Delhi High Court's Landmark Ruling Brings Google's Ads Program Under Trademarks Act Jurisdiction

In a groundbreaking decision with far-reaching implications for the online advertising landscape, the Delhi High Court has ruled that Google's Ads Program falls within the jurisdiction of India's Trademarks Act. The verdict, delivered by a division bench comprising Justice Vibhu Bakhru and Justice Amit Mahajan, has categorized Google as an "active participant" in the use of trademarks owned by various entities. The court's observation arises from Google's approach of proposing rival trademarks as keywords to advertisers, a tactic that has yielded significant profits for the search engine titan via keyword sales.

The case originated from a complaint lodged by logistics firm DRS, which highlighted that searches for its trademarked term "Agarwal Packers and Movers" were yielding results that directed users to rival websites. DRS alleged that Google's advertising mechanism was capitalizing on its trademark to divert users to competing platforms.

By upholding the initial order and directing Google to address DRS's grievances and remove offending advertisements, the division bench has set a precedent that compels platforms like Google to implement innovative systems for ongoing trademark-related concerns.

Nithin Kamath, the founder, and CEO of the trading platform Zerodha, commented on the ruling's significance through a social media thread on social media X: "One of the worst ways to spend money as a business is to advertise against your own keywords." Kamath explained that companies often find themselves compelled to advertise against their own keywords to prevent competitors from seizing the top spot in search results. This situation, he argued, arises due to the lack of adequate trademark protection.

The court's assertion that Google cannot be deemed a "passive intermediary" but instead operates an advertisement business under its "pervasive control" is a considerable blow to the technology giant. The judges rejected Google's argument that it should be considered an intermediary and thus entitled to "safe harbor" protection under Section 79(1) of the Information Technology Act. They endorsed the single judge's earlier ruling, indicating that if Google were found guilty of trademark infringement, the "benefit of safe harbor under Section 79(1) of the IT Act would not be available to it."

This verdict casts a shadow over Google's advertising activities in one of its largest markets. The ruling raises questions about the tech giant's role in online advertising and its responsibility for trademark protection. The decision is poised to reshape the legal landscape for online advertising and compel major industry players to adopt new measures to address trademark-related issues that arise within their platforms.