Not Everyone’s Cup of “Use” – The Changing Dynamics of “Trademark Use” and “Infringement” in Internet Advertising

Last month we had a detailed post by Aditya Gupta on the DHC Division Bench order in Google v. DRS, explaining the Court’s approach towards determining whether the use of a mark as a keyword will amount to trademark infringement or not. Taking the discussion on the order forward, we are pleased to bring to you a guest post by Nivrati Gupta on its probable impact. Nivrati is an IP lawyer based in Delhi and is a graduate of Institute of Law, Nirma University Ahmedabad. Views expressed here are those of the author’s alone.

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Not Everyone’s Cup of “Use” – The Changing Dynamics of “Trademark Use” and “Infringement” in Internet Advertising

Nivrati Gupta

“New technologies give us new opportunities, but they all raise the question: How do old, familiar laws apply?”

Justice Stephen Breyer

Not long after the precedential ruling of the Delhi High Court in Google LLC v. DRS Logistics (“DRS Case”) which seems to have settled the debated issue of Google’s liability in the ‘use’ of trademarks as keywords in their Adword Programme, its ratio saw quick applicability in the recent judgment of Policybazaar Insurance Vs Coverfox Insurance Broking (“Policybazaar Case”). The court, referring to the detailed observation on ‘use’ made in the DRS Case, dismissed Policybazaar’s plea to prevent other entities from using keywords identical to its trademarks on Google’s AdWords. The post discusses the evolving legal dynamics of trademark use and infringement in internet advertising, particularly in the Indian context, and to raise questions about its impact on trademark holders and businesses.

Findings of the Court in Google LLC v. DRS Logistics

The DB order clarifies that Google’s use of a mark as a keyword (which is an internet referencing service) prima facie cannot be regarded as “use” of the mark under Section 29(1) as it does not perform the function of identifying the source of the goods or service. However, the use of keywords to trigger the display of advertisements for commercial ventures was interpreted as ‘use’ of the trademark in advertising within the meaning of Section 29(6) of the Trademarks Act, 1999. (This nuanced understanding of the Court’s interpretation here has been explained by Aditya Gupta in his post here).  

On confusion, the court reasoned that the applicability of the standard ‘likelihood of confusion’ test, provided under Amritdhara Pharmacy v. Satyadeo Gupta, cannot be applied in the case of keywords as a person using an internet software tool or a device is aware of its rudimentary functions. Therefore, such prima facie use of a trademark as keyword, absent blurring, tarnishment or anything more, will not constitute infringement. As a quick background, the standard question of likelihood of confusion which rests on the Initial Interest Confusion test means material confusion at an initial stage is sufficient to establish infringement of the trademarks, even though an internet user may not be confused after visiting the site.  

No doubt the DRS judgment is likely to have a profound impact in landscaping the trademark infringement jurisprudence in India, but simultaneously it poses three concerns- (1) what is the alternate remedy/test to the now non-applicable “Initial Interest Confusion” test in trademark infringement disputes vis a vis internet advertising (2) confusion being the prima facie essential for establishing infringements, how will an absence of the Initial Interest Confusion test play out for future cases of claiming trademark infringement in keywords (3) legal justification for bidding on the trademark as a keyword regardless of the mark’s ownership. 

Broad vs. Narrow Interpretation of Use in Trademark Infringement

Globally,  the interpretation of ‘use’ to examine whether a mark has been infringed by the Google Adword or not seems to range from narrow to broad

The courts in Google, Inc. v. American Blind, GEICO v. Google and 800-JR Cigar v. have established Google’s liability using a broad interpretation of “trademark use”. They leaned towards finding liability for trademark infringement by interpreting “use” as – use by trading on the value of the trademarks, marketing the trademarks in any way and use such that it diverts potential customers away from the right holder’s products or services to those of its competitors. 

Some courts like in Rescuecom v. Google, 1-800 Contacts, Inc. v. and, Inc. v. decided in favour of a narrow interpretation of “trademark use” by arguing that there should be no liability until the “use” of the trademark identifies the products and services as being advertised by the defendants. Meaning, since Google doesn’t use other businesses’ trademarks to identify its own services, the Google AdWords Keyword Tool does not qualify as “use in commerce” under this interpretation of the law. 

Indian Interpretation To “Use” and Its Implications 

The DRS Case decision to not find infringement in the mere “use” of trademarks as keywords but to make it dependent on circumstances detrimental to the distinctive character or repute of the mark is based on the narrow, and in this author’s opinion, correct interpretation. The court’s reasoning behind “use” deserves approval for it is difficult to determine whether the internet user is led to a competitor’s advertisement because of the competitor’s own service or because of being misled by the Adword. In the Policybazaar Case, the court after applying the principle of source of origin (as laid in the DRS Case) denied the plaintiff’s plea by determining that the defendant’s sponsored link does not reflect any connection (source or indication of origin) with the plaintiffs. 

There are two issues with the court’s interpretation in the present case that could use clarification. While the court denied the application of Amritdhara’s test of “Initial Interest Confusion”  in the case of online infringement, it did not provide any other alternate test to establish the prima facie case of infringement vis-a-vis confusion while seeking injunctions in online advertising.  Second, it’s unclear how this new standard of “use of keywords not amounting to infringement” plays out in the context of the strict threshold of confusion in the case of pharmaceutical products. As discussed in the post above, in such cases, human memory has been given little regard, and even slight confusion may result in harmful health consequences. 

Impact of “Use” of Trademarks in Keywords on Market Dynamics 

Apart from the issues concerning trademark law, the impact of this interpretation can also be seen in competition law. The internet has had an undeniable impact on the trade and market and has resulted in an expansion of protecting trademarks in the real as well as the virtual world. However, it may be important to re-emphasise Google’s role in influencing the market share. 

For example, it is very likely that the mere “use” of the trademark as a keyword by Google Adwords for bidding will affect the per se rights of the trademark holder for the reason that bidding on the right holder’s mark by various competitions will drive up the bidding price of the keyword. Allowing advertisers to bid on and use trademarks in AdWords arguably creates unfair competition because firstly the trademark holder will now be paying extra every time to practice their legal right of exclusive “use” in the shadow of balancing competition and fair use and secondly creates unfair competition for smaller business holders who may struggle to compete effectively in this environment for their own right to use their trademark.  

In the DRS case, the bench acknowledged that “cases must be judged in the context of Indian laws, legal procedures and the practical realities of litigation, which exist in India ” and also the difference in attributes of an “average consumer in this country” and an international customer.  Though the court’s thoughtful reflection of the applicability of law in an Indian context took consideration of an “Indian internet user” there may be a separate set of considerations for an “Indian trader”. The Indian context also includes small and medium business owners who are standing in the other end of the coin as the “users” of Google Adwords. With the remarkable share of 33% in the GDP and 43.6% in the share of exports of Medium and Small Enterprises specified products it is important to attend to their role in enhancing the competitiveness of technology-based businesses in India. In the Indian context, small traders find it increasingly challenging to sustain rising bid prices. This dynamic between small and medium traders and big traders is delineating a unique legal landscape, necessitating traders, regardless of small or big, to make substantial investments in the protection of their trademarks when utilized as keywords.    

The protection of trademarks is strongly dependent on the nature of the marketplace.  In the physical marketplace, multiple identical/ similar trademarks can exist within several markets to operate in independent and non overlapping geographic areas for the sole reason that the consumers will not be confused about the source or origin of the goods and services. Such a co-existence is plausible in the physical marketplace as there are umpteen cues for the consumer to reconcile legitimate infringement claims, non trademark usages and differentiate trademark “owners” in various marketplaces. However, the case of the “use” of trademarks as keywords by Google is different – the user will see results of all goods and services bidding on the keyword searched for irrespective of any differentiation in classification and area of activity compiled in one page. The fact that two trademarks can co-exist if they are operating in different classifications or geographical areas fails here. Because here the consumer owing to the lack of contextual cues in the result page has no idea of the source and origin of the advertiser.

Dilution of Well-Known Trademarks in Internet Advertising 

This further nudges one to discuss the scope of  trademark dilution for well known marks  in internet advertising. The question of whether a well-known trademark is diluted is a separate question from whether the mark is infringed.  The court in Daimler Benz Aktiegesellschaft v. Hybo Hindustan) observed that the unauthorized use of “Benz”, a well-engineered luxury car and a globally recognised well-known mark will be diluted by users of the name “Benz” dealing with product like under-wears. Applying this to internet advertising, the stakes are much higher – firstly now a single page contains ads of well-known trademarks and other similar/ identical trademarks and secondly, the advertiser deliberately bid on the well-known trademarks to take the benefit of somebody else’s reputation for their own goods and services. For the above reasons, dilution theory calls for a more recognized and strict application in the realm of internet advertising to safeguard the integrity and distinctiveness of well-known trademarks, particularly in cases where advertisers deliberately bid on these trademarks to exploit somebody else’s reputation for their own goods and services. 

The impact of data intelligence that Google holds and works on has far more implications than one can imagine. It benefits by connecting with consumers precisely during a “micro-moment” when they are particularly open to receiving messages due to their immediate want for something. The fact that Google, “intensifies the probability of shaping behavior,” is concerning as it is intentionally created to bypass the natural defense mechanisms that most consumers unconsciously employ when exposed to conventional advertising/physical marketplace. Undoubtedly, the court has taken note of Google’s undeniable and unignorable impact on society while upholding its liability and denying it the benefit of “safe harbour” and by further noting that on a case-to-case basis the intermediary’s contributory liability may be permissible. But given the above reasons and questions posed, the current situation around Google’s liability for “use” of trademarks might make one feel as if we are in a continuous run out of quicksand, the only problem being you do not run in quicksand or it takes you in. 

The author would like to thank Swaraj and Praharsh for their valuable input.

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