The Delhi High Court has permitted advertisers to use their competitor’s trademarks as keywords for Google ads, as long as they don’t cause any confusion among consumers. This judgement has great implications for the digital marketing ecosystem as it will provide more flexibility for advertisers and make internet users aware of the options in the market. However, it may also dilute trademark protection given that internet users in India may not be able to sufficiently differentiate between organic and sponsored search results. Further allowing trademarks as ad keywords may adversely impact competition as new entrants may be unsuccessful in the bidding wars that take place for online advertisements.
In December 2023, a Division Bench of the Delhi High Court decided a trademark infringement case between the travel booking websites MakeMyTrip (MMT) and Booking.com. The Court allowed Booking.com to use their competitor MMT’s trademark as a keyword to display their advertisement on Google. The judgment is significant as it carries weighty implications for advertisers and platforms, as well as IP holders.
When an internet user searches for a keyword, Google’s search engine displays certain organic responses as well as sponsored links or advertisements (ads). Under Google’s ad policy, an advertiser bids the highest amount they are willing to pay for an internet user to click, view or interact with their ad. For instance, a company selling daily planners may purchase the keywords “buy planner” or “buy diary” when bidding for Google ads. Thus, each time a user searches for phrases including these keywords, Google will display the company’s ad. MakeMyTrip filed a trademark infringement suit against Booking.com, asking the Delhi High Court to prevent Booking.com from bidding for or using their trademarks MakeMyTrip, MMT, or their variants as a keyword in Google Ads. This would mean that users who searched for MakeMyTrip or MMT would only be shown content related to MMT and not any competitors, including Booking.com.
However, the High Court rejected MakeMyTrip’s plea for preventing Booking.com from using its trademarks as keywords. It held that trademark infringement under Section 29(1) would occur only if it causes confusion amongst internet users or gives competitors an unfair advantage over the trademark owner. The Court found that Booking.com did not utilize MMT’s marks in the manner of a trademark, that is, a mark that distinguishes one company's goods from another. It also stated that though the parties provide similar services, Booking.com is a popular platform, and internet users are unlikely to confuse it with MMT. This conclusion reaffirms the findings of a previous Division Bench judgment in Google vs. DRS Logistics. In that case, it was held that the use of trademarks as keywords amounted to use for advertising. However, competitors using trademarks as keywords would not be trademark infringement if there was no confusion, unfair advantage, dilution or compromise of the trademark. The decision in MMT’s case shows the Delhi High Court’s consistent position on Google’s ad policy and has implications for all stakeholders in the online advertising ecosystem.
The Delhi High Court’s judgment is beneficial for advertisers, users, and advertising platforms, such as Google. By liberalizing the use of trademarked terms as keywords, the judgment ensures that advertising platforms, such as Google and Bing, can offer advertisers greater flexibility in choosing keywords. Thereby giving advertisers access to their competitors’ audiences. Bidding on trademarks as keywords may also be more cost-effective than bidding on generic words, as there is less competition among advertisers for trademarked terms. Moreover, the policy clarity resulting from the judgment ensures that incumbents can no longer flag and block all advertisements containing their trademarks unless they can prove that the specific ad misleads or confuses owners.
Further, Google changed its ads policy in June 2023, specifying that trademark owners cannot submit a blanket declaration that restricts all advertisers from using their trademark.[1] Every request to use a trademark as a keyword had to be approved by the trademark owner unless approved by the owner. Instead, they can now only submit complaints regarding specific ads. The imposition of industry-wide blocks and over-flagging of ads as infringing content was widely prevalent in online advertising and greatly restricted the keywords available to advertisers.[2] Hence, the MMT judgment and Google’s policy changes will provide a larger pool of keywords for advertisers to choose from by limiting such blanket blocks. At the same time, trademark owners can seek recourse through Google's complaints mechanism and the judiciary if Google ads truly deceive or harm the distinctiveness of their trademarks.
Search engines and advertising platforms benefit from this ad policy as they can effectively boost their earnings from advertisements due to the removal of limitations on the use of trademarks as keywords. Indeed, Google[3] and Bing[4] relaxed their policies on using trademarks as keywords more than a decade ago. Users may also benefit as searches for a particular brand or product will now yield diverse options, including those from leading competitors that they were previously unaware of.
Despite the benefits of allowing trademarks as ad keywords, certain concerns arise regarding its impact on competition. The Delhi High Court in the MMT judgment stated that a person using an internet search engine is presumed to be aware of the nature of the service and its ability to display organic as well as sponsored results.[5] Given that only 38 per cent of Indian households are digitally literate,[6] it is presumptuous to believe that Indian internet users can differentiate between sponsored links and organic results. While entering a search query, consumers may be actively interested in viewing results related to the trademark owner’s competitors.[7] However, it is not possible to accurately grasp Indian internet users’ ability to navigate between search results and ads without empirical studies on the subject.
By using a competitor’s trademark as a keyword, advertisers utilize the interest that the internet user may have in the competitor’s products as a means to redirect traffic to the advertiser’s website. Although the trademark is not visibly used in conjunction with the advertiser’s website or product, invisible usage as a keyword may still cause confusion among internet users. Thus, permitting advertisers to use such keywords and capitalize on their competitors’ goodwill effectively dilutes trademark protection.
Permitting the use of trademarks as keywords for Google ads also raises concerns regarding the impact on new entrants to a market. The ad policy may inadvertently favor established companies over new entrants as the former have the resources to bid aggressively on ads and keywords. Consequently, the ad policy restricts the ability of new entrants to utilize their trademarks for brand discovery and customer acquisition. Indeed, internet users tend to prioritize links that appear at the top of search results.[8] Thus, if established companies' links occupy the top-ranked positions in search results, internet users are more likely to click on the sponsored link instead of the new entrant’s organic link.
The Delhi High Court's decision in the trademark infringement case between MakeMyTrip and Booking.com has significant implications for the online advertising ecosystem. The greater flexibility and liberalization for advertisers and advertising platforms could lead to more cost-effective advertising strategies. However, the judgment also raises concerns about its impact on competition as it may disadvantage new market entrants who may struggle to compete with established companies in bidding for ad keywords. Furthermore, the use of competitors' trademarks as keywords could potentially dilute trademark protection and a trademark owner’s ability to profit from their own brand. Overall, while the judgment offers opportunities for advertisers and advertising platforms, it also underscores the need for a balanced approach that considers the interests of trademark owners, new market entrants, and the general public.
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[2] https://searchengineland.com/google-ads-trademark-policy-change-advertisers-ads-428001
[3] https://rmfpc.com/news/mar-2013-google-updates-its-adwords-policy/
[4] https://searchengineland.com/bing-yahoo-align-with-googles-trademark-rules-64902
[5] Google v. DRS Logistics, FAO(OS)(COMM) 2/2022 & FAO(OS) (COMM) 22/2022, decided 10th August 2023
[6] https://dtnbwed.cbwe.gov.in/images/upload/Digital-Literacy_3ZNK.pdf
[7] https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1049&context=mttlr