Google found liable for misleading and deceptive representations in AdWords sponsored links

Google found liable for misleading and deceptive representations in AdWords sponsored links

Google found liable for misleading and deceptive representations in AdWords sponsored links

ACCC v Google Inc [2012] FCAFC 49

The Full Federal Court has unanimously held that search giant Google engaged in ‘misleading and deceptive conduct’ in contravention of Australian consumer protection laws by publishing advertisements headlined with the name or trade mark of an advertiser’s competitor, in circumstances where users clicking on the advertisement were taken to the advertiser’s website which contained no information about the competitor.

The Full Court has held that consumers would think that Google (in addition to the advertiser) was in some way responsible for the misleading “sponsored link” advertisements appearing in the search result, not that Google was just a mere conduit for the information supplied by the advertiser. This was despite Google’s attempts to limit its liability in the terms and conditions for its AdWords advertising program.

As a result aggrieved brand owners now have recourse against an advertiser and in certain circumstances, directly against Google.

At first instance: Google was considered a “mere conduit” of the misrepresentations

The Full Federal Court was considering whether Google was liable for making misleading and deceptive representations contained in four sponsored links. Under section 52 of the Trade Practices Act 1974 (Cth) (now section 18 of the Australian Consumer Law) a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. It is also a contravention of s53 of the Trade Practices Act (now section 29 of the Australian Consumer Law) to make false or misleading representations regarding commercial association or affiliation.

An example of one of the sponsored links at issue, and which was returned in response to searches for “Harvey World Travel” or “Harvey Travel” is below:.

Harvey World Travel
www.statravel.com.au
Unbeatable deals on flights, Hotels & Pkg’s Search, Book & Pack Now!

When the users clicked on the URL or the headline they were taken to the STA Travel website (a competitor of Harvey World Travel) at which there was no information available regarding Harvey World Travel.

At first instance Justice Nicholas held that the advertisers responsible for the four sponsored links had each misrepresented that they had some commercial association or affiliation with the competitor whose trading name was featured in the headline of the sponsored link. However, he held that in each instance, the advertiser and not Google had made the misrepresentation contained in the sponsored link.

Although Google provided the technical facilities (including the keyword insertion facility whereby the competitor’s name was automatically inserted into the headline of the sponsored link) and Google staff had some involvement and input in creating the sponsored links, Justice Nicholas held that Google had merely communicated the advertisement and had not endorsed or adopted the information conveyed in the advertisement.

On appeal: was Google directly responsible for the misrepresentations?

However, on appeal the Full Federal Court unanimously held that Google had made the misrepresentations contained in four sponsored links and hence engaged in misleading and deceptive conduct. According to the Full Court:

87. No user of Google’s search engine presented by Google with a sponsored link in response to a search query would regard the sponsored link displayed by Google with a clickable link to the sponsor’s URL as conveying the message that the sponsored link is a statement by an advertiser which Google is merely passing on. What appears on Google’s webpage is Google’s response to the user’s query. That it happens to headline a keyword chosen by the advertiser does not make it any the less Google’s response. And even that occurs pursuant to the AdWords facility made available to the advertiser by Google. Google’s conduct cannot fairly be described as merely passing on the statements of the advertiser for what they are worth. In those circumstances, it is an error to conclude that Google has not engaged in the conduct of publishing the sponsored links because it has not adopted or endorsed the message conveyed by its response to the user’s query. (Emphasis added).

The specific conduct that was said to be misleading and deceptive was Google’s:

88…. display of the sponsored link in response to the entry of the user’s search term in collocation with the advertiser’s URL. The display of the sponsored link is effected by Google’s engine as Google’s response to a user’s search. That which is displayed by Google is called up by Google’s facility as Google’s response to the user’s search. The clickable link, when clicked, takes the user directly to the advertiser’s URL. (Emphasis added).

The Full Court concluded that “an ordinary and reasonable user would conclude from these circumstances that it was Google who was displaying the sponsored link in collocation with the sponsor’s URL in response to the user’s search. Even if all these circumstances would not be apparent to ordinary and reasonable users, so that Google could not be “seen” by them to be more than a mere conduit, these circumstances show that Google is, in fact, much more than a mere conduit” (emphasis added).

Thus Google (as well as the advertisers) was held directly liable for the misrepresentation made as to commercial association between the advertiser and the competitor whose name featured in the headline of the sponsored link. In each case the intermediary’s conduct, in this case that of Google, needs to be considered as a whole to determine if the intermediary is merely a conduit passing on information. The Full Federal Court’s decision does not disturb Justice Nicholas’ findings that the advertisers themselves were directly liable for the misrepresentations.

Google was ordered to implement a trade practices compliance program and ordered to pay the costs of trial in relation to the four sponsored links the subject of the appeal and the costs of the appeal.

Special leave to appeal to High Court

According to media reports, Google is seeking special leave to appeal to the High Court. Leave to the High Court is not automatically granted.

Google’s liability in Europe and the United States

The Full Court’s finding that Google is liable for the content of advertiser’s sponsored links in Australia is to be contrasted with the position in Europe and the United States where Google has not been held liable (under the trade mark laws in those jurisdictions).

Lessons for brand owners

As a result of the decision, brand owners now have the option of taking action against the sponsored link advertiser or directly against Google.