Background
Facts
Decision
Comment


Background

On February 6 2013, in Google Inc v Australian Competition and Consumer Commission, the High Court upheld the appeal of Google Inc against the Federal Court ruling that the company had breached Section 52 of the Trade Practices Act 1974 (Cth) in relation to representations contained in advertisements placed by customers of its AdWords programme.(1) The programme determines whether the Google search engine displays 'sponsored links', and the order and position in which such links appear.

In a unanimous decision, the High Court found that Google was not responsible for any misleading and deceptive representations contained in the advertisements placed by customers of its AdWords programme. The decision is important, both for publishers (particularly online platform providers that allow third parties to produce content on their sites) and for businesses that advertise generally.

Facts

Google's AdWords programme operates in conjunction with the company's popular search engine of the same name. When a user enters a search term into the Google search engine, two kinds of results are returned and displayed - 'organic results' and 'sponsored links'. Organic results are links produced by Google when a search term is run through the complex algorithm underlying Google's software, designed to select the most relevant web pages from the Internet at large. Sponsored links are advertisements paid for by customers of the AdWords programme. Customers can create, modify and monitor the performance of sponsored links via the AdWords programme.

Participation in the AdWords programme is subject to Google's terms of service, the AdWords programme terms and applicable Google policies. Google's terms of service relevantly provide that:

"8.5 You agree that you are solely responsible for (and that Google has no responsibility to you or to any third party for) any Content that you create, transmit or display while using the Services and for the consequences of your actions (including any loss or damage which Google may suffer) by doing so

9.6 Unless you have been expressly authorized to do so in writing by Google, you agree that in using the Services, you will not use any trade mark, service mark, trade name, logo of any company or organization in a way that is likely or intended to cause confusion about the owner or authorized user of such marks, names or logos."

The AdWords programme terms relevantly provide that:

"2. The Program. Customer is solely responsible for all: (a) ad targeting options and keywords (collectively 'Targets') and all ad content, ad information, and ad URLs ('Creative'), whether generated by or for Customer; and (b) web sites, services and landing pages which Creative links or directs viewers to, and advertised services and products (collectively 'Services').

5. ('Use'). Customer represents and warrants that (y) all Customer information is complete, correct and current; and (z) any Use hereunder and Customer's Creative, Targets and Customer's Services will not violate or encourage violation of any applicable laws, regulations, code of conduct, or third party rights (including, without limitation, intellectual property rights)."

Google's advertising policies include a statement that an advertiser's "ads and keywords must directly relate to the content on the landing page for [the advertiser's] ad", and that "[p]roducts or services promoted in [the advertiser's] ad must be reflected on [the advertiser's] landing page". Additionally, the policies include an article entitled "Deceptive use of business names", which warns advertisers that they "may not imply an affiliation, partnership or any special relationship with any unrelated third party".

The AdWords programme enables customers to decide which search terms entered by a user of the search engine (ie, the 'search query') will result in the customer's advertisements being eligible for display. An AdWords customer selling international flights, for example, could decide that its advertisements would be displayed when a user searched for the term 'flight' or 'holiday', or even a more oblique term such as 'getaway'. Relevantly, the AdWords customer could also decide to trigger its advertisements when the search query contained the name or actual website of its competitors.

In one of the examples relevant to this case, a search for the term 'Harvey World Travel' produced advertisements for STA Travel, a competitor of Harvey World Travel. This was not by chance - STA Travel had chosen 'Harvey World' as a trigger for its advertisement. Google's technology informed AdWords customers of the most successful search queries relevant to their business.

In the initial Federal Court trial, the Australian Competition and Consumer Commission claimed that the sponsored links in question were misleading and deceptive, because it would not be sufficiently clear to the ordinary user that they were advertisements. This claim was rejected by the initial trial judge and not pursued by the commission in its appeal to the Full Federal Court.

However, on appeal, the Full Federal Court agreed with the commission's claim that Google had breached the Trade Practices Act by providing the medium through which misleading and deceptive advertisements were communicated to the public.

The issue on appeal was whether Google was liable for misleading and deceptive representations contained in advertisements of AdWords customers.

Decision

In a joint judgment, Justices French, Crennan and Kiefel (Justices Hayne and Heydon wrote separate judgments) emphasised the automatic nature of both Google's search engine and the AdWords programme itself:

"The automated response which the Google search engine makes to a user's search request by displaying a sponsored link is wholly determined by the keywords and other content of the sponsored link which the advertiser has chosen. Google does not create, in any authorial sense, the sponsored links that it publishes or displays".

Accordingly, the majority (supported by Heydon) found that by providing a service for advertisers to reach the public at large, Google was ultimately no different from other "intermediaries, such as newspaper publishers…or broadcasters". Heydon went further, rejecting the idea that in this context there was any relevant distinction between "advertising in online media and advertising in traditional media".

The majority, supported by Heydon, looked beyond the fact that Google provided the means through its AdWords programme to facilitate the misleading and deceptive conduct of its customers. The court was not convinced that this facilitation alone meant that Google had breached the Trade Practices Act. Google displayed the advertisements, but it was not the 'maker' of the information in the advertisements: "Google has no control over a user's choice of search terms or an advertiser's choice of keywords… even with the facility of keyword insertion, the advertiser is the author of the sponsored link."

Heydon largely supported the majority's view, stating that the question was whether the relevant section of the public would perceive that Google, as the 'carrier' or 'conduit' of a particular representation, could be said to have adopted that representation:

"Here, there is no basis on which it could be concluded that ordinary and reasonable members of the relevant class would have regarded Google as adopting the advertisements. Neither the trial judge nor the Full Court reached that conclusion."

Comment

Impact for publishers
At a high level, this case raises similar issues to other recent technology-related cases in which the company providing the technology or product (or acting as the intermediary between users) seeks to avoid any liability for the content it carries or publishes - for example, the iiNet case, in which the High Court decided that an internet service provider was not liable for the copyright infringements of its users.(2)

The High Court has clearly determined that Google is in a similar position to a television network or newspaper, and is therefore not liable for the content of advertisements placed by its advertising customers unless it can be proven that Google is more actively involved in the creation of the content. The fact that it provided the technology to assist advertisers create advertisements or to display the advertisements was not sufficient to turn Google from an intermediary to an actor. However, it is likely that Google would not have escaped liability had the evidence established that Google was more actively involved in creating the content of the sponsored links.

As such, the decision highlights the need for publishers to exercise caution when determining their level of involvement in the content of advertisements. If a publisher is found to have authored the content (or even just made a contribution towards it), the publisher will be liable for any misleading representations or unlawful conduct in those advertisements, along with its advertising customers. Liability will be established on the particular circumstances of each case, as well as evidence as to the level of a publisher's involvement in making the relevant representation.

The High Court's reasoning does not necessarily assist Google in relation to the non-advertising parts of Google's system, such as the organic search results or the Google auto-complete function. Google's liability in Australia for the content of organic search results is likely to be the subject of further judicial review (as is the liability of other web search engines).

Impact on businesses
The Google decision clarifies who is the 'author' or 'maker' of representations in advertisements for the purpose of determining liability.

Advertisers, rather than publishers, will be held responsible for misleading or deceptive representations contained in advertisements, unless it can be established that the publisher was also responsible for the creation of its content. As such, businesses must be vigilant in ensuring that any advertisements that they create - regardless of where they appear (including in print or online) and which product they use in creating the advertisements - do not contain representations that are misleading or deceptive, or are likely to mislead or deceive consumers.

For further information on this topic please contact Moira Saville, John Swinson, Mandi Jacobson or Anthony McKew at King & Wood Mallesons by telephone (+61 2 9296 2000), fax (+61 2 9296 3999) or email (moira.saville@au.kwm.com, john.swinson@au.kwm.com, mandi.jacobson@au.kwm.com or anthony.mckew@au.kwm.com).

Endnotes

(1) Google Inc v Australian Competition and Consumer Commission [2013] HCA 1 (February 6 2013). Section 52 of the act provides that a corporation "shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive". On January 1 2011 the act was renamed the Competition and Consumer Act 2010 (Cth). The Consumer Law is contained in the latter act. Section 18(1) of the law provides that "a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive".

(2) Roadshow Films Pty Ltd v iiNet Ltd [2012] HCA 16.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.