India jurisdiction report: AdWords, antitrust and trademark laws

While IP laws grant exclusivity to IP owners, antitrust laws inter alia define the limitations of such exclusivity.

In this article we discuss the aspect of law and the related judicial precedents in India that has arisen owing to conflict of such laws, especially in the context of AdWords search services provided by web search engine providers such as Google.

A case of abuse?

Google, through its AdWords service, allows advertisers to sponsor any “keyword” for advertisement of their products and services. Such process of sponsoring is hereinafter referred to as bid or bidding as the context may so require and the advertiser so bidding is referred to as bidder. When such a keyword is entered as a search string on Google’s search engine, the sponsored advertisement of the advertiser appears predominantly on the search results page.

Google also allows such keywords to be bid by multiple users and in such a process, the highest bidder pays Google every time the sponsored advertisement web page link is clicked by internet users.

Problems arise when a bidder starts bidding on keywords of business competitors who are the real trademark owners of such keywords. When such proprietary marks are bid upon as keywords, the brand owner’s webpage does not appear first on the Google search page. Instead, the highest bidder of the keyword appears as a sponsored advertisement in the search results, rather than the brand owner.

Brand owners in India have alleged that Google has, through its AdWords service, allowed third parties to bid on trademarks. Due to this, competitors have had an opportunity to ride on the goodwill of trademark owners, thereby hampering fair competition. Such practice was alleged as amounting to Google’s abusing its dominant position in online web and search advertising markets by imposing unfair conditions upon trademark owners in violation of section 4 of the Indian Competition Act, 2002.

Judicial precedents

This aspect was examined by the Competition Commission of India (CCI) in Matrimony.com v Google and Ors. In this matter Google allowed bidding on the keywords “Bharat Matrimony”, which was the registered trademark of the complainant before the CCI. The CCI held that the subject keywords were descriptive of the services and hence in this context the AdWords service enables a user to include a trademarked keyword in its query.

Consequently, the user is presented not only with ads from the trademark owner but also with a broader range of ads, including ads from the trademark owner’s competitors, and hence the AdWords service promotes competition and enhances user choice. Therefore Google was not abusing its dominant position by allowing such bidding.