In May 2012, we reported that the Full Court of the Federal Court of Australia had found Google had engaged in misleading or deceptive conduct when it displayed a number of advertisements in sponsored links as part of its AdWords program. The decision related to particular instances of use of competitor names as keywords by a number of advertisers, overturning part of the first instance decision in that case. The High Court has now unanimously allowed Google's appeal against the Full Federal Court decision, finding that Google did not make the representations and had not engaged in the misleading or deceptive conduct and was therefore not liable.
The Australian Competition and Consumer Commission (ACCC) had brought proceedings against the Trading Post (an online trading platform for the sale and purchase of consumer goods and services) and Google, alleging that the use of competitors' business names in advertisements or "sponsored links" appearing on Google's search engine results pages breached the Trade Practices Act 1974 (Cth) (TPA) (now the ACL).
The ACCC alleged that the advertiser, the Trading Post, had contravened sections 52 (prohibiting misleading or deceptive conduct) and 53(d) (prohibiting false representations of approval or affiliation) of the TPA when selection of particular keywords, being the names of other businesses triggered its advertisements using the Adwords system. The Trading Post had chosen these keywords through its use of the Google AdWords service. The Trading Post settled the proceedings with the ACCC.
The ACCC also alleged that Google had directly contravened the TPA by failing to distinguish sponsored links from organic search results and by causing the sponsored links of a number of advertisers to be published on its website. The ACCC failed on both counts at first instance, with the primary judge finding that, while the advertisements were misleading or deceptive, the sponsored links were sufficiently distinguished from organic search results and Google had not itself "made" or authored the misleading representations of the advertisers by publishing and displaying sponsored links, but was acting as a mere conduit for the advertisements.
The ACCC appealed only the second aspect relating to the finding that Google was a mere conduit.
Full Federal Court: ACCC v Google
The Full Federal Court disagreed with the primary judge, holding that Google was more than a mere conduit. By displaying the sponsored link in search results, the Full Federal Court considered that Google was informing the user that the sponsored link was being provided as an answer to the user's query; in other words, Google was effectively creating the message, not simply passing it on. The Court noted that Google's algorithms determined whether a search result would be sufficiently relevant to be displayed in response to a user's query, and that Google's involvement in the process distinguished Google's conduct from that of more traditional publishers of billboards and newspapers.
High Court: Google v ACCC
The High Court viewed the scenario differently. The High Court took the view that the advertiser remained the author of the sponsored link, despite the advertiser's use of Google technologies and services, such as the AdWords service. The High Court acknowledged that the display of the organic search results and sponsored links was provided by Google in response to a user's query. It considered that the Google technology simply assembled information provided by others in order to publish or display advertisements to users of the Google search engine. In this way Google was no different from newspaper publishers, broadcasters or other intermediaries displaying third party advertisements.
The Court agreed with the primary judge's view that ordinary and reasonable users of the search engine would understand the sponsored links to be advertisers' statements that Google was simply passing on without adoption or endorsement.
The ACCC had also argued that the High Court should have regard to the role of Google employees in assisting some of the relevant advertisers select the keywords used for the advertisements. Although there was evidence of correspondence between Google employees and a number of the advertisers to this effect, the High Court did not consider that the involvement of Google employees in those instances was sufficient to affect its finding that it was the advertisers, and not Google, which created the content of the sponsored links.
Implications for business
This decision reminds advertisers to take care when referring to another business in their advertising so that consumers are not misled or deceived into believing that there is an association between the advertiser and the other business when there is not. In the case of keyword advertising in an online environment, businesses who use a competitor's name are likely to be engaging in misleading or deceptive conduct.
To avoid misleading or deceptive conduct on their part intermediaries such as internet publishers, content aggregators and search engines should ensure that advertising is clearly differentiated from content in their services, that the advertising is not presented in a way which appears to be adopted or endorsed by the intermediary and that advertisers have ultimate control over the content of the advertising, including the keywords. Intermediaries and their employees may play some role in selection of content but care must be taken to ensure that the level of involvement does not elevate the role to the "author" of the content.
It should be noted that intermediaries such as internet publishers, content aggregators and search engines found to have made the representations may also rely on the "publication of advertisements" defence (formerly section 85(3) of the TPA; now section 251 of the ACL), provided they did not know and had no reason to suspect that the publication would amount to a contravention of the relevant provisions of the ACL.
Businesses should check that their compliance programs cover the issues raised in this case and that staff involved in advertising, or liaison with advertisers, understand their responsibilities to avoid contravening the ACL.