The Australian Competition & Consumer Commission (ACCC) has recently taken action in the Federal Court against Google and its Australian subsidiary Google Australia in relation to Sponsored Links (“AdWords”) displayed by Google on its search result pages (Australian Competition and Consumer Commission v Trading Post Australia Pty Limited  FCA 1086.)
Whilst the Trading Post was the first respondent to the proceedings, the matter was settled with this party.
The ACCC’s action was based on the Trade Practices Act 1974 (Cth) (now the Australian Consumer Law). The ACCC did not contend that Google’s acts were intended to be misleading, deceptive or confusing, however the relevant sections are strict liability and no intention needs to be shown.
The ACCC contended that Google’s behaviour amounted to misleading and deceptive conduct because:
> Google’s reputation was that the most relevant pages located by the search engine are listed at the top;
> the search result pages did not adequately distinguish between paid advertisements (Sponsored Links) and the results of the “organic” search created by the algorithms applied by the Google search engine;
> the use of keywords in the headlines corresponding to trading names, product names or website addresses belonging to competitors of the actual advertisers was misleading and deceptive.
In particular, the ACCC was concerned with use of the keywords “Kloster Ford” and “Charlestown Toyota” in Sponsored Links arranged by the Trading Post through Google’s AdWords. Kloster Ford and Charlestown Toyota were business names owned by competitors of the Trading Post.
Google responded that:
> the advertisements were clearly identified as “Sponsored Links” and the overall layout of the search results did not lead to deception or confusion;
> the ACCC had not shown that the use of the competitor’s names as keywords was likely to mislead or deceive;
> even if there was a misleading or deceptive representation, it was the advertiser, who made the representation
> Google asserted that it had a defence under s.85(3) as a person whose business is to publish or arrange for publication of advertisements and who had received the advertisement in the ordinary course of business and did not know or have a reason to suspect that publication of the advertisement would breach the Trade Practices Act.
Nicholas J found that:
> The use of the keywords “Kloster Ford” constituted misleading and deceptive conduct by the Trading Post, as it
suggested an association and affiliation between Kloster Ford and the Trading Post, which was not the case at that time;
> The use of the keywords “Charlestown Toyota” by the Trading Post also suggested an association and affiliation between the business run under the name Charlestown Toyota and the Trading Post, but the Court found that the evidence did not show that such an association did not exist;
> The shaded background behind the Sponsored Links appearing at the top of the search results with the words “Sponsored Links” appearing on the shaded background would not lead ordinary and reasonable users of the Google search engine to believe the Sponsored Links were not advertisements or were no different to the organic search results. Accordingly Google’s actions were not found to be misleading or deceptive conduct;
> Ordinary and reasonable users would be unlikely to view advertisements appearing on the search result pages as being endorsed or adopted by Google, so Google was not liable for the misrepresentation found in relation to the
“Kloster Ford” keywords.
Since the evidence in this case was filed, Google appears to have changed the reference to “Sponsored Links” to read “Ads”, presumably to address ACCC criticism that the term “Sponsored Links” did not make it clear who was sponsoring whom.
The ACCC has appealed the decision.