Google vs. Hindware: trademark bidding and the cost of defending your brand

Trademark bidding in Italy and the EU: when is it unlawful?

In Italy and the European Union, the purchase of another party’s trademark as a keyword in Google Ads is not, in itself, unlawful. A business may therefore appear among sponsored results even when the user searches for a competitor’s name.

The problem arises when the ad creates confusion as to the origin of the products or services, leading the user to believe that they are dealing with the trademark owner, an affiliated company, or an authorized party. This is the principle that emerges from Italian case law (see, for example, the “Hotel Armonia” case, discussed here: Is It Lawful to Use a Competitor’s Name on Google Ads? The Answer from the Court of Ancona).

Protection is based on Article 20 of the Italian Industrial Property Code (Codice della Proprietà Industriale, CPI)—the domestic counterpart to Article 9 of Regulation (EU) 2017/1001 for the European Union trademark and Article 10 of Directive (EU) 2015/2436 for harmonized national trademarks—which protects the owner of a registered trademark against the unauthorized use of identical or similar signs in the course of trade. However, not every use of another party’s trademark amounts to infringement. For trademark bidding to become unlawful, the use of the keyword must impair one of the trademark’s protected functions.

In particular, a competitor’s conduct may be sanctioned when:

• the displayed ad does not allow the normally informed and reasonably attentive user to understand whether the products or services come from the trademark owner or from a third party (impairment of the function of indicating origin);
• in the case of well-known trademarks, the advertiser takes unfair advantage of the distinctive character or reputation of the trademark (free-riding), or harms its distinctiveness (dilution) or its reputation (corrosion or tarnishment)—see the Interflora / Marks & Spencer case, CJEU, First Chamber, September 22, 2011, C-323/09;
• the use of the keyword substantially hinders the owner’s ability to acquire or preserve a reputation capable of attracting and retaining consumers (impairment of the investment function).

Article 2598 of the Italian Civil Code on unfair competition may also apply. Here too, however, the purchase of keywords is not enough: it is necessary to determine whether the ad is actually capable of creating confusion in the average consumer or of causing an improper association with the competitor’s reputation (for more on unfair association: Unfair Competition: When It Occurs and How to Defend Yourself).

The prevailing view in Italy and the EU, therefore, does not treat the mere purchase of another party’s trademark as a keyword as unlawful. The assessment focuses instead on the effects of the ad and on the likelihood of confusion generated among users.

It is precisely on this point that the Delhi High Court’s decision departs from the European approach, placing greater emphasis on the role played by the advertising platform.

Is Google liable if it sells a trademark as a keyword?

In Hindware, the Delhi High Court examines the concrete role Google played in the AdWords system. The Court did not merely treat Google as a simple technical provider of advertising space; it gave weight to the way the platform monetizes keywords, optimizes ads, and manages the auction system used to allocate them.

From this perspective, the HINDWARE trademark was not merely “hooked” by a third-party advertiser, but was inserted into a commercial mechanism governed and monetized by the platform.

This is a stricter approach than the European one.

Starting with the Google France v. Louis Vuitton case (CJEU, Grand Chamber, March 23, 2010, joined cases C-236/08, C-237/08, and C-238/08), the Court of Justice of the European Union, later also followed by Italian courts, has excluded, as a matter of principle, Google’s direct liability, holding that the operator of the advertising service, as a mere provider of a referencing service, does not itself use another party’s trademark.

The same Court, however, clarified the limits of the liability exemption for providers under Article 14 of Directive 2000/31/EC (now incorporated into Article 6 of Regulation (EU) 2022/2065—the Digital Services Act). To benefit from this protection, the provider’s role must remain neutral “in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data it stores.”

The picture changes, however, when the platform assumes a more active role, one that gives it knowledge or control over the data and ads, or if, once informed of the unlawfulness, it fails to act with due promptness.

When that happens, additional remedies may also be pursued against the provider.

What should you do if a competitor uses your trademark on Google Ads?

Before taking action, you need to determine whether the competitor’s ad crosses the line of lawful competition. In general, the mere appearance of another party’s sponsored ad when someone searches for your trademark is not enough to establish a violation. The decisive issue is whether the average user may be led to believe that there is a commercial, authorization, or corporate connection between the competitor and the owner of the sign.

The review must therefore cover not only the keyword used, but also the visible ad, the landing page, and the way the trademark is referenced throughout the advertising path.

The evidentiary record is decisive: ads change quickly and may no longer be visible by the time the case is heard. For this reason, in more sensitive cases it is advisable to use a notarial record or a timestamped forensic IT report (including through an online service such as TrueScreen), before sending any challenge.

Before sending a cease-and-desist letter, it is advisable to:

• document the full SERP, indicating the query entered, date, time, device, browser, ad position, and destination URL;
• check whether the trademark appears in the ad title, in the description, in the visible URL, or only as a non-visible keyword;
• also capture the competitor’s landing page.

Once the evidentiary record has been established, you can proceed with reporting the conduct to the platform with the assistance of counsel and, if necessary, also take action against the competitor.