In a significant legal setback for tech giant Google, the Delhi High Court has ordered Google LLC and Google India to pay Rs 30 lakh in damages to sanitaryware major Hindware Ltd. The court ruled that auctioning trademarked brand names as keywords to direct competitors through the Google AdWords programme constitutes an “unfair advantage” under the Trademarks Act and is not protected by intermediary legal immunities.
In a judgment dated May 22, Justice Mini Pushkarna presided over two lawsuits filed by Hindware Ltd, ultimately restraining Google from using ‘Hindware’, ‘Hindware Sanitaryware’, ‘Hindware Sanitary’, or ‘Hindware Sanitaryware India’ as advertising keywords on its search platform.
The court awarded nominal damages of Rs 15 lakh in each of the two suits, totaling Rs 30 lakh, which Google must pay within an eight-week period. Additionally, Hindware was ruled entitled to recover its actual litigation costs, with the court directing the company to submit its official “Bill of Costs” within two months.
Intercepting Customers for Commercial Gain
The legal battle highlights how Google’s highly profitable AdWords system interacts with national trademark laws. The court observed that AdWords operates as a commercial venture specifically designed to monetise search engine traffic by displaying sponsored links of paying advertisers.
By allowing Hindware’s direct business competitors to bid on the company’s registered trademarks as keywords, the court found that Google enabled rival entities to intercept users who had expressed an explicit interest in Hindware.
Justice Pushkarna ruled that this process represented an “unfair practice,” noting that Google sought to exploit the established reputation and distinctive character of Hindware’s well-known brand to directly benefit its own advertising revenues. Crucially, the court highlighted that Google had never sought or obtained prior consent or approval from Hindware before offering, suggesting, or selling its registered trademarks to third parties.
No ‘Safe Harbour’ Protection for Keyword Auctioning
A critical point of the court’s decision was its refusal to grant Google immunity under India’s Information Technology (IT) Act. Google had sought protection under Section 79(1) of the IT Act, which typically offers a legal “safe harbour” to digital intermediaries, shielding them from liability for third-party actions or content on their platforms.
However, the court ruled that Google’s active role in auctioning and selling trademarked terms to a brand’s direct competitors constitutes an active commercial promotion rather than passive hosting, thereby disqualifying the tech giant from safe harbour exemptions.
The judgment also traced the history of Google’s advertising practices in India, noting that until 2009, Google’s policy did not permit trademarks to be used as keywords in the country. The subsequent policy shift, the court stated, was explicitly designed to encourage the use of trademarked brand terms to drive commercial profits for Google’s advertising ecosystem.
