Trademark Issues in E-Commerce: Keyword Advertising and Marketplaces

The commercial internet has created a new kind of marketplace one that is frictionless, borderless, available at every hour and dominated by algorithms that decide what you see before you have even articulated what you are looking for. In this environment, a brand’s trademark performs more work than it ever did in a physical market. When a consumer types a brand name into a search engine, the trademark is simultaneously the search query, the pointer to the brand’s own presence and the trigger for a series of commercial decisions made in milliseconds by advertising platforms, competitors and intermediaries all of them operating largely invisibly to the consumer and in legal territory that Indian courts are only now beginning to map with precision.

The collision of trademark law and digital commerce in India raises questions that the Trade Marks Act, 1999 was not designed to answer directly. The statute was drafted for a world of physical goods in physical markets, where a trademark was applied to goods or their packaging, appeared in print advertisements and was encountered by a consumer who walked into a shop. The digital economy has dissolved most of those anchors. Trademarks are now used as invisible keywords purchased in online auctions, embedded in the metadata of competitor websites, displayed in sponsored search results that appear above the organic listing of the trademark owner and exploited by e-commerce platforms that simultaneously host counterfeit products and claim the protection of intermediary immunity. For brand owners, legal practitioners and digital marketers operating in India today, understanding how the Trade Marks Act, 1999 applies to keyword advertising, meta-tag use, comparative digital advertising, domain name conflicts and the liability of online platforms is not optional it is the foundation of any credible brand protection strategy.

The Statutory Framework: Section 29 and the Meaning of “Use” in the Digital Context

Every analysis of trademark issues in digital commerce must begin with Section 29 of the Trade Marks Act, 1999, which defines infringement of a registered trademark. Section 29(1) provides that a person who is not the registered proprietor or licensee infringes the mark by using in the course of trade a mark identical with or deceptively similar to the registered mark, in relation to goods or services for which the mark is registered and the use is such as is likely to cause confusion on the part of the public. Sections 29(2) and 29(3) extend protection to marks that are identical to earlier marks used for identical or similar goods or for dissimilar goods where the mark has a reputation and the use takes unfair advantage of or is detrimental to its distinctive character. Section 29(4) covers use of a well-known trademark even in relation to dissimilar goods. Section 29(6) provides that for the purposes of the section, a person uses a registered trade mark if, in particular, he uses it in advertising.

The critical interpretive question in keyword advertising is whether the act of purchasing or using a trademark as an invisible keyword in an online advertising platform constitutes “use” of that trademark within the meaning of Section 29. The answer is not self-evident from the statutory text. The mark is not visible on the goods, it is not placed on packaging, it is not reproduced in an advertisement that consumers can see it is a background instruction, invisible to the end user, that tells an advertising algorithm to display a competitor’s advertisement when the trademark owner’s brand name is searched. Whether this invisible, functional use is a “use” for trademark purposes is the central question that the Delhi High Court has addressed in the most important digital trademark decisions in Indian legal history.

Domain Names as Trademarks: The Supreme Court’s Foundation in Satyam Infoway

Before examining keyword advertising, it is necessary to understand the foundational principle that domain names and by extension the digital use of trademarks more broadly are subject to the Trade Marks Act, 1999. This was established by the Supreme Court of India in Satyam Infoway Ltd. v. Siffynet Solutions Pvt. Ltd., AIR 2004 SC 3540 (2004) 6 SCC 145, decided on May 6, 2004 by a bench of Justices Ruma Pal and P. Venkatarama Reddi. The appellant, Satyam Infoway, had coined the word “Sify” from elements of its corporate name “Satyam Infoway” and registered multiple domain names using that word sifynet.com, sifymall.com and others with ICANN and WIPO from 1999 onwards. The respondent, Siffynet Solutions, began using the similar domain names siffynet.com and siffynet.net in 2001. The High Court had refused an interim injunction, taking the view that the two businesses were different and confusion was unlikely. The Supreme Court reversed this decision in emphatic terms.

The Court held that although no statute in India explicitly regulates domain names, this absence of specific legislation does not deprive domain names of legal protection. A domain name in the modern commercial environment has evolved from a mere technical address into a business identifier it distinguishes and identifies the goods or services of the business in the digital space, just as a trademark identifies goods in the physical marketplace. The Court held that the principles of the Trade Marks Act, 1999 specifically the doctrine of passing off apply to domain names. Reviewing the definitions in Sections 2(zb) and 2(m) of the Act, the Court found that a domain name possesses all the characteristics of a mark capable of distinguishing the trade or service of one person from that of another. The Court held that Satyam Infoway had established goodwill and reputation in the coined word “Sify,” that the respondent’s use of “Siffynet” was calculated to cause confusion and that the balance of convenience favoured the grant of an injunction. The decision established the principle since uniformly followed that passing off principles under trademark law govern domain name conflicts in India and that prior adoption and use of a domain name that serves as a distinctive business identifier creates enforceable rights even without a formal trademark registration.

Keyword Advertising: The Google v. DRS Logistics Judgment and Its Aftermath

The most significant and analytically sophisticated treatment of trademark issues in digital advertising in India is the Division Bench decision of the Delhi High Court in Google LLC v. DRS Logistics (P) Ltd. and Google India Private Limited v. DRS Logistics (P) Ltd., 2023 SCC OnLine Del 4809, decided on August 10, 2023, by a bench of Justice Vibhu Bakhru and Justice Amit Mahajan.

DRS Logistics and its group company Agarwal Packers and Movers are among India’s most recognised logistics and packing companies. DRS alleged that Google’s Ads Programme the platform through which advertisers bid for keywords to have their advertisements displayed on the Google Search Engine Results Page (SERP) actively encouraged third parties to use DRS’s registered trademark “AGARWAL PACKERS AND MOVERS” as a keyword. When a consumer searched for DRS’s trademark, Google displayed competitor advertisements prominently on the SERP, diverting traffic that the consumer intended to direct at DRS toward rival companies. DRS argued that this constituted infringement of its registered trademark under Section 29 of the Trade Marks Act, 1999 and that Google’s facilitation of this practice made Google an active participant rather than a passive intermediary, thereby disentitling Google from the safe harbour protection under Section 79 of the Information Technology Act, 2000.

The Division Bench delivered a judgment of considerable analytical depth that simultaneously answered several questions and left others open. On the primary question of whether using a trademark as a keyword constitutes “use” within the meaning of Section 29, the Court held firmly in the affirmative. Reading Section 2(2) of the Act which provides that “use in relation to goods shall be construed as a reference to the use of the mark upon or in any physical or in any other relation whatsoever, to such goods” the Division Bench held that the words “in any other relation” give the concept of “use” an amplitude that cannot be limited to visual, physical representations. The Court held that the use of a trademark as a keyword to display advertisements in the Google Ads Programme constitutes use in advertising within the meaning of Section 29(6) of the Act. This conclusion applied both to the advertiser who purchases the keyword and to Google itself, which actively assists advertisers in selecting keywords, monetises the use of those keywords and derives significant commercial benefit from selling the right to use them.

Having established that keyword use is “use” under the Act, the Court then addressed the more important practical question: does such use per se constitute infringement? Here the Division Bench delivered a holding that balanced the competing interests of trademark owners, search engines and internet users with considerable nuance. The Court held that the mere use of a trademark as a keyword, without any resulting confusion, unfair advantage, dilution or tarnishment, does not amount to infringement per se. The test for infringement in the keyword advertising context is not whether the keyword was used it is whether that use caused or was likely to cause the specific harms prohibited by Section 29, namely likelihood of confusion, taking unfair advantage of the mark’s reputation or damaging its distinctive character. The Division Bench drew a thought-provoking analogy: just as it is not illegal for a business to place its advertising billboard next to a competitor’s exclusive store and just as a retailer may place competing products on shelves next to a well-known brand, an advertiser who bids on a competitor’s trademark keyword is not automatically infringing as long as the advertisement itself does not cause confusion or mislead consumers about the source of the goods or services.

The Court also refined the standard for assessing confusion in the search engine context. The traditional imperfect recollection test measured against the average Indian consumer of average intelligence does not apply in its “rudimentary sense” to internet users who understand how search engines function. A typical user who searches for a brand name on Google understands that sponsored results are paid advertisements, not organic results from the trademark owner. The Court held that the relevant consumer standard in keyword advertising disputes is the perspective of a person who understands how search engines operate, who is aware that sponsored links appear alongside organic results and who is capable of distinguishing between them. This recalibration of the consumer standard for digital markets is one of the most important doctrinal contributions of the Google v. DRS Logistics decision.

On the question of Google’s intermediary status, the Division Bench upheld the finding that Google is not a passive intermediary in respect of its Ads Programme. Google does not merely provide a platform on which advertisers independently create and run advertisements. It actively assists advertisers in selecting keywords, including suggesting competitors’ trademarks as valuable keywords, earns higher revenue when advertisers bid on popular brand-name keywords and exercises pervasive control over the operation of the Ads Programme. This active commercial participation means Google cannot claim the broad safe harbour protection under Section 79(1) of the IT Act for the Ads Programme. Section 79(1) shields intermediaries from liability for third-party content but Section 79(3) removes that shield where the intermediary has conspired, abetted, aided or induced the unlawful act. The Court held that Google’s active role in promoting the use of third-party trademarks as keywords takes it outside the passive conduit category.

The MakeMyTrip v. Booking.com Application: Confusion as the Deciding Factor

The principles established in Google v. DRS Logistics were immediately applied in the companion decision also decided in December 2023, in Google LLC v. MakeMyTrip India Private Limited, arising from a Commercial Suit filed by MakeMyTrip one of India’s largest online travel platforms against Google and Booking.com. MakeMyTrip alleged that Booking.com’s use of the trademark “MakeMyTrip” and “MMT” as Google Ads keywords, causing Booking.com’s advertisements to appear prominently when consumers searched for MakeMyTrip, constituted infringement and passing off. The Single Judge had granted an ad-interim injunction. The Division Bench set it aside. The Court found that when a consumer searches for “MakeMyTrip” on Google and a Booking.com advertisement appears in the second position, a sophisticated internet user who is aware of the search engine ecosystem would not be confused into believing that Booking.com’s services are those of MakeMyTrip. Both platforms are well-known, independently branded and clearly distinguished in their advertising. The Court held that since Booking.com and MakeMyTrip provide identical services online travel booking there was nothing inherently deceptive about a consumer being offered an alternative in the search results. The case drew a clear line: where both parties are independently well-known brands operating in the same space and the advertisement is clearly identified as Booking.com’s advertisement rather than MakeMyTrip’s, keyword bidding by a competitor does not cross the threshold of infringement. This position is consistent with EU and US jurisprudence on the same issue.

E-Commerce Platforms as Active Participants: Christian Louboutin v. Nakul Bajaj

Keyword advertising is only one dimension of trademark exposure in digital commerce. The liability of e-commerce marketplaces for trademark infringement committed by third-party sellers on their platforms raises a distinct and equally important set of questions. The leading Indian authority on this issue is the decision of Justice Prathiba M. Singh of the Delhi High Court in Christian Louboutin SAS v. Nakul Bajaj and Ors., CS(COMM) 344/2018, decided on November 2, 2018.

Christian Louboutin, the celebrated luxury shoe manufacturer known for its distinctive red-sole trademark registered in India, alleged that the e-commerce platform Darveys.com was selling counterfeit Christian Louboutin products. Darveys.com operated as a premium online marketplace, charging a membership fee for access, hosting detailed product descriptions and photographs, using the Christian Louboutin trademark and logo in its listings and meta-tags, enclosing sold goods in its own packaging and managing the entire logistics chain from seller to buyer. The defendants argued that they were mere intermediaries under Section 79 of the IT Act and therefore not liable for the actions of third-party sellers who listed products on their platform.

The Court rejected this defence in emphatic terms. Justice Prathiba Singh held that the question of whether an e-commerce platform qualifies as an “intermediary” entitled to Section 79 protection is not answered by how the platform labels itself it is answered by examining what it actually does. The Court laid down a framework of 26 possible activities that an online platform may undertake, ranging from identifying and verifying sellers, displaying product photographs and descriptions, using brand trademarks in meta-tags and advertising, processing payments, providing logistics and packaging, to offering discounts and customer service. The Court held that the more of these activities a platform undertakes particularly activities that integrate it into the selling process and give it commercial benefit from the sale the more it crosses the line from passive intermediary to active participant. Once a platform is found to be an active participant in the infringing sale, Section 79 immunity ceases. The Court held that Darveys.com, by using Christian Louboutin’s trademarks in its meta-tags and advertising, packaging goods in its own branding, processing memberships and actively curating its product listings, was far more than a passive conduit and had crossed the threshold into active participation in the infringement.

The judgment also drew attention to the obligation of an e-commerce platform, even when it is an intermediary, to exercise due diligence and to act promptly on notices of infringement from trademark owners. A platform that receives a specific notice of infringing listings and fails to act may lose its intermediary immunity even if it would otherwise qualify for safe harbour protection. The Court confirmed, in a companion decision on November 12, 2018, in L’Oreal India Pvt. Ltd. v. Brandworld & Anr., CS(COMM) 980/2016, that the same principles apply to platforms selling counterfeit beauty and personal care products. Together, these two decisions from Justice Prathiba Singh’s court established the foundational framework for e-commerce platform liability for trademark infringement in India.

Meta-Tags, Deep-Linking and Invisible Use of Trademarks

Beyond keyword advertising in the Google Ads sense, digital commerce involves a range of other invisible uses of trademarks that can constitute infringement. Meta-tags the descriptive text embedded in a webpage’s source code that search engines use to index and rank the page have been the subject of several Indian decisions. In Kapil Wadhwa v. Samsung Electronics Co. Ltd., FAO(OS) 93/2012 (Delhi High Court Division Bench), the Court considered the use of a competitor’s trademark in meta-tags as a mechanism for diverting search engine traffic. The Division Bench affirmed the principle that invisible use of a trademark in meta-tags can constitute infringement if it causes diversion of traffic in circumstances amounting to confusion or passing off, even though the consumer never sees the trademark used in the meta-tag itself. This principle was directly applied in Google v. DRS Logistics, where the Division Bench drew an analogy between meta-tags and keywords, noting that both serve the same function associating a webpage or advertisement with a search query and that the reasoning from meta-tag cases therefore applies to keyword cases.

Deep-linking the practice of hyperlinking directly to a specific page on another entity’s website, bypassing the home page and the brand context it provides raises related concerns. While deep-linking is not itself a trademark issue in the traditional sense, where the destination page uses or incorporates a third party’s trademark and the link is presented in a manner that suggests an association or endorsement that does not exist, it can constitute passing off. The broader principle, consistent across Indian decisions on digital trademark issues, is that the invisible or technical use of a trademark to divert consumer attention or to create a misleading association is treated with the same scrutiny as visible use.

Comparative Advertising and the Limits of Section 30(1)

Digital marketing frequently involves comparative advertising the practice of using a competitor’s trademark in an advertisement to draw a comparison between the two brands’ products or services. Section 30(1) of the Trade Marks Act, 1999 provides that nothing in Section 29 shall be construed as preventing the use of a registered trade mark by any person for the purpose of identifying goods or services as those of the proprietor, provided the use is in accordance with honest practices in industrial or commercial matters and is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trade mark.

Section 30(1) therefore permits comparative advertising within limits: the comparison must be honest and fair, must not take unfair advantage of the registered mark and must not damage its reputation or distinctiveness. In the context of digital marketing where comparative advertisements appear on social media platforms, in search results and in email marketing the practical boundary between lawful honest comparison and trademark infringement is a matter of degree. An advertisement that names a competitor’s product and states truthfully that the advertiser’s product is cheaper, faster or more effective is within Section 30(1). An advertisement that uses a competitor’s mark in a manner calculated to create confusion, to suggest that the competitor’s brand endorses the advertiser or to tarnish the competitor’s reputation crosses the line into Section 29 infringement.

Policybazaar v. Coverfox and the Conduct-Based Test

The interplay between the confusion-based infringement standard and the conduct of both parties came into sharp focus in Policybazaar Insurance Web Aggregator Pvt. Ltd. v. Coverfox Insurance Broking Pvt. Ltd., 2023: DHC: 6407 (Delhi High Court, Single Judge, September 6, 2023). Policybazaar had initially obtained an ex-parte ad-interim injunction against Coverfox for using the “PolicyBazaar” trademark as a keyword in Google Ads. However, the injunction was subsequently lifted when the Court discovered that Policybazaar itself had been bidding on Coverfox’s trademarks as keywords for over a year a material fact that had not been disclosed when seeking the injunction. The Court applied the principle that a party seeking equitable relief must come to court with clean hands. The finding that Policybazaar was itself engaged in the same conduct it complained of and had concealed this fact from the Court was fatal to its claim for interim relief. The decision is a warning to brand owners: a trademark infringement claim in the digital advertising context requires not only that the defendant’s conduct is unlawful but that the plaintiff’s own conduct in the same space is beyond reproach. Selective enforcement of digital trademark rights targeting competitors while simultaneously exploiting their marks is not a strategy that will survive judicial scrutiny.

The Doctrine of Initial Interest Confusion in Indian Digital Trademark Law

The doctrine of initial interest confusion which holds that infringement occurs where a consumer is initially confused or misled into believing an association exists, even if that confusion is dispelled upon closer examination was discussed but not fully adopted in its American form in Google v. DRS Logistics. The Division Bench acknowledged the doctrine but held that in the Indian search engine context, it requires a “real likelihood of confusion” not merely the initial diversion of a consumer’s attention. The Court held that the mere appearance of a competitor’s advertisement when a brand name is searched does not satisfy the real likelihood of confusion standard, because an internet-literate user understands that sponsored results are paid placements and not endorsements by the trademark owner. This is an important qualification on the doctrine as it operates in US law, where some circuits have found initial interest confusion more readily in the keyword advertising context.

The Information Technology Act, 2000 and the Safe Harbour Interaction

The interface between the Trade Marks Act, 1999 and Section 79 of the Information Technology Act, 2000 is a recurring theme in every digital trademark case. Section 79(1) provides that an intermediary shall not be liable for any third-party information, data or communication link made available or hosted by it. The protection is wide, but it is subject to important conditions under Section 79(2): the intermediary must not have initiated the transmission, must not have selected the receiver and must have observed due diligence. Section 79(3) removes the protection entirely where the intermediary has conspired, abetted, aided or induced the unlawful act or upon receiving actual knowledge or on being notified by the government that the resource it has hosted is being used to commit unlawful acts, fails to expeditiously remove or disable access to it.

The practical message for e-commerce platforms and search engines operating in India, drawn from Louboutin, Google v. DRS and the subsequent decisions, is clear. A platform that operates as a passive conduit hosting third-party content without selection, modification or commercial integration retains Section 79 protection. A platform that actively curates, promotes and commercially integrates third-party content including by selling trademark-targeted advertising or by providing services that actively facilitate infringement loses that protection and becomes liable under the Trade Marks Act and potentially under general tort law. The question is always one of fact: how active was the platform and how intimately connected was that activity with the infringement?

Practical Implications for Brand Owners and Digital Marketers

The body of law surveyed in this article generates several practical propositions for brand owners and digital marketing practitioners in India. First, the registration of a trademark under the Trade Marks Act, 1999 does not automatically prevent competitors from purchasing that trademark as a keyword the trademark owner must demonstrate that the keyword use caused confusion, unfair advantage or dilution. Second, e-commerce platforms that actively participate in the commercialisation of their listings through meta-tag usage, logistics integration, payment processing and curated product descriptions cannot rely on Section 79 safe harbour and should implement robust brand protection mechanisms including take-down procedures, seller verification and counterfeit detection. Third, domain names that function as brand identifiers are protectable under passing off principles even without trademark registration. Fourth, brand owners engaging in keyword bidding wars must maintain clean hands: targeting competitors while concealing one’s own similar conduct is a litigation risk that courts have been willing to act upon.

Conclusion

Indian trademark law has travelled a considerable distance in twenty years from the Supreme Court’s foundational recognition in Satyam Infoway that digital identifiers are protectable under the Trade Marks Act, to the Delhi High Court’s nuanced analysis in Google v. DRS Logistics of the conditions under which keyword advertising constitutes infringement, to Justice Prathiba Singh’s comprehensive framework for e-commerce platform liability in Christian Louboutin v. Nakul Bajaj. What these decisions collectively establish is that the Trade Marks Act, 1999 is a statute with the flexibility to accommodate the digital economy that its definitions of “use,” “advertising,” and “infringement” are broad enough to reach the invisible and algorithmic uses of trademarks that characterise modern digital marketing but that the application of those provisions requires contextual, fact-specific analysis rather than bright-line rules.

The trajectory of this jurisprudence points toward greater sophistication. Courts are developing a digital-native consumer standard that replaces the imperfect recollection test of the physical market with a more accurate picture of how internet users interact with search results and advertising. The intermediary liability framework is moving toward a spectrum model where the level of active participation determines the degree of liability rather than a binary active-passive distinction. The question of whether India needs a statutory Digital Markets Act or specific legislative framework for online trademark protection, as some jurisdictions are developing, will likely generate significant policy debate in the coming years. Until then, practitioners must build their digital brand protection strategies on the foundation that the cases examined in this article have provided.

References

Trade Marks Act, 1999 Sections 29 and 30 India Code https://www.indiacode.nic.in/handle/123456789/1993
Information Technology Act, 2000 Section 79 (Intermediary Liability) India Code https://www.indiacode.nic.in/handle/123456789/1999
Satyam Infoway Ltd. v. Siffynet Solutions Pvt. Ltd., AIR 2004 SC 3540 WIPO Lex https://www.wipo.int/wipolex/en/judgments/details/2955
Google LLC v. DRS Logistics (P) Ltd., 2023 SCC OnLine Del 4809 (Delhi High Court, Division Bench, August 10, 2023) SCC Online https://www.scconline.com/blog/post/2023/08/14/googles-use-of-trade-mark-as-keyword-for-display-of-advertisements-amounts-to-use-delhi-hc/
Christian Louboutin SAS v. Nakul Bajaj and Ors., CS(COMM) 344/2018 (Delhi High Court, November 2, 2018) Indian Kanoon https://indiankanoon.org/doc/99622088/
Nandhini Deluxe v. Karnataka Co-operative Milk Producers Federation Ltd., (2018) 9 SCC 183 WIPO Lex https://www.wipo.int/wipolex/en/judgments/details/2991
CGPDTM Manual of Trade Marks Practice and Procedure https://ipindia.gov.in/writereaddata/Portal/IPOGuide/1_41_1_Manual_of_TM_Practice_Procedure.pdf
WIPO Uniform Domain Name Dispute Resolution Policy (UDRP) https://www.wipo.int/amc/en/domains/rules/udrp.html
TRIPS Agreement Article 16 (Rights Conferred) WTO https://www.wto.org/english/docs_e/legal_e/27-trips_04d_e.htm
Delhi High Court Google LLC v. MakeMyTrip India Pvt. Ltd. December 2023 Lexology coverage https://www.lexology.com/library/detail.aspx?g=fca7367a-9bee-4b2a-a25e-16b12ee2c201

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