Google LLC v. DRS Logistics (P) Ltd. & Ors.

High Court of Delhi at New Delhi (Division Bench) | Decided: 10 August 2023 | FAO(OS)(COMM) 2/2022 & FAO(OS)(COMM) 22/2022 | Bench: Hon’ble Mr. Justice Vibhu Bakhru & Hon’ble Mr. Justice Amit Mahajan

Background

Google LLC, the appellant in FAO(OS)(COMM) 2/2022, owns and operates the Google Search Engine and the Google Ads Programme (formerly AdWords). Google India Private Limited, the appellant in FAO(OS)(COMM) 22/2022, is a non-exclusive reseller of the Ads Programme in India and a subsidiary of Google.

DRS Logistics (P) Ltd. and Agarwal Packers and Movers Pvt. Ltd., the respondents, are leading packaging, moving and logistics service providers in India and the registered proprietors of several trademarks under Classes 16, 17 and 39, including the mark AGARWAL PACKERS AND MOVERS, which DRS claimed had acquired the status of a well-known trademark through long and continuous use.

DRS alleged that Google’s Ads Programme allowed third-party advertisers, including DRS’s competitors, to bid on DRS’s registered trademarks as keywords, so that when an internet user searched for DRS’s trademark on the Search Engine, sponsored links of unrelated third parties such as www.safepackersmovers.com and www.dtccargopackers.com appeared on the search engine results page (SERP). DRS contended that this diverted internet traffic from its own website to that of advertisers having no connection with DRS, deceived consumers into believing they were availing DRS’s services and constituted infringement of its registered trademarks.

DRS filed Suit No. CS(Comm) 1/2017 against Google and Just Dial Ltd. (respondent no. 4) seeking a permanent injunction. By judgment dated 30.10.2021, a learned Single Judge allowed DRS’s interlocutory applications under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908, holding that use of trademarks as keywords amounts to “use” under the Trade Marks Act, 1999 and may constitute infringement and that Google was not entitled to the intermediary defence under Section 79 of the Information Technology Act, 2000. Google and Google India appealed against this judgment, confining the scope of their appeal to these two findings and not challenging the specific operative directions requiring investigation of complaints.

Issues for Determination

Whether use of trademarks as keywords amounts to use of those marks for the purposes of Section 29 of the Trade Marks Act, 1999.
If so, whether such use is attributable to the advertiser alone or also to Google.
Whether the use of a trademark as a keyword per se amounts to infringement of a trademark.
If so, whether Google is absolved of liability in respect of such use by virtue of being an intermediary under Section 79 of the Information Technology Act, 2000.

Key Holdings of the Court

The court held that use of a trademark as a keyword in the Ads Programme amounts to “use” of the mark “in advertising” within the meaning of Section 29(6)(d) of the Trade Marks Act, 1999, notwithstanding that the keyword itself is invisible to the internet user. The expression “use of a mark” under Section 2(2) of the Act cannot be confined to use in visual or printed form, particularly in light of Section 29(9), which recognises that spoken use of the distinctive elements of a mark may also infringe it.
The court held that such use of a trademark as a keyword is not, however, “use as a trade mark” since a keyword does not perform the primary function of identifying the source of goods or services. Consequently, Section 29(1) of the Act, which requires the mark to be used in a manner likely to be taken as being used as a trade mark, was held inapplicable.
The court rejected Google’s contention that its role is limited to that of a passive service provider. It held that Google actively suggests, encourages and monetises the use of trademarks as keywords through tools such as the Keyword Planner and determines, through its proprietary algorithms, the Ads displayed and their order on the SERP. Accordingly, the use of trademarks as keywords was held to be use not merely by the advertiser but also by Google itself.
The court held that the mere use of a registered trademark as a keyword, absent any likelihood of confusion, unfair advantage or dilution or compromise of the distinctive character or repute of the mark, does not amount to infringement. Whether infringement under Section 29(2) or Section 29(4) of the Act is made out depends on the facts of each case.
The court accepted the applicability of the Doctrine of Initial Interest Confusion under Indian law, holding that since Section 29(2) of the Act does not specify any minimum duration for which confusion must persist, even confusion of a brief or transient nature, occurring before an internet user realises that the website accessed is unconnected with the trademark, can attract liability under Section 29(2).
The court held that the relevant standard for assessing confusion in the context of internet search engines is the rudimentary functional awareness of a person using such a device and not the “average intelligence and imperfect recollection” test evolved in Amritdhara Pharmacy v. Satya Deo Gupta, which was developed in the context of visual or phonetic recall of marks rather than the use of internet search tools.
The court declined to finally determine whether Google could be held contributorily liable for trademark infringement by advertisers, holding that this was a matter for trial, subject to DRS laying the necessary foundation in its pleadings and leading evidence.
The court held that Google is not entitled to the safe harbour under Section 79 of the Information Technology Act, 2000 in respect of the Ads Programme, since Google is not a passive intermediary but actively selects and suggests keywords, determines the display and ranking of advertisements through its proprietary systems and commercially monetises the use of trademarks as keywords.
The court declined to interfere with the directions issued by the learned Single Judge in paragraph 127 of the impugned judgment requiring Google to investigate complaints regarding use of DRS’s trademarks as keywords and to review and, where necessary, restrain or remove advertisements found to infringe or pass off DRS’s trademarks. In respect of Google India, the court held that the directions must be understood as requiring Google India to do whatever is within its power to ensure compliance, given its position as Google’s Indian subsidiary and reseller of the Ads Programme.
The appeals were accordingly disposed of and the findings of the learned Single Judge on the two issues under challenge were upheld at the prima facie, interlocutory stage.

Statutory Provisions Involved

Section 2(1)(m) of the Trade Marks Act, 1999 defines “mark” to include a device, brand, heading, label, ticket, name, signature, word, letter, numeral, shape of goods, packaging or combination of colours or any combination thereof.
Section 2(1)(zb) of the Trade Marks Act, 1999 defines “trade mark” as a mark capable of being represented graphically and capable of distinguishing the goods or services of one person from those of others, including in relation to indication of a connection in the course of trade between the goods or services and the proprietor or permitted user.
Section 2(2)(b) and (c) of the Trade Marks Act, 1999 provide that, unless the context otherwise requires, the use of a mark is to be construed as the use of a printed or other visual representation of the mark, and, in relation to goods, as use upon or in any physical or other relation whatsoever to, such goods, and, in relation to services, as use as or as part of any statement about the availability, provision or performance of such services.
Section 28 of the Trade Marks Act, 1999 confers on the registered proprietor of a trade mark the exclusive right to its use in relation to the goods or services for which it is registered.
Section 29 of the Trade Marks Act, 1999 sets out the circumstances in which a registered trade mark is infringed, including sub-section (1) (use likely to be taken as use as a trade mark), sub-section (2) (use likely to cause confusion or association), sub-section (3) (presumption of confusion in certain cases), sub-section (4) (use taking unfair advantage of or detrimental to, a mark having a reputation), sub-section (6) (deeming certain acts, including use “in advertising”, to constitute use of a mark) and sub-section (9) (infringement by spoken use of the distinctive elements of a mark).
Section 2(1)(w) of the Information Technology Act, 2000 defines “intermediary” with respect to any particular electronic record as a person who, on behalf of another person, receives, stores or transmits that record or provides any service with respect to that record.
Section 2(1)(za) of the Information Technology Act, 2000 defines “originator” as a person who sends, generates, stores or transmits an electronic message or causes such a message to be sent, generated, stored or transmitted, but excludes an intermediary.
Section 79 of the Information Technology Act, 2000 provides an exemption from liability for intermediaries in respect of third-party information, data or communication links, subject to the conditions in sub-sections (2) and (3), including that the intermediary’s role must be limited to providing access to or temporary storage or hosting of, third-party information, that it must not initiate the transmission, select the receiver or select or modify the information and that it must observe due diligence; the exemption does not apply where the intermediary has conspired, abetted, aided or induced the unlawful act or has failed to expeditiously remove infringing material on receiving actual knowledge.

Reasoning of the Court

On the question of “use,” the court undertook a textual analysis of Section 2(2) of the Trade Marks Act, 1999, noting that the opening words “unless the context otherwise requires” limit the application of the visual-use definition in Section 2(2)(b) and that Section 29(6), which expressly deems certain acts including use “in advertising” to constitute use of a mark, is not constrained by Section 2(2). The court relied on the Supreme Court’s interpretation in Hardie Trading Ltd. v. Addisons Paint & Chemicals Ltd. of the words “in any other relation whatsoever” as indicating a wide amplitude for the expression “use of a mark” in relation to goods. On this basis, the court held that the use of a trademark as a keyword to trigger the display of an advertisement falls within “use in advertising” under Section 29(6)(d), even though the keyword itself is not visible to the internet user.

The court examined the divergent approaches of courts in Australia, New Zealand, the European Union and the United States. It declined to follow the approach of the Federal Court of Australia in Veda Advantage Ltd. v. Malouf Group Enterprises Pty Ltd. and similar decisions from New Zealand, which required that a sign be used “as a trade mark” (that is, as a badge of origin) before infringement could arise, on the ground that Section 29 of the Indian Act is considerably wider than the corresponding provisions of the Australian Trade Marks Act, 1995. The court agreed with the conclusion of the Court of Justice of the European Union in Google France SARL and Google Inc. v. Louis Vuitton Malletier SA that an advertiser’s use of a sign identical to a trademark as a keyword falls within “use in relation to goods or services,” but expressly departed from that judgment’s further conclusion that the referencing service provider itself does not “use” the sign. The court found this conclusion unpersuasive having regard to the active, revenue-driven role played by Google through its Keyword Planner, bidding and ranking systems.

On whether the use of trademarks as keywords amounts to infringement per se, the court reasoned that a search engine is an indexing service and not a directory limited to the proprietor’s own website and that an internet user entering a trademark as a search query may legitimately be interested in information about competitors, reviews or alternatives. The court drew an analogy with permissible comparative advertising practices in the physical marketplace, such as a sales assistant suggesting an alternative brand or a competitor’s billboard placed near a rival’s store, relying on the illustrations given in McCarthy on Trademarks and Unfair Competition. On this basis, the court held that the use of a trademark as a keyword, without resulting confusion, unfair advantage or dilution, does not by itself infringe Section 29(1), (2) or (4) of the Act.

On the Doctrine of Initial Interest Confusion, the court reviewed United States decisions including Grotrian, Helfferich, Schulz, Th. Steinweg Nachf v. Steinway & Sons, Mobil Oil Corp. v. Pegasus Petroleum Corp. and Brookfield Communications, Inc. v. West Coast Entertainment Corporation, as well as decisions taking a contrary view in the First, Second and Fourth Circuits. The court held that, as a matter of construction of Section 29(2) of the Trade Marks Act, 1999, which does not prescribe any duration for which confusion must subsist, even transient confusion at the threshold stage is sufficient to attract liability, while clarifying that mere generation of interest in a sponsored link, without any element of deception, does not amount to infringement.

On the standard of the average consumer, the court reasoned that the test in Amritdhara Pharmacy v. Satya Deo Gupta was developed to assess whether the visual or phonetic similarity of marks would cause confusion in the mind of a person of average intelligence and imperfect recollection and was not designed to assess a person’s familiarity with the functioning of an internet search engine. The court held that a person using a search engine must be assumed to possess the rudimentary functional knowledge necessary to use that tool, including the distinction between organic and sponsored results.

On Section 79 of the Information Technology Act, 2000, the court reasoned that the conditions for the safe harbour under Section 79(2), namely that the intermediary’s role be limited to providing access to or temporary storage of, third-party information and that it not select the receiver of the transmission or select or modify the information transmitted, were not met on the facts alleged. The court noted that Google had changed its global policy in 2009 to permit the unrestricted use of trademarks as keywords with a view to increasing advertising revenue, that it actively suggested and auctioned keywords including registered trademarks and that its proprietary algorithms determined the selection and ranking of advertisements displayed. On this basis, the court held that Google’s role in the Ads Programme could not be characterised as that of a passive conduit and that the safe harbour under Section 79(1) would accordingly be unavailable if Google’s activities were ultimately found to infringe DRS’s trademarks.

On contributory infringement, the court referred to the reasoning in Inwood Laboratories, Inc. v. Ives Laboratories, Inc., Tiffany (NJ) Inc. v. eBay Inc. and Perfect 10, Inc. v. Google Inc., but held that whether Google had the requisite knowledge of specific infringing advertisements and failed to take remedial steps was a matter requiring evidence and was therefore not to be finally decided at the interlocutory stage.

Doctrinal Significance

This judgment is the leading Indian appellate authority on the trademark law treatment of keyword advertising and represents a significant departure from the “use as a trade mark” threshold adopted in Australia, New Zealand and, in part, by the Court of Justice of the European Union. By holding that invisible, backend use of a registered trademark as a keyword falls within “use in advertising” under Section 29(6) of the Trade Marks Act, 1999, the court has confirmed that the wider language of the Indian statute permits a more expansive reading of “use” than corresponding provisions in several other common law jurisdictions and that this reading extends to novel forms of use generated by internet search and advertising technologies.

The court’s holding that a search engine operator running an algorithmically-driven, revenue-maximising advertising auction cannot claim the intermediary safe harbour under Section 79 of the Information Technology Act, 2000 in respect of that advertising business is an important clarification of the boundary between an entity’s role as a passive conduit for third-party content and its role as an active commercial participant, even where both functions are performed through the same online platform.

The express adoption of the Doctrine of Initial Interest Confusion, a doctrine that remains contested even within United States jurisprudence, as consistent with the text of Section 29(2) of the Trade Marks Act, 1999 extends the scope of actionable confusion under Indian trademark law to transient, pre-sale confusion, without requiring proof that any transaction was ultimately affected.

At the same time, by holding that the use of trademarks as keywords is not infringement per se and that liability depends on proof of confusion, unfair advantage or dilution on the facts of each case, the judgment avoids conferring on trademark proprietors a monopoly over search engine results triggered by their marks and preserves space for competitive and comparative advertising in the online environment. The judgment also recalibrates the applicable consumer standard for internet-based disputes, holding that the “average intelligence and imperfect recollection” test developed for visual and phonetic comparison of marks is not an appropriate proxy for assessing a person’s familiarity with the operation of a search engine. As the decision was rendered at the prima facie, interlocutory stage in proceedings under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908, the final determination of liability, including on contributory infringement, remains to be decided at trial.

Google LLC v. DRS Logistics (P) Ltd. & Ors. (Delhi HC, 10 August 2023)

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