Social media, search engines and other online tools can provide organisations with a quick and easy means to increase brand recognition, but the benefits come with some inherent challenges. Recent decisions highlight some of the key risks in adopting these tools in an evolving regulatory environment. Megan Comerford and Nesha Jeyalingam discuss.

The High Court decision – Google AdWords

In February 2013, the Australian High Court delivered a decision following a six-year legal battle involving Google and the Australian Competition and Consumer Commission (ACCC).  

The ACCC brought a claim against Google alleging that, by publishing and displaying particular search results as sponsored links as part of its ‘AdWords program’ advertising service, Google had engaged in misleading and deceptive conduct. As an example, STA Travel had purchased the words ‘Harvey World Travel’ as AdWords. This led to STA Travel’s website being displayed as a sponsored link when a person conducted a search on Google using the keywords ‘harvey world travel’.

When the case reached the High Court, it was accepted that use of a competitor’s trade marks in sponsored links could amount to misleading and deceptive conduct. However, the issue for the High Court to determine was whether Google, by selling and hosting the sponsored links in the first place, had engaged in misleading and deceptive conduct.

The High Court held that Google had not engaged in misleading and deceptive conduct. Google had merely displayed the links that were created by advertisers and was not the ‘maker, author, creator or originator of the information’. The High Court affirmed the trial judge’s reasoning that ‘ordinary and reasonable users … would have understood that sponsored links were created by advertisers… [and] that representations made … were those of the advertisers, and … not adopted or endorsed by Google’.

Following this decision, Google announced it has revised its AdWords trade mark policy in a number of countries, including Australia. From 23 April 2013, Google no longer responds to trade mark complaints by monitoring or restricting keywords for advertisements, and owners must now take action directly with the party infringing upon their rights.

The Advertising Standards Bureau decision – Victoria Bitter  

In 2012, the owners of Victoria Bitter (VB) came under scrutiny after a number of complaints in relation to its Facebook page were lodged with the Advertising Standards Bureau (ASB). The complaints concerned the user-generated content on the VB Facebook page, such as comments and other posts which were sexist, racist, discriminatory and encouraging of irresponsible consumption of alcohol.  

The key issue for the ASB was whether VB, as the administrator of a commercial Facebook page, was responsible for ensuring that user-generated content complies with the relevant Advertiser Code of Ethics (Code).  

Despite VB’s claim that Facebook was merely a networking tool facilitating communication between company and customer, the ASB determined that a company’s Facebook page is a marketing tool, and therefore content on the page is to be considered advertising.  

Further, the ASB held that Facebook allows the advertiser a reasonable degree of control of its Facebook page and the advertiser has a level of responsibility to monitor the site: ‘Social media is an advertising platform that requires monitoring to ensure that offensive material is removed within a reasonable timeframe and that content … should, like all other advertisement and marketing communication, be assessed with the Code in mind’.  

On this basis, the ASB held that the Code does extend to user-generated content on an advertiser’s Facebook page, and that the user-generated content on VB’s Facebook page had breached the Code.  

Following the ASB decision, the ACCC indicated its expectation for “big corporate players with lots of resources” to monitor their social media brand platforms daily, and quickly remove infringing user-generated content. Large companies who knowingly allow infringing content to remain run the risk of being held accountable. ACCC commissioner, Sarah Court, told the media that if an organisation becomes aware of potentially infringing content uploaded to its page by a third party – the organisation cannot allow the user-generated content to remain on its page and then disclaim any fault or responsibility for that content.  

Australian Securities Exchange (ASX) amended guidelines:  

In May 2013, the ASX amended Guidance Note 8, which largely relates to continuous disclosure obligations for listed entities. The amendment directly referred to the use of social media by “strongly encourag[ing]” an entity that has a pending market sensitive announcement or is close to finalising a market sensitive transaction to keep an eye on “any investor blogs, chat-sites or other social media it is aware of that regularly include postings about the entity … for signs that the information in the announcement may have leaked”.  

Lessons for advertisers, intermediaries and trade mark owners  

The High Court and ASB decisions serve as a reminder that the law surrounding online marketing is constantly evolving - companies need to identify and consider any applicable laws and regulations in order to fully utilise online advertising services and social media. Those who fail to do so risk reputational damage and incurring significant costs in the event of claims and legal proceedings.  

Set out below are some key lessons for advertisers, intermediaries and trade mark owners arising from these recent decisions.

  • Advertisers have a responsibility not to mislead or deceive under Australian law:

Advertisers will be held liable if they engage in misleading and deceptive conduct by using AdWords containing another organisation’s trade marks and linking these to their own sponsored links.  

  • Use of a third-party online service does not shift your organisation’s responsibility for lawful advertising to that thirdparty:  

Internet intermediaries will generally not be held liable for the unlawful conduct of organisations that utilise their platforms and services.  

  • Read the terms and conditions:  

Your organisation should consider whether its liability for use of an online advertising tool is potentially broadened under applicable terms and conditions imposed by the technology intermediary in relation to use of that tool.  

As an example, the Facebook Terms of Use require organisations to indemnify Facebook for all losses and expenses of any kind related to a claim against Facebook in relation to the organisation’s ‘actions, content or information on Facebook’. This indemnity could require the organisation to cover any costs incurred by Facebook as a result of infringing user-generated content posted on the organisation’s Facebook page.  

The Google Advertising Program Terms also require organisations that advertise with Google to “defend, indemnify and hold harmless Google” and its partners and affiliates from any liability resulting from the organisation’s use of the relevant Google advertising service or breach of the Terms. In the event that an organisation, for example, misleads or deceives through its use of the advertising service, and a claim in relation to that conduct is initially brought by the ACCC against Google, the organisation may be required to cover all Google’s costs resulting from responding to that claim.

  • Assess your organisation’s ability to monitor social media:  

If companies have social media pages as part of their promotional activity, they should monitor them on at least a daily basis and remove usergenerated content that could breach a law, an advertising code or similar.  

  • Protection for trade mark owners is limited - owners may need to take action directly:  

The High Court decision does not address anti-competitive concerns of trade mark owners, such as the lack of protection that is afforded to owners seeking to prevent other companies from exploiting their marks in order to advertise online.