Google Inc. v Australian Competition and Consumer Commission

• Jurisdiction: Australia Federal only
• Judge: French CJ,Crennan,Kiefel JJ,HAYNE J.
• Judgment Date: 06 February 2013
• Neutral Citation: [2013] HCA 1
• Docket Number: S175/2012
• Court: High Court
• Date: 06 February 2013

Google Inc

Appellant

and

Australian Competition and Consumer Commission

Respondent

[2013] HCA 1

French CJ, Hayne, Heydon, Crennan and Kiefel JJ

S175/2012

HIGH COURT OF AUSTRALIA

Google Inc v Australian Competition and Consumer Commission

Trade practices — Misleading or deceptive conduct — Search engine operator displayed ‘sponsored links’ on search results page — Sponsored links created by or at direction of advertisers — Sponsored links comprised advertising text which directed users to web sites of advertisers” choosing — Whether search engine operator engaged in misleading or deceptive conduct by publishing or displaying sponsored links which contained misleading representations made by advertisers — Whether search engine operator adopted or endorsed misleading representations.

Words and phrases — ‘adoption’, ‘endorsement’, ‘intermediary’, ‘misleading or deceptive conduct’, ‘misleading representation’.

Trade Practices Act 1974 (Cth), ss 52, 85(3) ..

Representation

A J L Bannon SC with C Dimitriadis for the appellant (instructed by Gilbert + Tobin)

S T White SC with K C Morgan for the respondent (instructed by Corrs Chambers Westgarth)

ORDER

• 1. Appeal allowed with costs.

• 2. Set aside the orders of the Full Court of the Federal Court of Australia made on 3 April 2012 and the orders of the Federal Court of Australia made on 4 May 2012 and, in their place, order that the appeal to the Full Court be dismissed with costs.

1 French CJ, Crennan and Kiefel JJ The appellant, Google Inc (‘Google’), operates the well-known internet search engine ‘Google’ (‘the Google search engine’) 1. The respondent, the Australian Competition and Consumer Commission (‘the ACCC’), claims that particular search results displayed by the Google search engine between 2005 and 2008 conveyed misleading and deceptive representations, and that, by publishing or displaying those search results, Google engaged in conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (‘the Act’) 2.

2 In July 2007, the ACCC initiated proceedings under Pt VI of the Act, seeking declarations and injunctive relief against Google and another party. At first instance in the Federal Court of Australia, the primary judge (Nicholas J) dismissed the ACCC's application to the extent that it related to Google on the basis that Google had not made the misleading and deceptive representations relied upon by the ACCC 3. The Full Court of the Federal Court (Keane CJ, Jacobson and Lander JJ) allowed the ACCC's appeal, and made declarations to the effect that Google had contravened s 5of the Act by publishing the search results 4. By special leave, Google now appeals to this Court. The ACCC has filed a notice of contention concerning an aspect of the evidence it contends is relevant to conclusions about Google's conduct.

3 As explained below, the search results which are the subject of these proceedings are ‘sponsored links’ — a form of advertisement created by, or at the direction of, advertisers willing to pay Google for advertising text which directs users to a web site of the advertiser's choosing. It is not now in contention that the sponsored links which are the subject of this appeal — referred to in these reasons as ‘the STA Travel advertisements’, ‘the Carsales advertisements’, ‘the Ausdog advertisement’ and ‘the Trading Post advertisement’ — conveyed misleading and deceptive representations. What the present appeal concerns is whether, in all the circumstances, Google (as distinct from the advertisers to whom the sponsored links belonged) engaged in misleading and deceptive conduct by publishing or displaying the sponsored links. In the reasons which

follow, it will be explained that Google did not contravene s 52 of the Act. Google did not author the sponsored links; it merely published or displayed, without adoption or endorsement, misleading representations made by advertisers.

Relevant principles

4 At all times relevant to these proceedings, s 52(1) of the Act, found in Div 1 of Pt V 5, provided that ‘[a] corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive’. The ACCC sought to establish that Google had contravened s 52 directly, and did not seek to rely on s 75B of the Act, which relevantly provided that a person who had ‘aided, abetted, counselled or procured the contravention’ of a provision of Pt V would be a person ‘involved in [the] contravention’ for the purpose of the enforcement and remedies provisions in Pt VI.

5 Google sought to rely on s 85(3) of the Act. Section 85 6, in Pt VI, was headed ‘Defences’, and sub-s (3) provided:

‘In a proceeding in relation to a contravention of a provision of Part V or VC committed by the publication of an advertisement, it is a defence if the defendant establishes that he or she is a person whose business it is to publish or arrange for the publication of advertisements and that he or she received the advertisement for publication in the ordinary course of business and did not know and had no reason to suspect that its publication would amount to a contravention of a provision of that Part.’

More will be said about s 85(3) later in these reasons.

6 A number of well-established propositions about s 52 may be stated briefly. First, the words ‘likely to mislead or deceive’ in s 52 make it clear that it is not necessary to demonstrate actual deception to establish a contravention of s 52 7. The ACCC did not call evidence to show that any user of the Google search engine was misled or deceived in any relevant respect 8.

7 Second, where an issue in s 52 proceedings is the effect of conduct on a class of persons such as consumers who may range from the gullible to the astute, the court must consider whether ‘the “ordinary” or “reasonable” members of that class’ would be misled or deceived 9. The primary judge applied that test.

8 Third, conduct causing confusion and wonderment is not necessarily co-extensive with misleading or deceptive conduct 10.

9 Fourth, s 52 is not confined to conduct which is intended to mislead or deceive. A corporation could contravene s 52 even though it acted reasonably and honestly 11. However, as Mason ACJ, Wilson, Deane and Dawson JJ observed in Yorke v Lucas12:

‘That does not … mean that a corporation which purports to do no more than pass on information supplied by another must nevertheless be engaging in misleading or deceptive conduct if the information turns out to be false. If the circumstances are such as to make it apparent that the corporation is not the source of the information and that it expressly or impliedly disclaims any belief in its truth or falsity, merely passing it on for what it is worth, we very much doubt that the corporation can properly be said to be itself engaging in conduct that is misleading or deceptive.’

10 In the courts below, there was some discussion of an early case, Universal Telecasters (Qld) Ltd v Guthrie13. Guthrie concerned the corporate proprietor of a television station which had been convicted on a charge under s 53(e) of the Act in connection with the broadcast of an advertisement, sourced from one of its customers, which contained a misleading statement concerning the price of certain motor vehicles. A majority of the Full Court of the Federal Court (Bowen CJ and Franki J; Nimmo J dissenting) found that the corporation had successfully established a defence under s 85(3) of the Act, and quashed the conviction. However, all members of the Full Court found that, by broadcasting the advertisement, the corporation had itself made the misleading statement — although, given the result, the opinions of Bowen CJ and Franki J on this issue were obiter dicta. On the question of whether an intermediary broadcasting a statement on behalf of another can be said to ‘make’ the statement for the purposes of s 53(e), Bowen CJ said 14:

‘where there are express words of adoption or exclusion, this may, perhaps, be a proper line to draw. If so, then logically it would seem difficult to distinguish the case where, by necessary implication the statement was made for or on behalf of another. These will be matters for decision when an appropriate case arises …

The fact that a statement is clearly an advertisement for a particular advertiser would not seem to constitute a sufficient basis in the circumstances to justify a holding that the statement was not made by the television station.

… Even if it be proper to distinguish statements, on the basis they are expressly or by necessary implication statements of the advertiser and not of the television station, the statement in this case is not seen to be such a statement.’

11 In Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd15, the Full Court of the Federal Court (Bowen CJ, Lockhart and Fitzgerald JJ) considered Guthrie in the context of an alleged contravention of s 52 of the Act arising from the publication of several newspaper articles. The members of the Full Court recognised that a newspaper's publication of material encompasses both the

making of representations and the passing on of the representations of others 16. Their Honours found that the publication of an inaccurate statement of another conveys an essentially different meaning from that conveyed by the original statement (unless the original statement is adopted by the publisher), and that mere publication of the statement will not necessarily amount to adoption by the publisher 17. This approach presaged the formulation of the principle established by this Court in Yorke v Lucas18. It also implicitly qualified the Full Court's apparent support in Guthrie for the proposition that the mere fact that a broadcaster is obviously not the source of a misleading advertisement may not be sufficient for the broadcaster...