In a blow to the ACCC after its eight year battle against internet search giant Google, the High Court held that Google did not engage in misleading and deceptive conduct by publishing third party advertisements, even when those advertisements contained misleading representations.
The proceedings related to Google's use of "sponsored search links" - a form of advertisement that appears prominently on the Google search result page when a user conducts a 'Google search'. For example, Google was targeted for publishing a sponsored link by the Trading Post which contained as keywords the name of a competitor ("just 4 x 4s magazine") in order to direct internet traffic (and customers) away from that competitor.
The ACCC alleged that Google, in addition to the advertisers to whom the sponsored links belonged, had engaged in misleading and deceptive conduct by publishing the sponsored links. The High Court disagreed, noting that "Google did not author the sponsored links; it merely published or displayed, without adoption or endorsement, misleading representations made by advertisers". As such there was no contravention of section 52 of the Trade Practices Act 1974 (now section 18 of the Competition and Consumer Act 2010) which prohibits misleading or deceptive conduct by corporations.
The effect of the decision is that providers of online content are unlikely to be held liable for publishing misleading advertisements on their websites. This comes on the back of the iiNet decision in April 2012 in which the High Court ruled that internet service provider iiNet could not be held responsible for the actions of consumers who used iiNet's server to download copyright material illegally. Taken together, the Google and iiNet cases show that owners of valuable intellectual property rights and goodwill are unlikely to stop third parties infringing those rights by commencing proceedings against online service providers who act as a mere conduit.
The decision serves as a salient reminder for owners of valuable intellectual property rights to be vigilant in protecting their assets, and to ensure that trade marks or business names are not being used by a competitor as part of paid search keywords, such as those used in sponsored search links.
The decision also makes clear that Google (and likely any other online provider) is not responsible for monitoring the appropriate use of trade marks or business names. It recognises that Google is in any event unlikely to have the capability to check that a particular advertiser is authorised to use particular keywords, logos or other intellectual property.
In summary, companies advertising online should:
Companies providing an online publishing service should:
Since the case began in 2005, Google's functionality has advanced significantly; the internet has become the most significant medium for advertising; the explosion in popularity of social media - including blogs, Facebook and Twitter - means that millions of Australian consumers are themselves now providers of online content, and widespread use of smartphones has forever changed the ways in which companies engage with consumers.
Because of these developments, the judgment relates specifically to Google's operations in 'the online world' of 2005, which is markedly different to the complex mesh of advertising, publishing and technology faced by Google and other online providers in 2013.
What the decision does clarify is that for online providers, mere publication is not necessarily enough to attract liability. A majority of the High Court stated that at least in certain circumstances, some element of adoption or endorsement is required and there was no basis for this finding in relation to Google's publication of the misleading sponsored links. The ACCC did not plead that Google was 'knowingly concerned' in the misleading and deceptive conduct and apparently did not produce sufficient evidence to support its contention that the AdWords program (including the actions of Google's marketing staff) was sufficiently responsible for the misleading advertisements.
For ACCC Chairman Rod Sims, the action was an important step to clarify the law relating to advertising practices in the internet age. Indeed, the decision clarifies the law as it stood eight years ago for print media, and demonstrates that - for now - online providers will be treated in the same way.