As the digital advertising landscape becomes increasingly competitive, the boundary between fair competition and trademark infringement has become blurred.
A post-trial final judgment of the Delhi High Court passed in two suits filed by Hindware addresses a fundamental and contentious issue in this domain: Can an advertising platform legally auction a registered, coined and distinctive trademark to the proprietor's direct competitors for use as a backend keyword?
This landmark ruling answers that question with a resounding “no”, significantly reshaping the responsibilities of search engines and the strategies available to digital marketers.
At the heart of modern digital marketing lies an invisible, high-stakes battle for consumer attention, which is fought entirely through backend search engine algorithms. The dispute originated when Hindware, a renowned sanitaryware company with a registration dating back to 1991, discovered that its direct competitors Grohe and Cera, were appearing as the top “sponsored” links on Google whenever users searched for “Hindware” or its variants. This was facilitated by Google's AdWords (now Google Ads) Programme, which allowed these competitors to bid on the keyword "HINDWARE".
While Grohe and Cera eventually settled with Hindware, the litigation continued against Google, which contended that it merely provided a neutral technology platform, that backend keywords are invisible to the user and therefore do not constitute “use” of a trademark, and that offering alternatives to a searching consumer was simply fair competition analogous to placing a billboard next to a competitor’s store.
The Court fundamentally dismantled the argument that an invisible backend keyword falls outside the ambit of the Trade Marks Act, 1999 (“TM Act”). Relying on Sections 2(2)(c) and 29(6) of the Act, the Court held that the use of a trademark as a keyword to trigger advertisements clearly amounts to use “in advertising”. The law does not require the trademark to be visually perceptible in the final ad text to constitute use. The very mechanism of utilizing the mark to fetch search results is sufficient. The Court established that an invisible meta-tag or keyword used to divert traffic from a proprietor’s website to an advertiser’s website is a direct violation of trademark rights under the scope of advertising.
A central pillar of the judgment was the assessment of Google’s role. Google argued it was an intermediary as it merely provides the service and does not actually bid for the registered mark and is thus entitled to safe harbour protection. However, the Court observed that Google’s Keyword Planner Tool actively suggests trademarked terms to advertisers based on search volumes. By identifying, suggesting, and ultimately auctioning these terms through a real-time bidding system, Google actively monetizes the trademark. The Court noted that Google earns revenue on a “Cost-Per-Click” basis. Thus, it actively profits when a user, intending to find Hindware, clicks on a competitor’s ad. The Court determined that Google’s business model deliberately exploits the distinctive character and repute of the trademark, placing it well beyond the realm of a passive intermediary.
Tech platforms frequently shield themselves from liability by invoking the intermediary protection under Section 79 of the Information Technology Act, 2000 (“IT Act”). However, the Court weighed this technical immunity against the realities of trademark exploitation. Under Section 29(8) of the TM Act, an advertisement infringes a trademark if it takes “unfair advantage of and is contrary to honest practices." The Court highlighted that a coined mark like “HINDWARE” gained its popularity purely through the proprietor’s investment in quality and brand promotion. When competitors buy this keyword, they effectively free ride on Hindware’s goodwill. They bypass the costs of building their own brand recognition by hijacking the exact moment a consumer expresses specific interest in Hindware. The Court rejected Google’s brick-and-mortar analogy, noting that a user typing a specific brand name is akin to walking into an exclusive brand outlet, not a general multi-brand store. Selling that specific keyword transforms a targeted search into a general one against the proprietor’s will, amounting to an unfair and dishonest commercial practice.
In the event the Delhi High Court’s decision is not challenged and set aside, it marks a shift for the digital advertising industry, introducing several profound effects, some of which could include the following:
1. The ruling pierces the shield of intermediary liability for search engines. Platforms that actively suggest, auction, and profit from the unauthorized use of trademarked keywords can now be held directly liable as active participants in infringement.
2. The ruling imposes a significant obligation on platforms such as Google, which derive revenue from advertising, to meticulously categorize registered trademarks as either generic or distinctive, a task that is fraught with complexity and potential liability. This onus may lead to an overly broad interpretation of trademark infringement, resulting in the over-restriction of keywords as a precautionary measure.
3. The advertising platforms will likely need to overhaul their keyword planner tools to proactively filter out registered trademarks, rather than waiting for reactive complaints (a policy Google itself admitted to abandoning in 2009 for India).
4. Brands that invest heavily in creating distinctive, coined trademarks are granted stronger protections online. They will no longer be forced to artificially inflate their marketing budgets by bidding on their own names just to outrank competitors who purchased their keywords.
While the present judgment was passed after an extensive trial based on evidence specific to the facts of this case, to insulate keyword advertising frameworks against future injunctions, financial liabilities, advertisers and platforms may adopt certain guardrails which focus on compliance.
1. Platforms may need to update their automated systems, like Google's Keyword Planner Tool, to avoid suggesting trademarked keywords of competitors. This could involve restricting backend software from scanning and suggesting proprietary trademarks, and removing distinctive brand names from automated prompts to minimize the risk of trademark infringement claims.
2. A baseline automated check should classify search inventory into generic terms versus highly distinctive or well-known coined marks. Platforms can minimize legal exposure by freezing competitive keyword bidding on recognized coined marks unless the advertiser produces verified authorization or falls under verified comparative, nonconfusing usage exceptions.
3. Relying strictly on reactive take-down notices after a brand owner files a formal complaint leaves platforms highly vulnerable. While the judgment noted that Google reserved the right to disapprove advertisements on a reactive basis, its systemic policy to completely ignore keyword-level trademark complaints post-2009 was fatal to its defence. Platforms must implement programmatic blocking filters that allow trademark proprietors to proactively lock their registered marks against unauthorized rival bidding and address any complaints on priority.
4. To protect the safe harbour status, platform algorithms must decouple targeted delivery from pure commercial bidding metrics. If the platform’s system dynamically ranks an ad slot solely because an infringer outbid the trademark owner on a click-through revenue metric, courts will treat the platform as an active beneficiary of unjust enrichment rather than a passive data transmitter.
While the judgment heavily protects distinct brand owners, the questions that begs to be asked is whether the judgment is inherently disruptive to the foundational architecture of the intermediary?
A critical question arises here because judicial intervention may only be justified to the extent of uniquely coined trademarks. The moment this logic is expanded to the broader digital ecosystem, it triggers a severe tension with Section 79 of the IT Act.
If an intermediary is forced to take a unilateral decision on which trademark is legally "invented" and which is merely "descriptive," it ceases to be a neutral platform. Determining where a word falls on the trademark spectrum (whether it is coined, arbitrary, suggestive, or descriptive) is a highly subjective legal exercise. Trademarks regularly shift in status based on market awareness and acquired distinctiveness. Expecting an automated ad platform or an algorithm to act as a quasi-judicial trademark registry is an unworkable standard. By forcing Google to actively analyze, evaluate, and categorize the legal strength of a trademark, the court effectively strips away its passive status. To retain its safe harbour, the platform is forced into an active role creating a logical paradox that breaks the very definition of an intermediary.
The Hindware judgment serves as a course change in digital advertising law. It unequivocally dictates that the technological evolution of advertising cannot be used as a cloak to bypass traditional trademark protections. By holding the advertising platform accountable for keyword misappropriation, the Court has reinforced the principle that the commercial magnetism of a brand belongs exclusively to its creator.
Given that this ruling directly threatens a cornerstone of Google’s global revenue model and fundamentally challenges standard intermediary safe harbour protections, an appeal is highly anticipated. Consequently, while this judgment sets a powerful precedent, the digital advertising ecosystem will likely remain in a state of regulatory suspense until a final appellate verdict is delivered.
About the author: Surabhi Pande is an Associate Partner at Saikrishna and Associates.
Disclaimer: The opinions expressed in this article are those of the author(s). The opinions presented do not necessarily reflect the views of Bar & Bench.
If you would like your Deals, Columns, Press Releases to be published on Bar & Bench, please fill in the form available here.