The Delhi High Court has held that use of a registered, coined, and well-known trademark as a keyword under a paid search advertising programme, even where the keyword is invisible to the consumer, constitutes “use” of the trademark within the meaning of Sections 2(2)(c)(i) and 29(6)(d) of the Trade Marks Act, 1999. A search engine operator that actively suggests, auctions, and sells trademarked terms as keywords to the trademark proprietor’s direct competitors, without the proprietor’s consent and for commercial gain, is not a passive intermediary but an active participant in such use. Such conduct amounts to infringement under Section 29(8) of the Trade Marks Act as it takes unfair advantage of the trademark’s reputation and goodwill, and is contrary to honest practices in industrial and commercial matters, regardless of whether likelihood of confusion is established.
The Court further laid down that the safe harbour under Section 79 of the Information Technology Act is unavailable to such a search engine operator because it selects the receiver of the transmission, fails to observe due diligence under the Intermediary Guidelines, and actively aids or induces the infringing use. The advertising function of a trademark, its ability to attract consumers to the proprietor’s goods and services, is a protectable commercial asset, and a search engine cannot be permitted to auction or monetise that asset without the proprietor’s authorisation.
The High Court therefore granted permanent injunction restraining Google LLC and Google India from using the mark ‘HINDWARE’, or ‘HINDWARE SANITARYWARE’, ‘HINDWARE SANITARY’, ‘HINDWARE SANITARYWARE INDIA’, or any combination thereof, as advertising keywords or AdWords, or in any manner amounting to infringement. The Court also awarded nominal damages of Rs. 15 lakhs in each suit, totalling Rs. 30 lakhs, payable jointly and severally by Google LLC and Google India within eight weeks. Actual costs of litigation were held payable jointly and severally by the defendant.
A Single Judge Bench of Justice Mini Pushkarna observed that it had territorial jurisdiction under both Section 20 of the Code of Civil Procedure, 1908 and Section 134 of the Trade Marks Act, 1999. Section 134 provides an additional forum to a registered proprietor and is in addition to, and not in exclusion of, Section 20 of the CPC. The plaintiff conducted business in Delhi through its network of dealers, showrooms, and institutional partners. The products of both the plaintiff and defendants were available and sold in Delhi. Google’s website and its AdWords Programme were accessible in Delhi, and Google’s own witness admitted that Grohe’s advertisement, after successful keyword bidding, was visible throughout India including Delhi. Even partial arising of a cause of action within the jurisdiction is sufficient.
The Bench rejected Google’s contention that on account of the settlement with the advertiser defendants (Grohe and Cera), no cause of action survived against Google. It held that use of the plaintiff’s registered trademark ‘HINDWARE’ by Google in its AdWords Programme, by offering, suggesting, and auctioning the mark to rival entities without the plaintiff’s consent, itself constitutes an independent and actionable cause of action against Google. The settlement with the primary advertisers does not extinguish this independent cause of action. The Bench also held that both Google LLC (which operates the AdWords Programme through google.com) and Google India (its wholly owned Indian subsidiary which entered into the AdWords Agreement with the Indian advertiser entities) are jointly liable.
The Bench addressed Google’s central defence that keywords operate only as invisible backend triggers, imperceptible to consumers, and therefore cannot constitute “use” of a trademark under the Trade Marks Act. It held that Section 2(2)(c)(i) of the Trade Marks Act is couched in wide terms, use of a mark “in any physical or in any other relation whatsoever” to goods. The phrase “in any other relation whatsoever” must be interpreted broadly and includes even invisible use of a mark. Accordingly, use of a trademark as a keyword, even though not visible to the end user, amounts to use of the mark.
Further, under Section 29(6)(d) of the Trade Marks Act, a person uses a registered trademark if he uses it “in advertising.” The legislature has deliberately used the gerund “advertising” (a verb/process) and not “advertisement” (a noun/end result). Use of a trademark as a keyword to trigger display of a competitor’s advertisement is use of the mark in the entire process of advertising, and is not contingent on the mark being physically visible in the AdText, added the Bench.
The Court also drew an analogy between keywords and meta-tags, both are invisible backend mechanisms that serve to divert internet traffic from the proprietor’s website to a rival’s. Invisible use of a trademark to divert traffic from the proprietor’s website to an advertiser’s website amounts to use under Section 29 of the Trade Marks Act.
The Bench categorically held that use of the trademark as a keyword amounts to use by Google and not merely by the advertiser. Google does not operate as a neutral or passive platform. It actively suggests trademarked terms to advertisers through its Keyword Planner Tool, conducts real-time auctions for the use of trademarks as keywords, and determines which advertisements are ultimately displayed on the SERP through its proprietary algorithms. The final decision on which ad is displayed is Google’s, not the advertisers. Google monetises this process by earning CPC revenue at the precise moment a user clicks on the advertisement and is diverted to a rival’s website.
No prior consent or approval was taken from the plaintiff for offering, suggesting, or selling its registered trademark to third parties. Therefore, there is no permitted use within the meaning of Section 2(1)(r)(ii) of the Trade Marks Act, added the Bench.
The Bench held that Google’s conduct constitutes trademark infringement under Section 29(8) of the Trade Marks Act, which provides that a registered trademark is infringed by “any advertising” of that trademark if such advertising (a) takes unfair advantage of and is contrary to honest practices in industrial or commercial matters; (b) is detrimental to its distinctive character; or (c) is against the reputation of the trademark. Importantly, proof of likelihood of confusion is not required for infringement under Section 29(8).
On unfair advantage, the Bench held that the term “unfair advantage” means a benefit or profit earned by free-riding on the goodwill of another’s mark. ‘HINDWARE’ is a coined word, a consumer types that term in the search bar only because the plaintiff has built a reputation for it through years of investment. Google exploits this consumer recognition by auctioning the mark to the plaintiff’s direct competitors, without the plaintiff’s consent and without sharing revenue with the plaintiff. Google generates higher revenue from third-party bidding on ‘HINDWARE’ than the plaintiff itself would generate by bidding on its own mark. This constitutes unfair advantage and free-riding on the plaintiff’s commercial asset.
The Bench further observed that the trademark, instead of guiding consumers to the plaintiff, was being used as a trigger to expose them to competing advertisements. This impairs the advertising function of the trademark itself the plaintiff’s own mark was being used not to attract customers to it, but to divert them away.
The Bench rejected Google’s brick-and-mortar analogies. A consumer typing a coined trademark in a search bar is not akin to a customer entering a general store; it is akin to a customer walking into the trademark owner’s exclusive outlet. Google’s AdWords Policy effectively converts a source-specific search into a general one, exploiting the magnetism of the trademark’s advertising value.
On honest practices, the Bench held that a practice is “honest” if it is fair with respect to the legitimate interests of the trademark proprietor, and is regarded as honest by a substantial and responsible section of the industry. Google’s conduct of selling a trademark it does not own to the proprietor’s direct competitors, without consent and without sharing profits, violates commercial morality. It amounts to misappropriating the advertising value of the plaintiff’s trademark and does not constitute honest practice in industrial or commercial matters.
Briefly, the plaintiff, Hindware Ltd. (originally incorporated as HSIL Limited, later restructured and renamed), is one of the oldest sanitaryware companies in India, established in 1960. It holds a registered trademark ‘HINDWARE’ since 1991, a coined word with no dictionary meaning and has been declared a well-known mark by the Delhi High Court vide order dated 21st April, 2017. The plaintiff commanded a 40% market share in the organised sanitaryware sector, had sales exceeding Rs. 500 Crores for 2011-12, and spent over Rs. 50 Crores on advertising and promotion of its mark in the same year.
The plaintiff discovered that Grohe India Pvt Ltd. and Cera Sanitaryware Ltd. along with Omkara Infoweb Pvt Ltd. had purchased the plaintiff’s registered trademark ‘HINDWARE’, and combinations thereof such as ‘HINDWARE SANITARYWARE INDIA’, as keywords under Google’s AdWords Programme. As a result, when consumers searched for the plaintiff’s mark on google.com, the first search result on the Search Engine Results Page (SERP) was the sponsored advertisement of these competitor companies, and not the plaintiff’s website.
Google’s AdWords Programme (now Google Ads) is a paid referencing and keyword advertising service. Under this programme, advertisers bid in real-time for keywords, including trademarked terms, to have their sponsored advertisements displayed on the SERP. Google provides a Keyword Planner Tool which actively suggests keywords, including third-party trademarks, to advertisers based on search trends and popularity. Google earns revenue on a Cost-Per-Click (CPC) basis, i.e., only when a user actually clicks on the sponsored advertisement and is diverted to the advertiser’s website. Google’s AdWords Policy in India, as changed in 2009, does not restrict or investigate the use of trademarked terms as keywords.
Google’s own witness admitted that no prior consent or approval was obtained from trademark owners before auctioning their marks as keywords, and that Google does not share revenue with trademark proprietors after successful bidding. Grohe, Cera, and Omkara Infoweb all settled with the plaintiff during the course of proceedings and decrees were passed against them. The litigation ultimately proceeded against Google India Pvt Ltd. and Google LLC alone.
