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September 23, 2011

ACCC misleading conduct action against Google dismissed

In Australian Competition and Consumer Commission v Trading Post Australia Pty Ltd [2011] FCA 1086 in which Google Inc was the Second Respondent the Federal Court has published its decision in respect of proceedings originally instituted in 2007 against Google (background). The ACCC alleged misleading and deceptive conduct in relation to sponsored links that appeared on the Google website.

One of the claims made by ACCC related to the use of "Kloster Ford": the business names "Kloster Ford" and "Charlestown Toyota" appeared in the title of Google sponsored links to Trading Post’s website. Kloster Ford and Charlestown Toyota are Newcastle car dealerships who competed against Trading Post in automotive sales. In other words, the ACCC said that Trading Post bought those names for use to link to its site when certain automotive sales searches were performed on Google even though Trading Post had no association with those names.

The ACCC had previously settled its action against Trading Post and declarations were made about its misleading conduct. The decision therefore mostly related to Google.

The ACCC alleged that the appearance of organic search results and sponsored links was essentially the same and therefore misleading. It also complained about misleading keywords in the headlines of particular advertisements.

After considering Google's technical evidence and trade marks policy Justice Nicholas dismissed the claims against Google.

He concluded:

"I do not accept that ordinary and reasonable members of the class would be likely to be lead to believe that either top left or right side sponsored links were not advertisements or that they were no different to organic search results. This conclusion applies not only to the Kloster Ford advertisement and the Charlestown Toyota advertisement but also to top left sponsored links and right side sponsored links generally..."

"Once it is accepted that the ordinary and reasonable members of the class would have understood, as was the fact, that the Kloster Ford advertisement and the Charlestown Toyota advertisement were advertisements, then it seems to me to follow that they would be most unlikely to have understood that any information conveyed by those advertisements was endorsed or adopted by Google. They would have understood that the message conveyed was a message from the advertiser which Google was passing on for what it was worth."

UPDATE 14 October 2011: The ACCC has appealed the decision
UPDATE 10 April 2012: ACCC's appeal successful.
UPDATE 12 February 2013: Google's High Court appeal succeeds

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Posted 23rd September 2011 by admin in Legal, Web/Tech