Google Searches and the use of competitor’s names in headline descriptors
Authors: Tal Williams, Partner and Dwana Walsh, Solicitor
24 November 2011
Recent cases have highlighted concerns by the Australian Competition and Consumer Commission (ACCC) about consumers being mislead by the use of a competitor's name in Google search optimisation processes. It is an issue that has also been addressed internationally (Inter-Flora and E-Bay have been involved in similar cases in Europe) but what is the law in Australia at the moment?
Earlier this year the ACCC took action against Google and the Trading Post in the Federal Court (see Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd [2011] FCA 1086 (22 September 2011)). Proceedings were commenced alleging that Google Inc and the Trading Post had contravened s 52 of the Trade Practices Act 1974 (Cth) (TPA) (now s 18 of the Australian Consumer Law (ACL)), by engaging in misleading or deceptive conduct with respect to search results generated by the Google search engine.
The specific allegations made by the ACCC against Google and the advertisers were:
- The overall layout and appearance of the results page failed to sufficiently distinguish between organic search results (those ranked by Google according to relevance) and sponsored links (advertisements).
- That certain advertisers had used a competitors trading name, product name or website address in the headline which also served as a clickable link to the advertiser’s website.
Sponsored links not distinguished as “advertisements”
The ACCC alleged that Google had engaged in misleading or deceptive conduct because the layout and appearance of the Google results page had the ability to mislead the public into viewing the links at the top of the Google search results page as the most relevant instead of as being paid advertisements.
The court did not agree with the ACCC. In view of the context in which the links were placed on the results page and the fact that Google was a well known and widely used search engine, it was held that the purpose of the different links on Google's search results page was clear to users and that the positioning of the “sponsored links” on the page adequately differentiated those links as “advertisements”.
The use of competitors' names in the headlines
The second part of the ACCC's case was based on 11 distinct claims involving various advertisers and sponsored links, which featured the trading or product name of the advertiser’s competitor. It was alleged the advertisements were misleading or deceptive because the relevant headline provided a link to the advertiser’s webpage rather than to the webpage of the advertiser’s competitor as featured in the headline.
For example, one of the main advertisements considered by the Court was a Trading Post advertisement placed on Go
ogle using the adwords “Kloster Ford” and “Charlestown Toyota”. If a user clicked on the headline of the Kloster Ford advertisement he or she would not be taken to the Kloster Ford website, but to the Trading Post site. This was alleged by the ACCC to give rise to a number of representations, including the erroneous representation that the Trading Post was in some way associated or affiliated with Kloster Ford.
The Court agreed that the Trading Post advertisement and other similar advertisements were misleading or deceptive in that they misrepresented that:
- there was an association and/or affiliation between the advertiser (Trading Post) and the advertiser’s competitor (Kloster Ford);
- information regarding the competitor (including Kloster Ford’s “car sales”) could be found at the advertiser's Site.
But the Court did not believe that Google was responsible for the false representations made by the advertisements. It was held that Google did no more than represent that the advertisement was an advertisement, containing information which ordinary and reasonable members of the community would have understood was a message from the advertiser and not one that had been adopted by Google. In other words, the Court found that Google had merely communicated what the Trading Post and other relevant advertisers had represented without adopting or endorsing any of it.
The Court further considered whether the "advertiser's defence" pursuant to s 85(3) of the TPA (now s 251 of the ACL) would have been available to Google had the Court found that Google was responsible for the misleading representations. It was considered that Google would have been able to rely on the "advertiser's defence" regarding a number of the contravening advertisements. The Court applied a wide construction to the "advertiser's defence", stating that the narrow construction adopted by the ACCC would have unfairly caused publishers of advertisements on notice that their advertising system could be used to generate misleading advertisements to be liable where they did not have a system to detect and preclude publication of misleading advertisements.
Lesson
Publishers of internet-based advertisements are less likely to be held directly responsibility for misleading representations conveyed by an advertisement where the advertisement would clearly be perceived as such by ordinary members of the community. Relevant to this consideration is the context in which the advertisement appears and the tools used by the publisher of the ad to differentiate it as an advertisement.
Conversely, advertisers who advertise on the internet and search engines such as Google are likely to be in contravention of the ACL if they use competitor’s names in the headlines of their advertisement. As such, advertisers should be careful when advertising on search engines such as Google and ensure that they do not include the names and/or products of their competitors in the headlines of their advertisements.
At the moment, it should also be noted that the use of competitors names (or their trademarks) in metadata or keyword searches has not been the subject of judicial consideration. What the court has said (both here and overseas) is that your cannot mislead the public when advertising so in that regard care must be taken when considering optimisation techniques.
Please contact Tal Williams or Dwana Walsh with any questions.
Tal Williams
Partner
T: +61 2 9390 8331
E: tal.williams@holmanwebb.com.au
Dwana Walsh
Solicitor
T: +61 2 9390 8334
E: dwana.walsh@holmanwebb.com.au