 4(2)(a) clarifies that any conditions imposed to promote competition are not deemed to be discriminatory or unfair. Google’s obligations extend only to the point where legitimate interests of owners are not violated. On the whole, the trademark owners are not being prejudiced by dominance of the search engine.
(ii) Anti-Competitive Agreements: The advertiser enters into a vertical agreement with Google for the provision of advertising services. Section 3(1) requires that Google’s actions do not result in any ‘appreciable adverse effect on competition within India’. Google does not negotiate all agreements with each advertiser. Therefore, the CCI cannot take any action unless there is evidence to suggest that the search engine has colluded with any advertiser causing prejudice to any other competitor.
Moreover, the text of Section 3 does not support any imposition of constraints on use of words in the present context except for violations of IP rights. From the definitions provided as explanation to Section 3(4), it appears that the effect of any alleged anti-competitive should have a restrictive or limiting effect on provision of services on few persons. Bharat Matrimony is free to carry on their ad campaigns on Google just like its competitors.
On a milder note, Google’s advertising policy should not be scrutinized with strict standards of trademark protection. The apparent distinction between organic search results and sponsored links reasonably mitigates any confusion among users regarding its origin. Moreover, consumers do not expect Google to serve a public function in providing sponsored links.
Conversely, in a similar matter the U.S. District Court in Nevada accepted the arguments of the defendants that the plaintiff (trademark owner) has ‘battled to censor and impede the universe of information that can be passed on to consumers; and conspired to ensure that consumers never taste the fruits of competition’. The Court also agreed that it would be ‘anti-competitive’ and ‘monopolistic’ to disable an advertiser when searched for any trademarked product.
For now we have to wait until the Director-General of the Commission investigates further on Consim’s complaint.
Image from here.