The High Court (Australia's ultimate appellate court) today delivered judgment in proceedings commenced by the Australian Competition and Consumer Commission (ACCC) in relation to sponsored links within Google Inc's (Google) search engine results (see Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 (6 February 2013)). The High Court unanimously allowed Google's appeal and found that Google had not engaged in misleading or deceptive conduct contrary to section 52 of the Trade Practices Act 1974 (Cth) (TPA) (now section 18 of Schedule 2 to the Competition and Consumer Act 2010 (Cth)).

Background

Google's advertising service known as the 'AdWords program', displays sponsored links. In this case, advertisers paid Google for a sponsored link to their websites by selecting keywords comprising the names of competitors . By way of example, STA Travel had purchased the AdWord 'Harvey World Travel' that led to its website being displayed in response to a search using the words 'harvey world travel', namely:

'Harvey Travel
Unbeatable deals on flights, Hotel & Pkg's Search, Book & Pack Now! www.statravel.com.au'

The ACCC commenced proceedings against these advertisers and Google alleging contraventions of section 52 of the TPA.

At first instance, the Federal Court found the advertisers liable as they had falsely represented both an association or affiliation with a competitor and that information regarding a competitor could be found on their websites. However, the Court found that Google had not engaged in misleading or deceptive conduct as it had not adopted or endorsed the representations of its customers and did no more than represent that the advertisements were advertisements.

The ACCC successfully appealed to the Full Federal Court, which unanimously held that Google had engaged in misleading and deceptive conduct. The Full Court found that, given the nature of its search engine and AdWords program, Google was much more than a mere conduit, as its systems generated the sponsored links. In doing so, Google effectively informed users of its search engine that the content of the sponsored links were responsive to the user's keyword searches.

The High Court's decision

The High Court unanimously allowed Google's appeal, holding, in summary, that Google did not itself engage in misleading or deceptive conduct, as it had not endorsed or adopted the representations which it displayed on behalf of advertisers.

The High Court held that 'ordinary and reasonable' users of the Google search engine would have

understood that the representations conveyed by the sponsored links were those of the advertisers, and would not have concluded that Google adopted or endorsed the representations.

In particular, in relation to the issue of adoption or endorsement of the advertisers' representations, French CJ, Crennan and Kiefel JJ (the majority judgment) found (at [67] - [73]):

• Google had no control over a user's choice of search terms or an advertiser's choice of keywords;
• the advertiser was the author of the sponsored link, as each relevant aspect of a sponsored link was determined by the advertiser;
• the search engine response in displaying a sponsored link was wholly determined by the keywords and other content of the sponsored link, which the advertiser had chosen; and
• Google is not relevantly different from other intermediaries, such as newspaper publishers or broadcasters, who publish, display or broadcast the advertisements of others:

The fact that the provision of information via the internet will – because of the nature of the internet – necessarily involve a response to a request made by an internet user does not, without more, disturb the analogy between Google and other intermediaries. To the extent that it displays sponsored links, the Google search engine is only a means of communication between advertisers and consumers. (at [69])

This was notwithstanding the fact that Google personnel advised or assisted advertisers in the selection of keywords.

The High Court made reference to Google's policies and complaint procedures for the misuse of trade marks and business names as well as its Advertising Policies and AdWords Program Terms, which variously provided that:

• advertisers were solely responsible for all advertisements and keywords selected;
• advertising and keywords must 'directly relate' to the content on the advertiser's homepage;
• advertisers may not imply an affiliation, partnership or relationship with any unrelated third party.

Whilst the High Court's conclusion made it unnecessary to determine the application of the 'publisher's defence' in section 85(3) of the TPA, it considered the scope of the defence in the context of whether an intermediary publisher can be said to have made the misleading representations of another which it has communicated to a third party. The majority judgment observed that to succeed in this defence, an intermediary may need to show that it had some appropriate system in place (at [75]).

Implications

The High Court's exoneration of Google's conduct has broad significance. While directly relevant to search engine providers, it has implications for businesses whose operations revolve around the online publication of advertisements and content created by third parties (such as YouTube). It is another example of the High Court determining that internet intermediaries are not liable for the unlawful conduct of those who use their services. Whilst the High Court's judgment is a positive outcome for internet intermediaries, each case will turn on its facts and care still needs to be taken in relation to policies and complaints systems for dealing with unlawful conduct.

Further, advertisers should pay careful attention to the Court's findings in this case. The High Court's decision in no way exonerates the conduct of the advertisers themselves and reinforces the position that advertisers will be liable for misleading and deceptive conduct if they purchase AdWords containing another person's trade mark and link those AdWords to a sponsored link.