AD-VANTAGE: The Interplay between Ad Words and Trademarks

In the era of online empires and click-driven commerce, the humble trademark has transcended its physical confines. No longer simply a brand stamped on a product, it has become a potent force in the digital battlefield of search engines and advertisements. Businesses now wield "ad words" – strategic keywords that trigger their ads when users hunt for specific terms – not just for visibility, but as potential weapons to claim dominance in the virtual marketplace. This potent force, however, has brewed a potent storm. The very practice that fuels reach and recognition – keyword advertising – now stands accused of trademark infringement and unfair competition. The recent tussle between Google and MakeMyTrip in India has pushed the boundaries of legal precedent and has left the courts grappling with the question: Does using another company's trademark as an ad word constitute a malicious assault on brand identity, or a fair play tactic in the digital marketplace?

The interplay between ad words and trademarks requires a delicate balance to be maintained between brand protection and competitive agility as it involves the balance between the rights of trademark owners, the interests of advertisers, and the freedom of expression and competition on the internet. The key issues that arise while discussing whether the use of trademarks as ad words by competitors or third parties constitutes trademark infringement or unfair competition include:

• The likelihood of confusion between ad words and trademarks. The use of ad words may create confusion among consumers regarding the source of goods or services.

• Advertisements using similar or identical ad words may dilute the distinctiveness of trademarks. This can harm the reputation and value associated with a brand.

• The concept of fair use and the descriptive nature of certain terms - whether the use of ad words is genuinely descriptive or if it is an attempt to capitalize on the goodwill of established trademarks?

• What are the responsibilities of online advertising platforms, such as Google, in monitoring and regulating the use of ad words? These platforms may often find themselves caught between facilitating commerce and preventing trademark infringement.

In India, the courts have dealt with the issue of ad words and trademarks by adopting a case-by-case approach, taking into account the facts and circumstances of each case. One of the recent and prominent cases on this topic is Google LLC v. MakeMyTrip (India) Private Limited and Ors., which has contributed to the evolving jurisprudence on this subject.

Since its launch, the Google Ads program, formerly known as Google AdWords, stirred concerns among brand owners due to its inclusion of trademarks as bidding keywords. Under this program, advertisers can bid on keywords, including trademarks, to enhance the visibility of their goods and services by securing top positions in Google search results. This led to legal action initiated by the well-known Indian travel portal, MakeMyTrip (referred to as 'MMT' hereafter), against Booking.com and Google. MMT's primary grievance revolved around the use of its registered trademarks, namely 'MakeMyTrip,' 'MakeMy,' 'MyTrip,' and 'MMT,' as keywords offered by Google to third parties, including the defendant, Booking.com. According to MMT, the utilization of these trademarks in the Google Ads program provides a significant commercial advantage, positioning the user's attention towards them as top results in the advertising category. The legal action brought forth by MMT also sought a directive against Google, restraining them from offering MMT's registered marks as keywords.

While granting an interim injunction in favour of the plaintiff in June 2022, a single judge of the Delhi High Court (‘DHC’) held that the use of a competitor’s registered trademark as part of the Google Ads program, is violative of the registered proprietor’s rights and would amount to trademark infringement.

Through this interim injunction, DHC restrained the defendants from using MMT’s registered trademarks as ‘keywords’ on the Google Ads Program, as this would amount to trademark infringement. Relying on the jurisprudence developed while deciding DRS Logistics (P) Ltd & Ors. v. Google India Pvt. Ltd., DHC held that a perusal of Section 29(9) (of the Trademarks Act) makes it clear that an infringement of a trademark can be by way of spoken use, which is different from printed or visual representations of the mark. That is, invisible use of the mark can also infringe a trademark. DHC also added that there is practically no difference between use of trademark as a ‘meta-tag’ or as a ‘keyword’ in Google Ads Program, in as much as even if a trademark is being used in a hidden manner, it still constitutes ‘use’ of the trademark for the purpose of advertisement and therefore is violative of Sections 29(6)(d) and 29(7) of the Trade Marks Act, 1999.

According to a report by IAMAI, the active internet base in India is expected to grow to 900 million by 2025. With such a high active user base on the internet, companies keen to grow their market share online undoubtedly sought more clarity on the subject. This was perhaps one of the reasons why Google filed an against the order of the DHC single judge.

In an interesting turn of events, a division-bench of the DHC vacated the interim injunction against Google and Booking.com in the case in December, 2023. While removing the injunction, the division bench of DHC held that “there was nothing illegal in Google using the trademarks as keywords for display of advertisements if it did not result in any confusion or mislead internet users to believe that sponsored links or ads displayed were associated with the proprietors of the trademarks.”

The division bench of the DHC relied on its judgment in Google LLC v. DRS Logistics (P.) Ltd. and Ors., where it was held that the use of marks as keywords would not amount to use as trademarks and, therefore, use of such marks as keywords does not constitute infringement under Section 29(1) of the Trade Marks Act.

In addition, it was noted that the Court had held that the use of the trademarks as keywords is use in connection with goods and services of the advertiser. Thus, if the goods and services advertised and covered under the sponsored link and those covered under the trademark are similar, Section 29(4) of the Trademarks Act would have no application.

The Court also stated that there was nothing illegal in Google using the trademarks as keywords for the display of advertisements if it did not result in any confusion or mislead internet users to believe that sponsored links or Ads displayed were associated with the proprietors of the trademarks. Thus, the use of trademarks as keywords without there being any confusion or unfair advantage, would not infringe the trademark. The services offered by Booking.com are similar to the services covered by MIPL’s trademarks. In these circumstances Section 29(4) of the Trade Marks Act would have no application, the High Court held.

In summary, as the digital landscape undergoes rapid transformations, the legal frameworks and court rulings significantly shape the future of online business and intellectual property protections. This particular case serves as a valuable lesson for businesses and online platforms, urging them to address trademark considerations in advertising practices with utmost care. Balancing legal obligations and evolving consumer expectations is crucial. The case reinforces the need for robust measures to avert consumer confusion and promote transparency in online advertising.

The Delhi High Court's decision permitting the resumption of Google and Booking.com's use of AdWords associated with MakeMyTrip is accompanied by specific conditions aimed at preventing consumer confusion. While the use of trademarks as key words by competitors, absent any confusion or deceit, does not per se amount to infringing use, this case highlights the challenges tied to trademark protection in the digital age and stresses the importance of striking a harmonious balance between upholding IP rights and fostering equitable competition in online advertising space.

About the author: Arjit Benjamin is an Associate Partner at Prosoll Law.