1 January 2011TrademarksNishchal Anand and Lakshmi Kruttika Vijay

Contextual advertising - a free ride for infringers?

In this click-button age, the first thing you would do if you lost your phone is go online, open a search engine and type the name of the most common brand of phone you know. But then what happens? The first option that pops up on the search engine is not the most common brand, but the second most common brand of phones.

You are slightly confused and wonder, as it has been a long time since you subscribed to that cool gadget magazine, whether this is now the ‘best available option’. So, you click on the link and purchase the second most common brand of phones, which you now believe is the most common brand.

You have just become a victim of a ‘contextual advertisement’.

Contextual advertising is the practice of some Internet search engines to allow advertisers to bid for ‘keywords’ that an Internet user might enter in a search query. The search engine then matches the advertisement and sponsored hyperlink to the said keyword.

When an Internet user enters the keyword as a search, it triggers the sponsored link to appear on the search results page either to the right or immediately above the natural search results. The keyword can either be generic, descriptive or even a registered trademark (of the advertiser itself or of its competitors).

In India, a country where infringers show scant regard for the law, any loophole is abused to the hilt. One such opportunity provided to infringers is bidding for keywords and the use of Adwords facilitated by various Internet search engines such as Google, Microsoft Bing, etc.

Though this issue has been much deliberated in other jurisdictions such as the US and the European Union, it is only recently that this has been adjudicated upon by the High Court of Madras in India.

Most search engines have policies that suggest that they merely provide a platform for advertisements to be placed through their respective programmes and in no way participate in the selection of keywords or the formulation of the Adwords. Further, the search engines also advise prospective advertisers against creating advertisements that may be illegal or in contravention of applicable laws, including intellectual property laws.

Some search engines have procedures for handling complaints from trademark owners for use of registered trademarks by third parties, whether in the ad text or as a keyword, while others have complaint procedures pertaining to ad text and not registration of the keyword. Policies and procedures differ in each jurisdiction. This gives rise to interesting possibilities with respect to infringement of trademarks by the advertiser as well as Internet service provider (ISP) liability.

Liability of the advertiser

For use of a registered trademark in the ad text: In India, a trademark owner can have a statutory claim against an advertiser for the use of a registered trademark as an ad word. Section 29(8) of the Trademarks Act, 1999, states that an advertisement resulting in an unfair advantage that is contrary to honest practices in industrial or commercial matters, or causes a detrimental effect to a trademark’s distinctive character or reputation, leads to infringement of the trademark.

For use of the registered trademark as a keyword: Though there is no specific provision to prove infringement of trademark by a third party selecting a registered trademark as a keyword, nevertheless, trademark owners can rely upon common law principles such as:

i) Passing off and unauthorised use of the trademark

ii) Misrepresentation

iii) Unfair competition.

However, in order for a trademark owner to succeed, it must effectively prove the ‘doctrine of initial interest confusion’. This allows for a finding of infringement when there is temporary confusion, even if it is dispelled before a purchase is made.

The liability of ISPs

Though ISPs cannot be held directly liable for infringement of a trademark owner’s right, they may be liable for contributory infringement under Section 79 of the Information Technology Act, 2000. This provides that an intermediary/ ISP shall be held liable for infringement if it:

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