An Indian court has ruled that Google may be held responsible for selling a brand's name to competitors.

      The Delhi High Court ruled that allowing competitors to bid on the trademark ‘Hindware’ as an advertising keyword constitutes infringement, and that Google’s safe-harbour protection does not apply in this case.

      The search advertising industry operates on an implicit assumption that platforms can auction off any term, including another’s brand name, and that any legal issues will be the responsibility of the advertiser. The Delhi High Court has now challenged that assumption.

      In a ruling issued on May 22, Justice Mini Pushkarna stated that Google is liable for permitting competitors to bid on the trademark “Hindware” as an ad keyword. The court has permanently prohibited Google LLC and Google India from offering the trademark as a keyword and mandated that they pay Hindware Limited, an Indian sanitaryware company, ₹30 lakh (approximately $31,600) in damages. While the amount is nominal, the underlying reasoning is significant.

      This dispute is not new; Hindware filed a lawsuit after discovering that rivals, including fittings brands Cera and Grohe, had purchased “Hindware” and its close variants as keywords, causing searches for the brand to display sponsored links to competing products. Those advertisers reached settlements, leaving Google as the sole defendant and escalating this trademark dispute into a significant test of platform accountability.

      Google's defense was the usual argument: it merely reserves keywords, and the responsibility for trademark usage lies with the advertising bidder. The court, however, was not convinced. It determined that Google actively promoted trademarked terms via its Keyword Planner tool, conducted the auctions that set their prices, and generated revenue each time a user clicked on a sponsored link triggered by the keyword.

      Based on this, Justice Pushkarna concluded that using a trademark as a keyword constitutes use “in advertising,” even if the term itself doesn't appear in the advertisement.

      A crucial aspect of the ruling pertains to safe harbour protections. According to Section 79 of India’s IT Act, intermediaries are normally shielded from liability for user actions on their platforms. However, the court found that Google loses this protection when it algorithmically determines who gets visibility and profits from this decision, asserting that Google's policy of not investigating trademarked keywords amounted to a lack of due diligence. In this scenario, a platform that influences outcomes is considered no longer a neutral conduit.

      This interpretation is what gives the ruling its broad implications. Keyword bidding on a competitor’s brand is common practice in the advertising industry, and this judgment holds both the bidder and the platform liable in India. Legal professionals and brand owners have welcomed this ruling; its reasoning, if upheld, may not be limited to keywords alone and could be applied to various functionalities where an algorithm shapes user visibility, from ad targeting to content recommendations to search rankings.

      It remains a singular high-court ruling from one significant market, and Google retains the option to appeal, which would test the survival of the safe-harbour reasoning in a higher court.

      Nevertheless, the decision arrives as regulators globally scrutinize the economics of Google’s advertising business, from European Union antitrust investigations to France’s €150 million fine concerning its ad regulations. What India introduces is a different consideration: not whether Google’s ad market is equitable, but whether it can continue selling terms that it does not own.