Can Competitors Buy Trademarked Keywords in Indian Online Advertising

Introduction : Search engines allow advertisers to bid on words that trigger the display of sponsored results. This creates a commercially important question: may a company purchase its competitor’s trademark as a keyword so that its advertisement appears when users search for the competitor?

For example, a restaurant may bid on “McDonald’s” so that its advertisement appears when a user searches for McDonald’s restaurants. The advertiser may never display the word in the visible advertisement. It may use the trademark only as an invisible trigger within the advertising system.

Meta-tags operate similarly in a website’s code. They may contain words that are not visible on the webpage but influence search indexing and attract users searching for another brand. Both practices raise legal concerns because they use another party’s trademark to obtain attention, traffic or commercial advantage.

Indian law does not impose an automatic prohibition on every use of a competitor’s trademark as a keyword. The legality depends on how the mark is used, whether the advertisement causes confusion, whether it takes unfair advantage of reputation and whether the use falls within the statutory concept of use in advertising. The principal provisions arise under the Trade Marks Act 1999, while the Competition Act 2002 may apply where a dominant search or advertising platform engages in exclusionary or discriminatory conduct.

Trademark Use in Digital Advertising

Section 2(zb) of the Trade Marks Act, 1999 defines a trademark as a mark capable of distinguishing the goods or services of one person from those of others. Section 2(m) defines “mark” broadly to include names, words, brands, devices and other identifiers.

Section 29(1) provides that a registered trademark is infringed when a person uses a mark that is identical or deceptively similar to the registered mark in relation to identical or similar goods or services in a manner likely to cause confusion or association. 

Section 29(6) explains what constitutes use of a registered mark. It includes applying the mark to goods or packaging, offering or exposing goods for sale, importing or exporting goods, using the mark on business papers and using it in advertising. Section 2(2)(c) further provides that references to use of a mark include use in relation to services and advertising.

The key legal question is whether an invisible keyword or meta-tag amounts to use in advertising. If the mark is used to trigger a competing advertisement, it is being deployed within a commercial advertising system. The fact that the mark is not visible to the user may not be decisive if its commercial function is to divert or attract users searching for the trademark owner.

The DRS Logistics Decision

The leading Indian decision is Google LLC v. DRS Logistics (P) Ltd., DRS Logistics owned trademarks connected with its logistics and relocation services. The dispute concerned Google’s advertising system, in which DRS’s trademarks could be selected as keywords to trigger advertisements for competing services.

The Delhi High Court Division Bench held that the use of a registered trademark as a keyword in the Google Ads programme could amount to use under the Trade Marks Act. The Court relied on the statutory concepts of advertising and commercial use and treated the keyword as part of the mechanism through which competing advertisements were displayed.

The decision is significant because it rejects the argument that invisible use is automatically irrelevant. A keyword may be unseen by the consumer but still perform an advertising function. It selects the audience, determines when the advertisement appears and allows the advertiser or platform to monetise the association with the trademark.

The judgment does not mean that every keyword use is automatically infringement. The Court recognised that infringement depends on confusion, association, unfair advantage and the other statutory conditions. If the advertisement is clearly identified as belonging to a different business and does not create an impression of affiliation, the use may be defensible. However, where the keyword diverts users by exploiting the competitor’s brand identity, the risk of infringement increases.

The decision also examined Google’s position as an intermediary. The Court declined to treat Google as automatically protected by Section 79 of the Information Technology Act 2000 in relation to the sale and commercial use of trademarks as advertising keywords. The reasoning was that Google’s role in monetising and organising the advertising service went beyond merely transmitting third-party information.

Meta-Tags and Search Diversion

Meta-tags are embedded instructions or terms used by websites to describe content or influence search visibility. A company may insert a competitor’s trademark into its meta-tags so that its own webpage appears in search results when users search for the competitor.

Indian courts have generally treated deceptive use of trademarks as meta-tags as capable of infringement or passing off. The Delhi High Court has recognised that invisible use can still divert users and exploit the goodwill attached to another mark. 

The legal analysis focuses on function. If the meta-tag is used to attract users searching for a particular trademark and redirect them to a competing business, it may constitute commercial use of the mark. The absence of visual display does not eliminate the possibility of confusion because the user’s journey has been influenced by the hidden trademark.

The strength of the claim depends on factors such as:

• The distinctiveness of the trademark.

• The similarity between the parties’ goods or services.

• The purpose of inserting the mark.

• Whether the resulting webpage creates an association.

• Whether the use diverts customers or takes unfair advantage.

• Whether the mark is used descriptively or merely as a brand reference.

Confusion and the Consumer’s Experience

The central trademark concern is confusion. Courts must ask whether a reasonably informed internet user would believe that the sponsored advertisement is connected with, sponsored by or authorised by the trademark proprietor.

Confusion may occur in several forms. The user believes the competitor’s advertisement belongs to the trademark owner, assumes that the advertiser is an authorised reseller, believes that the two businesses are affiliated, the user is diverted before noticing that the advertisement comes from another company. The advertisement benefits from the reputation of the searched mark even without an explicit false statement.

The layout of the search page is relevant. Clear labelling of sponsored advertisements may reduce confusion, but it may not eliminate it where the advertisement copies the trademark, uses a similar display URL, reproduces distinctive branding or offers closely related services.

The court may also consider the sophistication and purchasing circumstances of consumers. A user seeking an expensive industrial service may conduct further checks, while a user clicking a mobile advertisement may make a rapid assumption. Temporary or initial confusion can still matter where it produces commercial diversion.

MakeMyTrip and Amway

In Google LLC v. MakeMyTrip (India) Pvt Ltd, the Delhi High Court considered keyword use in the travel-services context. The judgment reflects the continuing judicial debate over whether a trademark used only as an internal keyword is being used as a trademark. The Court’s reasoning must be read with the facts of the case and the question of whether the use creates confusion or functions merely as an internal trigger.

The case demonstrates that Indian law has not adopted a completely automatic rule that all bidding on a competitor’s mark is unlawful. The court must examine the advertisement, the keyword system, the relationship between the parties and the likely consumer response.

In Amway India Enterprises Pvt Ltd v. 1MG Technologies, the Delhi High Court considered the use of trademarks in online advertising and meta-tags. The Court treated the use of a trademark to divert users towards competing commercial offerings as potentially actionable. The decision reinforces the principle that invisible digital use may still have legal significance when it affects consumer traffic and commercial association.

Defences and Legitimate Uses

A competitor’s purchase of a trademarked keyword may be more defensible where the advertisement is clearly independent and does not create confusion. Comparative advertising may be lawful if it is honest, substantiated and does not mislead consumers or unfairly denigrate the competitor.

A reseller or distributor may also have a legitimate reason to refer to a trademark, particularly where it genuinely sells or services the trademark owner’s products. However, the use must remain within the scope of legitimate reference and must not falsely imply authorisation or affiliation.

Descriptive use is another possible defence. A word that is also a trademark may be used in its ordinary descriptive sense if the use is honest and consistent with fair commercial practice. The defence is weaker where the word is selected solely because of the competitor’s brand recognition.

Section 30 of the Trade Marks Act recognises certain limits on trademark rights, including use necessary to indicate the intended purpose of goods or services and honest descriptive use. These provisions cannot generally justify a deceptive advertisement designed to capture a competitor’s customers through false association.

Competition Law Implications

Keyword advertising also raises competition-law questions, particularly where the relevant conduct is undertaken by a dominant search engine or advertising platform.

Section 4 of the Competition Act 2002 prohibits abuse of a dominant position, including unfair or discriminatory conditions or prices, denial of market access and practices that restrict competition. A search platform may possess significant market power if advertisers and consumers cannot realistically reach comparable audiences elsewhere. 

The competition analysis is different from the trademark analysis. Trademark law asks whether a particular use confuses consumers or unfairly exploits a mark. Competition law asks whether the platform’s conduct harms competitive conditions in a relevant market.

Possible competition concerns include:

• Giving the platform’s own services preferential placement.

• Applying keyword restrictions selectively.

• Charging different advertisers discriminatory prices.

• Preventing trademark owners from protecting their brands while permitting competitors unrestricted access.

• Using search and advertising data to disadvantage competing platforms.

• Requiring advertisers to use the platform’s other services as a condition of access.

• Allowing brand bidding in a way that raises a rival’s customer-acquisition costs.

However, purchasing a competitor’s keyword by itself is not necessarily an abuse of dominance. It may reflect ordinary competition for consumer attention. The CCI would need to define the relevant market, establish dominance and prove that the conduct produces exclusionary or exploitative effects.

The platform’s internal rules are relevant but not conclusive. A policy permitting trademark bidding does not override the Trade Marks Act. Conversely, a trademark complaint should not automatically be treated as a competition-law violation.

Conclusion

Keyword advertising and meta-tags are not automatically unlawful in India, but they can constitute trademark use and infringement when they cause confusion, create an association or take unfair advantage of another party’s goodwill. Section/s 2(2)(c), 2(zb), 29 and 30 of the Trade Marks Act, 1999 provide the principal framework.

The decision in Google LLC v. DRS Logistics establishes that using a trademark as a keyword to trigger commercial advertisements may amount to use in advertising. Amway and related decisions show that invisible meta-tags can also be actionable where they divert users towards competing services. MakeMyTrip illustrates that the final outcome remains fact-sensitive rather than automatic.

Competition law adds a separate layer. The CCI may examine discriminatory or exclusionary conduct by a dominant search or advertising platform, but ordinary competitor bidding does not by itself establish abuse of dominance.

The decisive principle is whether the digital practice affects the trademark’s source-identifying function. A competitor may compete for consumer attention, but it cannot use hidden or visible trademark associations to create confusion or obtain an unfair commercial advantage.

Author: Amrita Pradhan in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

References

1. Trade Marks Act, 1999, Section 2(zb).

2. Trade Marks Act, 1999, Section 2(m).

3. Trade Marks Act, 1999, Section 29.

4. Trade Marks Act, 1999, Section 2(2)(c).

5. Google LLC v. DRS Logistics (P) Ltd., 2023 SCC OnLine Del 4809.

6. Information Technology Act, 2000, Section 79.

7. Amway India Enterprises Pvt Ltd v. 1MG Technologies Pvt Ltd 2022 SCC OnLine Del 1355.

8. Google LLC v. MakeMyTrip (India) Pvt Ltd 2023 SCC OnLine Del 6616.

9. Trade Marks Act, 1999, Section 30.

10. Competition Act 2002, Section 4.

11. Competition Act 2002, Section 19.

12. Christian Louboutin SAS v Nakul Bajaj, 2018 SCC OnLine Del 12215.