Castle Constructions Pty Limited v Sahab Holdings Pty Ltd & Anor [2012] HCATrans 223

[2012] HCATrans 224

[2012] HCATrans 224

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S175 of 2012

B e t w e e n -

GOOGLE INC

Appellant

and

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

Respondent

FRENCH CJ
HAYNE J
HEYDON J
CRENNAN J
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 11 SEPTEMBER 2012, AT 10.16 AM

Copyright in the High Court of Australia

MR A.J.L. BANNON, SC:   May it please the Court, I appear for the appellant with my learned friend, MR C. DIMITRIADIS.  (instructed by Gilbert + Tobin)

MR S.T. WHITE, SC:   May it please the Court, I appear with my learned friend, MS K.C. MORGAN, for the respondent.(instructed by Corrs Chambers Westgarth)

FRENCH CJ:   Yes, Mr Bannon.

MR BANNON:   Your Honours, the effect of the Full Court’s decision is to render Google liable for misleading representations conveyed by advertisements published by it, notwithstanding that it made clear when it published those advertisements that they were advertisements of, and created by, third parties and paid for by third parties to promote their products and notwithstanding it did not adopt or endorse the representations conveyed by those advertisements.

HAYNE J:   That proposition rather encompasses several assumptions, does it not?  A proposition assumes the answer to a number of questions.

MR BANNON:   It may do, your Honour, but it may make assumptions in relation to the Full Court reasoning process.  It may make assumptions in relation to the state of the law in terms of responsibility for third party publications.  The particular orders which are the subject, ultimately, of the appeal are the orders of the Full Court which can be found in volume 3 of the appeal book at page 1093.  These are the declarations, it may be inferred, designed to identify the conduct constituting the contravening conduct and it involves in paragraph 2 a declaration in accordance with paragraphs 2i to iv of the notice of appeal and that accurately reflects what the ACCC sought on appeal:

i.that Google Inc. by publishing, or causing to be published, on results pages on [certain dates], results which were advertisements for STA Travel’s business and website with [those headlines] . . . represented, contrary to the fact, that:

a.there was an association between STA Travel and Harvey World Travel businesses;

b.there was an affiliation between STA Travel and Harvey World Travel businesses;

c.information regarding the Harvey World Travel businesses could be found at STA Travel’s website -

and something similar in (d) –

and thereby engaged in conduct that was misleading or deceptive or likely to mislead or deceive –

So that the conduct identified in the declaration was the publication firstly.  Secondly, the nature of the representations alleged to have been made necessarily involves an appreciation by the recipient of the representation of two separate entities, namely, STA Travel and Harvey World Travel, and in particular in the one case an association and, secondly, in relation to information. 

The nature of the representations are important as per certain of the statements in Butcher in this Court in working out whether or not someone might perceive that the conveyer of the information is also the maker of such representations.  To similar effect, the declarations in relation to each of the other matters – there is a slight difference in ii in relation to the Honda.com.au website, where the only representation was:

that by clicking on the headline to the advertisement users of the website would be taken to the Honda Australia website and thereby engaged in conduct –

but otherwise the ingredients of publishing and the use of the words “thereby engaged in conduct” appear, again, similarly in iii in relation to the so‑called “Alpha Dog” advertisement, and iv in relation to the “Just 4x4” advertisement.

Could I take your Honours to, just to demonstrate the issues, the particular advertisements which were in evidence, firstly, in volume 2 of the appeal book commencing at page 794.  That is the first of the – in terms of presentation in a book of the relevant advertisements.  On 794 one sees what is a Google web page.  The particular advertisement which is impugned and found to be contravening appears in the yellow shaded section, the second entry.  So, it is “Just 4x4s Magazine” and underneath it, and the words which appear to the right of that “New & Used 4WD Cars”.

HEYDON J:   What is misleading about that?

MR BANNON:   The trial judge found, and we did not contest and certainly do not contest here, that it conveys an association between Just 4x4s Magazine and the Trading Post organisation, firstly, and secondly, that information about Just 4x4s Magazine could be found at Trading Post.  We did contend at trial and we do not contend now - obviously we did contend at trial that Just 4x4s Magazine is such a descriptive term that it could not convey in a passing‑off sense an association with a particular entity. 

We failed in that, but that exercise and that endeavour, perhaps, demonstrates there is a real difficulty in attributing responsibility to a publisher for every time something which is said to be a business name appears in a headline because it involves an assumption or perhaps perfect knowledge about (a) what is a business name, (b) whether or not it is not so descriptive as not to amount to distinguishing a particular entity and other issues which necessarily arise.

CRENNAN J:   Mr Bannon, just to check whether I understand the respondent’s case, and looking at page 794, the Just 4x4s Magazine that the searcher puts in is called the keywords in the case?

MR BANNON:   That is the search query.

CRENNAN J:   Search query.

MR BANNON:   Yes.  That appears, as your Honour points out, in the search box at the top of the page.

CRENNAN J:   Yes.  Then “Just 4x4s Magazine” is in the yellow box.  That is the headline, is it?

MR BANNON:   Yes.

CRENNAN J:   Then the URL of course is the addresses and then the “New & Used 4WD Cars” to the end of the text there is the advertising text.  Then in sponsored links, as distinct from organic links, the advertiser chooses the headline.  Is that right?

MR BANNON:   Yes.

CRENNAN J:   There seem to be two options for choosing the headline.  One is to specify the text for the headline, and that is not this case?

MR BANNON:   Each of these impugned advertisements involves the use of what is called “keyword insertion”.

CRENNAN J:   Keyword insertion.  I was going to say the second option is what I understand to be called “dynamic keyword insertion”.

MR BANNON:   Yes.

CRENNAN J:   The dynamic keyword insertion really turns on the advertiser saying, “Well, that is the option I want for the headline” and then when the advertiser has chosen that option the technology physically allows the keywords or the searching query “Just 4x4 magazines” to then become the headline as shown in this yellow box?

MR BANNON:   Yes.

CRENNAN J:   It is that, as I understand it - I want to be disabused of this if I am wrong - that has led the respondents to argue that Google creates the ads and therefore is, if you like, a principal in relation to misleading and deceptive conduct as distinct from a conduit.

MR BANNON:   As we would understand it, yes.  Can I say a bit more about the elements which your Honour has referred to?  The expression “keyword” refers to a word, and it can include a phrase, which the advertiser, taking advantage of the AdWord program service provider by Google, can select as a trigger word which, if it matches the word entered by a user in the search box will trigger an advertisement which the advertiser says should appear on the occasion of the searcher using such a term. 

HAYNE J:   But it does not require any particular content for that advertisement?  It is simply the fact of triggering display of the advertisement.  Is that right?

MR BANNON:   The advertiser must specify the whole of the content of the advertisement which will be triggered in response to that particular search word and the content to be specified by the advertiser - the three elements of headline:  its URL, which it specifies and its advertising text, which it specifies.  So what the evidence shows and is the fact that advertisers by their own devices or the use of independent agencies or, in some instances, with the assistance of a Google service will specify sometimes hundreds of keywords.  The system allows them in relation to every keyword to say “If that keyword is triggered, this is the ad I want to throw up” and can specify the headline, which is described as a fixed headline and the ad text and the URL which will appear.

CRENNAN J:   Does 706 contain an example of what I think you were just describing, the selection of multiple keywords?

MR BANNON:   Yes, it does.  So that one option for an advertiser would be to say for every one of our keywords here is the full text of the ad which we want to appear in relation to each one of those keywords.  It may be the same text of an ad or it may be a different text of an ad.  Keyword insertion is a tool offered by Google which is simply a labour‑saving device which says rather than write out – if you have 1,000 keywords – 1,000 texts of ads which say – if the keyword, for example, looking at something on this page, “holiday short breaks” is entered by a search, “We want”, says the advertiser, “an advertisement to appear which will have a headline ‘Holiday Short Breaks’” – “tradingpost.com.au”, “New & Used cars” - I have got the wrong association; that is a travel one obviously, but your Honours get the picture.

So all keyword insertion does is save the advertiser writing out 100 times or 1,000 times the full content of the ad.  That is why the trial judge found that it is the advertiser, notwithstanding the use of the keyword tool, or the offering of it, is the creator of the text of each and every ad which appears and it is the creator in the sense that it specifies what the content will be of the headline, the ad text and the URL.

FRENCH CJ:   Going to paragraph 88 in the Full Court decision at 1075, putting to one side the alleged characterisation of the conduct as “misleading or deceptive”, do you accept that as an accurate description of Google’s conduct?

MR BANNON:   At paragraph 88?

FRENCH CJ:   Yes.

MR BANNON:   No, because it is not clear what that paragraph means.  The second sentence:

Google’s conduct consists relevantly of the display of the sponsored link –

Pausing there - it is undoubtedly the case that Google displayed the sponsored link or published the sponsored link - in either case that was never in issue; we admitted it.  The next words:

in response to the entry of the user’s search term in collocation with the advertiser’s URL -

have two difficulties.  The first is that the sponsored link consists of three elements, one of which is the advertiser’s URL, a matter which the Full Court themselves recognised in an earlier part of the judgment.  So that that sentence, with respect to the Full Court, does not make sense insofar as the first part of it says “The display of the sponsored link” which includes the URL, and then it says in response to the search “in collocation with the advertiser’s URL.”  It is a repetition.

So that is the first difficulty with that sentence.  The second difficulty is if the words “in response to” mean anything more than a search query is entered and then Google, in response to that search query – because it does everything in response to a search query – publishes certain advertisements, then there is no particular difficulty with it.  If captured within the expression “response”, there is some undisclosed process of reasoning and in particular some undisclosed representation, for example, that Google represents that the ads it publishes are relevant to the search query or that Google has a reputation for publishing only relevant ads, we do object to that as a characterisation of the case brought against us.

HAYNE J:   But that focuses on what Google intended, does it not?  Is not the question what the viewer would take from the screen?

MR BANNON:   Yes.  On the question of what the viewer would take from the screen there is no finding and no allegation at trial that Google had a reputation for presenting only relevant advertisements or advertisements which were relevant in a particular sense. 

HAYNE J:   But why do you insert notions of Google’s reputation in that proposition?  What is the significance you are attaching to that notion in that composite proposition?

MR BANNON:   The significance is that no case was run to say that a user of a system which saw that advertisement would understand that Google was saying something to the user about the relevance of that advertisement to their search query.  There is a particular reason for that which involves an understanding of the primary case run by the ACCC below.

The ACCC below had two parts of the case, the second part of which was not run in the Full Court.  The first part of the case involved the proposition that Google had failed to distinguish advertisements from what are described as “search results” or “generic search results”.  The gravamen of that allegation was twofold:  one, that Google had a reputation for ranking and displaying organic search results, or search results, in order of relevance.  That was point one of the case.

The second part of that case was to say Google had insufficiently distinguished between sponsored links and organic search results to cause consumers to be led to believe that the sponsored links, which appear at top or the right of the page, were the product of Google’s relevance ranking search results.  In other words, the gravamen of the complaint was “You, Google, do not rank your advertisements according to relevance.  You have a reputation for ranking your organic search results by reference to relevance and if you do not sufficiently distinguish between the organic result and the advertisement people are going to think that the advertisements are ranked according to relevance”.

It would have been antithetical to that case sought to be run by the ACCC to assert that users understood that advertisements were ranked in accordance with relevance.  The very problem they put forward was, according to the ACCC, that because they had a perception that organic results were ranked according to relevance, they would think advertisements were so ranked, the unstated proposition being that if they knew they were advertisements they would immediately realise they were there for paid reasons and the consumer would not fall into that trap.

CRENNAN J:   I think this gets back, at least in part, to what the primary judge said at paragraph 188 which is to be found at 964 because the Full Court took, it seems, quite a different approach. 

MR BANNON:   Yes.

CRENNAN J:   This is your point about what was understood by ordinary and reasonable members of the class in relation to advertisements.

MR BANNON:   Exactly.

CRENNAN J:   As distinct from organic search results.

MR BANNON:   Yes.  Can I make good the point about the pleading and the way the case was run on this and truly what has happened in the Full Court and can happen when a party no longer pursues a part of a case, there is a certain opportunism which is sought to be derived from material which was not led and hence not investigated for the reason on which it was led and what we respectfully submit, to the extent one understands the Full Court’s reasoning as saying that users understood that advertisements had a sort of relevance and that is the key to the Google’s conduct, that is not supported by any finding, not supported by an case and contrary to the fact.  To the pleading point firstly, if one looks at the pleading in volume 1 at page 23, paragraph 4(e) alleged that Google published:

advertisements that are generated by its online auction‑based advertising programme –

Notice the reference to “auction‑based”.  Then, over the page, paragraph 6(b), Google:

carried on, and continues to carry on, business in Australia, inter alia, assisting and advising advertisers in Australia:

(i)as to the content of advertisements to be placed on Google Inc.’s websites;

(ii)in the placement of their advertisements on such sites; and

(iii)as to the operation of the Adwords Program –

Then 25, paragraph 10:

When a person carries out a search . . . the results are displayed on a results page in a format which:

(a)includes search results –

That is the terminology that is sometimes referred to as organic search results –

(i)generated by the hardware and software . . . the “Google Search Tool” –

listed in a particular way –

(b)may also include advertisements produced by the Adwords Program:

(i)which appear on a results page only where an advertiser has selected key words that correspond, either exactly or substantially, to the words chosen by the person conducting the search –

 . . . 

(iv)whose position and order on the results page is determined in part by the price per click that the advertiser has agreed to pay.

Then over at page 27, paragraph 14:

At all material times, Google Inc. in maintaining and operating its websites including and purported to rank search results –

Again, I emphasise that is the organic search results.  Then over the page –

(b)has controlled the appearance of the results pages whose format cannot be modified by its advertising customers;

(c)has published advertisements in the same or similar format as search results; and

(d)has determined the position of advertisements on a results page proximate to the search results.

Paragraph 15, and this is the only pleading of any reputation:

At all material times, Google Inc. has had, and continues to have, a reputation in Australia for providing a search tool on its websites that ranks search results –

That is organic results –

by reference to their relevance –

Where the results page of a Google Inc. website displays advertisements . . . Google Inc. engages in misleading or deceptive conduct or conduct that is likely to mislead or deceive:

(a)by failing adequately to distinguish between search results and advertisements; and/or

(b)by failing to identify advertisements as such.

Then the particulars for that on top of page 29 include at (v) at the top of the page:

the overall impressions created by –

the foregoing –

and any combination thereof, are that the results listed:

(A)are search results generated by the Google Search Tool and are displayed in decreasing order of relevant; and/or

(B)     are not advertisements –

A similar allegation is made about halfway down the page, (viii), and then over the page on page 30, (x).  Perhaps I will just complete some of the pleading issues now while I am at it.  Then in dealing with particular advertisements the first one is the Trading Post advertisements, relevantly Kloster Ford at page 31.  Paragraph 22:

Trading Post advertised its business . . . in the format set out –

in the “Kloster Ford Advertisement”.  At 24:

By publishing the Kloster Ford Advertisement, Google Inc. and Trading Post made each of the following representations –

Then there are various associations alleged.  Again they are allegations of publications.  Then over the page at page 32, paragraph 25:

In addition to making the Kloster Ford Representations, Google Inc., by publishing the Kloster Ford Advertisement also made each of the following representations:

(a)the Kloster Ford Advertisement was a search result;

(b)the position . . . on the results page was the result of its relative relevance (as determined by the Google Search Tool) . . . and

(c)the Kloster Ford Advertisement was not an advertisement. 

They failed in each of those allegations across the board.  Then a similar process goes in relation to the other advertisements, the particular ones by way of example and I can avoid the repetition at page 36 in relation to the “Just 4x4s Magazine Representations”, paragraph 42, “Google Inc. published an advertisement” which is the one we have just been looking at, that is the Just 4x4.  Then at paragraph 44 over on page 37:

By publishing the Just 4x4s Magazine Advertisement, Google Inc. made each of the following representations –

There are various associations but in particular at paragraph (g) in paragraph 44 that the advertisement “was a search result”.  Then over the page it failed on that, and (h):

the position . . . on the results page was the result of its relative relevance –

They failed in relation to that, and (i):

the Just 4x4s Magazine Advertisement was not an advertisement –

They never alleged, never pleaded and there is no finding that anyone understood or would have understood that the appearance of an advertisement, once they understood it was an advertisement, had some connotation of relevance or that Google had so represented it.  That is why we take objection.  If the Full Court’s reasons are to be interpreted so, then it sits outside a case run or pleaded. 

Not only that, it raises extremely difficult issues because let it be assumed, as was the case in Butcher - in Butcher, the particular brochure was handed out by the employee, I think it was Mr Spring, to the prospective purchaser who came to the estate agent saying, in effect, “I am looking for a property around the northern beaches”.  It was Mr Spring who offered various suggestions in response to that inquiry and ultimately provided the suggestion of the particular property and at that occasion handed the brochure.  If your Honours are looking at Butcher then that appears from paragraph ‑ ‑ ‑

FRENCH CJ: (2004) 218 CLR 592.

MR BANNON:   Yes, in paragraph 6 on page 596.  So the fact that an advertisement – and of course Butcher was a more difficult case for the agent to avoid, in one sense, because it was a brochure prepared by the advertising agency to sell a property which it was the agent for selling.  We are one step removed from that, but the fact that the agent provided the brochure in response to a request because the agent thought it might be relevant to the prospective purchaser’s area of interest did not of itself make the agent responsible for everything in that brochure.

The ramifications for the Full Court’s approach are not limited to online advertising but would extend to any travel agent, for example, who, in response to an inquiry from somebody who wanders in saying, “I want to travel somewhere” and says, “Europe, is it - you might like these brochures” and hands out a string of brochures because they perceive it might be relevant to their area of interest - and because it is the travel agency’s response that makes them responsible for the content of everything in those advertisements.  That is an untenable outcome, we respectfully submit.

Equally, the test of whether something is relevant, if the Full Court is referring to that, what is the relevance they are referring to?  What one will see in that page, 594, which we started on, that not only is the – sorry, page 794, not only is the imputed advertisement there, immediately above it is another advertisement, “JustCar Insurance”.  No complaint by the ACCC about that advertisement.  On the right‑hand column there is another series of advertisements, “4x4 Magazine”, “carsales.com”.  That is an entity which has nothing to do with the publishers of 4x4 Magazine.  The next one, again, nothing to do with 4x4 Magazine.

What those advertisements show, and anybody who used Google on a regular basis and had some experience of the Google ads, a factual issue not investigated because it was not in issue, is that they would have appreciated that if they entered a search query they would get a whole range of advertisements.  The relationship to the particular search query might be open to question.  But one can understand at least this relationship, for example, that if someone enters a search query in relation to “4x4s” or “4x4s Magazine”, that other competitive advertisers might think that such a person has an interest generally in 4x4 magazines or magazines generally.

It is the same principle which informs why it is that in certain streets in this country and around the world that there is a whole series of antique stores which are next to each other.  It is the same theory which informs why in Westfield‑type shopping centres there are a whole series of shops selling the same types of goods because the market is attuned to this proposition, that if (a) you are interested in brand A that might mean you are interested in product A, and guess what, we have a competitive product next door in which you might be interested as well.

So to conclude, for example, that somebody who might type in, for example, “Harvey World Travel” - to conclude from that that an advertisement by STA Travel would be irrelevant to that person’s interests is not something which is open on the facts.  It was not investigated, but it is not rationally correct anyway because you cannot know why it is that that person typed in “Harvey World Travel”. 

If they typed in “Harvey World Travel” because they wanted the address of Harvey World Travel and nothing more, then perhaps it is true they are not interested in an STA Travel service, but on the not wild or crazy assumption they typed it in because they were interested in a good deal on travel services they may well be interested to know (a) that there are other travel organisations and (b) that there are other travel organisations offering good fares.  That, of course, does not mean that it is acceptable to represent an association between Harvey World Travel ‑ ‑ ‑

KIEFEL J:   Well, that is the point.  The primary judge did find that some of the advertisements were misleading in certain respects in that regard.  But his Honour went on to find that it was most unlikely that the average reader would have understood Google to be endorsing it and that Google did no more than represent them at ads, and that is at paragraph 191 of his Honour’s reasons.  The Full Court, however, and I am just wondering whether this is – there are a number of aspects to the Full Court’s approach, but whether this is something of a key, at paragraph 89.  It starts by observing that:

An ordinary and reasonable user would conclude . . . it was Google who was displaying the sponsored link -

That is not the same thing as saying “made the representation”, but then their Honours go on to say that that is not enough.  There is a question in all of this as to what in fact Google did.  Is there a tension in the Full Court’s judgment between what the reader understands Google to be saying to it, as the maker, and what the Full Court found that Google in fact did, either overtly or behind the scenes?  Their Honours seem to be more concerned with the processes that Google was involved in, rather than what the reader would understand Google to be saying to them.

MR BANNON:   In that paragraph – one of the difficulties with the Full Court judgment, there are several themes, I think, as your Honour Justice Kiefel has pointed out.  They are not always consistent and they do not necessarily follow logically from one to the other, but the opening sentence ‑ ‑ ‑

KIEFEL J:   It seems to be a matter of some importance that they referred to Justice Gummow’s judgment in the Channel Seven Case – I will come back to the citation – that the reaction of an ordinary and reasonable reader is not solely determinative of the issue, the issue I assume to be the making of a representation.

MR BANNON:   Yes.  The first sentence of that paragraph is:

An ordinary and reasonable user would conclude from these circumstances that it was Google who was displaying the sponsored link in collocation with the sponsor’s URL in response to the user’s search.

Again, we have a difficulty with language.  Google was publishing or displaying the sponsored link, it cannot be doubted, and that Google published it after the person typed in the search result cannot be doubted either because that was the fact.  But to add, the words “in collocation with the sponsor’s URL” are superfluous words because the URL is part of the advertisement.  When they go on to say – I accept what your Honour says, that they refer to “is and is seen to be”, but one has to then address what is the further material which follows from that.  Paragraph 90, the first sentence seems to say no more than Google published the advertisement, the first sentence.

KIEFEL J:   That is the point.  Their Honours seem to be concerned with what Google did, that is it responded to an inquiry it displayed - talking about the facts of what Google did, whereas the point the primary judge made was that the ordinary reasonable reader would not understand Google to be making – is it the question of the reader’s perception or is a question of what Google is doing by these steps?

MR BANNON:   Well, we say that if one looks at the legislation, section 52, and now section 18 focus on conduct.  The only conduct alleged throughout the pleading, no matter what else is alleged, is the making of specific representations.  Butcher recognised that section 52 is not so confined.  Butcher also recognised in that particular case because the only case made was the making of representations, the case was so confined.  So that when one asks who is the person making representations of a commercial association or that information can be found, the answer, we submit, is totally provided by looking at the ad unless you come to the conclusion that it was Google who created the advertisement and we have concurrent findings of fact that they did not.

If Google says “In response to your query we publish these advertisements which we tell you are third party advertisements, we tell you the advertiser” and the findings of fact which are not challenged is the user appreciates that they are third party advertisements paid for by advertisers, then what more does Google have to do to make it clear that Google is not making any representation contained in the ad itself.

FRENCH CJ:   What do you say to what appears at page 1077 in paragraph 94, identified as:

what is critical to the process is the triggering of the link by Google using its algorithms.

MR BANNON:   Firstly, to the extent that paragraph is referring to the process of the ad appearing in a combination of a headline text and URL, that is a mechanical exercise which is wholly directed by the advertiser.  To the extent it is referring to another part of the judgment, which is referred to at paragraph 100, which picks up evidence which was led in relation to an algorithm which results in an auction process and there their Honours pick up what appears in paragraph 54 of his Honour’s judgment, for example, and 55 and 56 ‑ ‑ ‑

FRENCH CJ:   Paragraph 55 throws up that Google’s algorithm offers the broad match option to the advertiser, which enables the kind of link that we have seen in these advertisements.

MR BANNON:   None of the impugned advertisements were the product of broad match ‑ ‑ ‑

FRENCH CJ:   They were the product of phrase match?

MR BANNON:   No, keyword match, exact match.

CRENNAN J:   I would have thought, Mr Bannon, that what was said in paragraph 94 on 1076 which the Chief Justice drew your attention was related, it seemed to me, to paragraph 92, which I think is a key paragraph in relation to the Full Court’s reasoning because this is the reasoning in which the argument is rejected that Google is a conduit.  It seems to suggest Google is acting as a principal.  It is not merely passing on the URL as a statement made by the advertiser.  I think the key is in the last sentence:

Rather, Google informs the user, by its response to the query, that the content of the sponsored link is responsive to the user’s query about the subject matter of the keyword.

Then, in paragraph 93, their Honours talk about the falsity of the response.  Then the last sentence of 93:

The enquiry is made of Google and it is Google’s response which is misleading.

MR BANNON:   Yes, that is the part of the case which we say was never run and the findings cannot support it.  If one looks at the second‑last sentence of 93:

The whole purpose of the user’s inquiry, to which Google responds by providing organic links and sponsored links, is to answer the user’s query.

Sorry – second sentence of 93, their Honours say:

The user enters that keyword because the user is seeking information about Harvey World Travel.

There is no evidentiary basis for that.  The particular searches of this one were conducted by an ACCC officer.  There was no inquiry as to what the individual responses of an individual user in the second class of case that this Court has referred to in Campomar - there is no investigation of that issue.  The case was run by the ACCC on the basis that one could determine it on the basis of ordinary, reasonable user and one can do that if one takes the pleading at face value that it is all about the publication of an advertisement because you can look at an advertisement and read it and see what it conveys to the ordinary, reasonable user. 

If one adds – which is what the full Court has added - an anterior representation, not pleaded, to say, in effect, Google is, by publishing the ad, asserting that the ad, whatever it contains, is responsive in the sense to some way relevant to a search query, that requires a consideration of the individual motivation of the particular user, but, as I say, it was never run, never pleaded, and necessarily involves what it is that a user takes from the publication of an ad. 

That is why I come back to my opening gambit to say that when one appreciates their case is to say that the real problem with this, the first problem, was that people were not told they were ads because if they did, then they would realise they were ads paid for and hence, not subject to this relevance criteria.  You cannot switch halfway through a case on appeal and then say well, we might have run that case but now start to infer without evidence, without factual finding, without any investigation to say that you should now assume that there is some anterior response which is Google’s response.  The pleading just says “publication”. 

HEYDON J:   Which paragraphs of your written submissions encapsulate this theory that the Full Court’s reasoning is outside the pleadings?

MR BANNON:   Paragraph 45.

HEYDON J:   And 46, that section?

MR BANNON:   Yes, and 56 as well.  Paragraph 60 actually is where we encapsulate – yes, it is really 60. 

HEYDON J:   Was any argument put to the Full Court which elicited this type of reasoning of which you now complain?

MR BANNON:   Well, we included in the transcript materials, perhaps in a different indication – perhaps I will just find it.  It starts at 1039 of volume 3 and perhaps at about line ‑ 1040 at about line 30.

HEYDON J:   Well, which, is it the little 30 or the big 40?

MR BANNON:   I am sorry, the big 30.

HEYDON J:   The big 30.

MR BANNON:   Where his Honour Justice Jacobson asked:

how’s Google making that representation –

and the reference to a response –

JACOBSON J:   But that is the response, isn’t it?

MR WHITE:   And what is contained –

Then over the page ‑ ‑ ‑

CRENNAN J:   Line 5.

MR BANNON:   Yes.  Then it is drawn to his attention, about line - big 40, that that point was never pleaded.  Over the page at 1045 ‑ ‑ ‑

CRENNAN J:   What about 1043 at around line 35?  This is about the pleading now.

MR BANNON:   That is at about line 40.  Big 50 goes into the creation of the advertisement point.  Then at 1045, Justice Jacobson asked the question, about bold 30:

Does that make Google responsible for any advertisement in which an advertiser’s keywords wrongly respond to the inquiry?

MR WHITE:   It might, depending on what the facts were.

Then at big 40, or roughly about 45 –

JACOBSON J:   The liability arises because of the wrong response to the inquiry?

MR WHITE:   No.

There is a part of the transcript which has not been included, which I do recall, where I think after my friend seemed to accept that their case was not about response, in response to some questions from the Chief Justice he agreed with his Honour that the case should be or was about response, if I can put it neutrally. 

It is not only a pleading difficulty - the fundamental difficulty, if you do not have an exploration of that - (a) you do not have an exploration of that factual inquiry; (b) if you do not ask with some precision what is the content of the alleged response, or the notion of the response, and what is the content of the notion of relevance, does it have to be relevance of any sort, and then (c), as a matter of logic, does the mere fact that Google says these ads are, or is it, may be relevant to your inquiry, how does that make Google responsible for the content of the advertisement and (d) as we say, in circumstances where these ads – anybody who uses these experiences would appreciate that the ads get thrown up – which on one view, the relationship between the search term and the particular ad might be, on one view, quite obtuse ‑ ‑ ‑

HEYDON J:   Do you take your paragraph 60, in your written submissions:

The ACCC’s case was that Google made some independent or anterior representation to the effect that the advertisements were relevant or responsive for users’ search queries.

If you run a search business are you not representing by conduct that some attempt will be made to respond to inquiries in a relevant way?  To get into Harvey World Travel you presumably make some inquiry about holiday travel or air travel or something, do you?

MR BANNON:   There is no doubt that the case put and responded to in relation to the so‑called organic searches was that we tried to, as best we could, respond, in terms of organic search results, according to our algorithm for relevance.  But our point is the case was not put that people understood or that we represented that the advertisements had some particular relevance to the search query. 

As soon as somebody knows – and this is an undisturbed finding of the trial judge – as soon as somebody appreciates that it is an advertiser paying to have that response there, which is what his Honour found, then the notion that somehow or other one infers from that that that is Google’s conduct or Google making some representation that the ad is going to be of interest to them, is antithetical to that finding. 

There is no doubt that – and as was referred to in those paragraphs of the Full Court judgment – Google has an auction‑based system and there was some evidence, not explored, to the effect that one of the criteria in relation to that auction system involves something called quality score, which includes an element of relevance.

That was evidence put on by Google to explain its system in relation to the AdWords program, really in response to the first part of the case.  There was no pleading or investigation of that issue, no pleading to say, for example, that Google selected on a process of relevance these particular ads and that that process of selection was the conduct which resulted in Google being responsible for the content of the ad. 

The difficulty with such an allegation, if it had been made, one could have then explored the issue of precisely to what extent relevance was an element of that auction process.  Mr Dulitz was asked a question and I should take your Honour to the answer to that - it is in volume 1 of the appeal book at bold 30 ‑ ‑ ‑

HAYNE J:   What page?

MR BANNON:   I am sorry, page 124.  The question put to him at bold 30 says:

So is it the case that when it comes that unlike organic search results, when it comes to the ordering of advertisements the relevance, as indicated by the organic search results, doesn’t particularly come into play when it’s to do with ranking of advertisements?---Yes.  That is correct, in that the systems used to determine relevance in the organic search results are independent of the systems that are used to determine, you know, quality and quality score within the advertising system even though there are elements of the advertising system that are designed to, you know, determine relevance.  They are basically separate algorithmically.  There is no – just a further comment; there is no single algorithm that, you know, would be the right answer, you know, that would produce the right answer in some objective sense for relevance.

So that line of cross‑examination is consistent with the first part of the case, namely everyone knows you rank search results, organic search results by relevance, but you do not do that in relation to advertisements because you can pay to get to the top, that was the point.  We put on evidence to say yes, we try and have some relevant advertisements, but there was no case that people so understood that.

The point was made clearly, we would respectfully submit, by counsel in closing submissions for the ACCC, senior counsel in closing submissions.  If one looks at volume 3 of the appeal books at page 886 where the trial judge at the top of the page says:

But don’t you say the reputation only extends to organic search results?  That’s your pleaded case.

MS ADAMSON:   Yes, your Honour, but that reputation for ranking by relevance ‑ ‑ ‑

HIS HONOUR:   But organic search results by relevance.

MS ADAMSON:   Yes, that’s right.

Then it continues down that page.  At about line 40, bold 40:

MS ADAMSON:   Because they think because of the similarity between the search query and the bold blue headline that if they click on that bold blue headline they’re going to be taken to a website which is associated with Harvey World Travel, which is going to have information about Harvey World Travel on it.

HIS HONOUR:   And that’s got nothing to do with Google’s reputation?  Because a reputation you’ve pleaded and relied on is confined to organic search results?

MS ADAMSON:   Yes, that’s right.

I answered a question incorrectly to your Honour the Chief Justice as to whether broad match applied to any of these ads.  Apparently it did.  The significance of that does not – if I can just explain broad match.  Broad match means that if someone types in, for example, “Harvey World Circus”, if the advertiser selects broad match, the Google algorithm may associate Harvey World Circus with a keyword which the advertiser has selected, in this case let us say Harvey World Travel, but Harvey World Travel will only appear in the advertisement if the advertiser selects that word to appear in the advertisement as the headline.

So the search query which is broad match will not be the headline.  The only thing which will be the headline will be the keyword which the advertiser selects.  So for broad match to work in my example, you have to have an advertiser selecting a keyword such as Harvey World Travel, you have a search query which is not the keyword but near enough to it, namely Harvey World Circus, but the ad will only be, if the advertiser selects keyword insertion, have a headline “Harvey World Travel”.  It will not have “Harvey World Circus”. 

That is explained in the evidence of Ms Barker which appears in volume 1 at page 194 at paragraph 66.  Ms Barker also explains on the previous page different forms of matching – sorry, at page 192, I should say, in paragraphs 59, 60 and 61 describes the three different types. 

CRENNAN J:   What happens in relation to this dynamic keyword insertion process if a complaint is received from a trademark owner of that misuse of a trademark?

MR BANNON:   The trademark policy allows for, at that time, a person to lodge a complaint for a registered trademark.  I think the policy later developed, I think there was evidence about this by the end of the case, to established common law trademarks to ensure – and if the complaint was received and accepted that it was a registered mark or a common law mark then Google’s own system would automatically block that name from appearing in the headline.

CRENNAN J:   Irrespective of whether the advertising customer had chosen dynamic keyword insertion?

MR BANNON:   That is right.  It was an override system.  At one stage, part of the relief sought by the ACCC – ultimately not awarded and no longer pursued - included a claim for relief which appears in volume 1 of the appeal book, page 6, paragraph 8.

HAYNE J:   You say this was not pursued?

MR BANNON:   They pursued but they failed and not pursued it further.
But the text of that just demonstrates the difficulty of an organisation such as Google or other search sites or, indeed, other advertisers because there is no general law to say you cannot use someone else’s trademark.  There may be all sorts of different ways of using it ‑ ‑ ‑

CRENNAN J:   Well, comparative advertising is the first thing that springs to mind. 

MR BANNON:   Exactly, and it may depend on the advertising text you are putting underneath it.  For example, you could say “Harvey World Travel” and underneath it, “They are hopeless, you should come to us”.  “STA Travel” - leaving aside the accuracy of that assertion of hopelessness, comparative advertising is permissible.  The further difficulty as to working out what is a business name, whether somebody – which is a submission – to distinguish a particular business.  These are the difficulties which are involved. 

The other thing to note by that – I do not need to go back to it, but what the response indicates on that Just 4x4 page is that it was produced in something less than a second, it produced some thousands of results.  Perhaps I will go back to it.  Near the top right‑hand corner on 794 in volume 2, here it is said to be:

Results 1 – 10 of about 29,200 for just 4x4s magazine (0.15 seconds)

The other thing to note is that – and there is no dispute about this – the tradingpost.com site in this case, and all the other URLs, are sites controlled by that particular entity; Google has no control over those sites, they can be changed at a moment’s notice.  Google has no capacity to know exactly what is on that site, for example, to know whether Just 4x4s Magazine is being advertised on Trading Post, for example, or indeed to know whether there is a commercial association between Just 4x4s Magazine and Trading Post, and à la Butcher, no one would understand – no user who understood that this was a paid for advertisement would understand Google to be entering into the ring of “We are telling you there is a commercial association of some sort between these two organisations”, just as one would understand a suburban real estate agent to be saying, here is the title, the high‑water mark of a plan.

Once they appreciate this is a paid for ad by a third party – and there is no evidence that Google intended to mislead anybody, in fact they specifically eschewed that so that Google did not intend to make these representations, so it is not a case of someone who is party to the representation.  Yes, it is a publisher, but it is not a party to it.

FRENCH CJ:   Well, their accessorial liability was expressly disclaimed.

MR BANNON:   Yes.  In relation to the involvement of particular individuals – we would not concede this but – there may be some cases in which they might seek to assert accessorial liability.  But they did not expressly so.  No doubt they did not expressly so because they were looking for a judgment which effectively upheld Guthrie, which was the case they put below and was the first ground of their notice of appeal to the Full Court, that his Honour erred by not applying Guthrie.  Guthrie says in terms, albeit obiter, if a broadcaster publishes an advertisement - in that case of a car dealer - which contained the statement “sales tax benefits are going to fall”, i.e. so in other words you should buy your car now, that Full Court decided that that was a statement made by the broadcaster.

Now, in a sense, we say the effect of the Full Court’s decision is to apply that principle.  We say that that decision is wrong.  A subsequent Full Court said, including at least one of its members, Sir Nigel Bowen, it was obiter and there has been a line of development which takes us to ACCC v Channel Seven, and post-Butcher, and indeed Yorke v Lucas, which we say contradicts that. 

But the significance of the case from my client’s point of view, obviously, but just more generally publishers is apparent, namely that in the case of a search engine where we respond in the sense of publishing particular ads which other people pay for and create, we are responsible for the whole of the content, including, for example – looking again at 794 – the statement “New & Used 4WD Cars – See 90,000+ Auto Ads”.

It is no comfort to say 85(3) exists for a couple of reasons.  That would mean that the prima facie liability applies to every advertiser, including broadcasters, and the onus is on them to prove in each case they had no reason to suspect.  The effect of that approach would be to establish information providers as the effective policemen of the Act and what we say is that the jurisprudence of this Court is that conduct requires, in terms of making representations, it has to involve the particular entity in the case of a publisher of third party statements, which is what this is.  If they make it clear they are third party statements, they actually have to adopt them or embrace them before that becomes their conduct as well, and that is the break.

FRENCH CJ:   Does the Full Court’s reasoning adverse to your client involve the proposition that Google, by using the particular kind of algorithms that it has is a party to the construction via those algorithms of the kind of advertisement that we see on 794?

MR BANNON:   We have concurrent findings that the ads were created by the advertiser.  The Full Court said so at paragraph 27 at 1057.  Ms Barker’s evidence, which I did not give your Honours a reference to, also includes an explanation as to how that happens.  Perhaps I should just give your Honours a reference to that, and perhaps if I can use his Honour the trial judge’s finding as well.

That is at volume 1 at page 179, paragraphs 12 and 13.  At page 194, well it is paragraph 66 I have taken your Honours to beforehand.  At 257 in that same volume - 257 and 258 are pages from the site you can go into telling how they create their ad.  Sorry, it really goes to 259 – so that when their Honours in the Full Court refer to Google creating the ad that can only be a reference to the automated processes which respond to the direction of the advertisers. 

We say in relation to that, to set that as a principle by which a publisher becomes the maker of the conduct itself has an enormously broad application.  A television broadcast only exists because of the communication over the airwaves of images which are embodied in – I forget now, it is electromagnetic waves, it came up on The Panel decision - you need a licence – a licence to broadcast.  The means by which the ad in those cases is actually seen is provided solely by the television organisation.  So to say that the technological means makes you party to the conduct is not a satisfactory answer, we respectfully submit. 

It would apply, too, to newspapers where you can go online and put your online ad with The Trading Post or Fairfax or whatever, you can go online and make your ad.  That goes into the newspaper’s computers.  Nothing gets published these days without being via a computer.  It is a newspaper’s computer.  No doubt they have limitations on the size of ads et cetera.  Again, its processes ultimately produce the wording but if it is at the direction of the advertiser, then the use of the word “create”, we respectfully submit, by the Full Court, must be referring simply to those technological processes and does not inform the debate. 

Could I fairly quickly just identify relevant parts of the trial judge’s judgment in relation to findings?  Starting in volume 3 of the appeal book, 902, where the judgment begins - paragraphs 4 and 5 – I am sorry, page 911 – 4, 5 and 6 refers to the primary case.  Then paragraph 21 on page 916 which records that Google had no intention to mislead.  We say that carries with it, and his Honour effectively said it, we never adopted or endorsed as a matter of fact any of the representations, so perhaps answering at least one or other of the queries which has come from the Bench. 

Google’s conduct, in fact, was not to be the maker of the representations or the endorser of it, and the findings of the trial judge is that we did not give the appearance that we were.  Then paragraph 22 refers to the absence of any 75B claim.  At page 918 of the judgment in paragraph 30 his Honour addresses an argument which we had pleaded, namely that we did not accept that each was an ad or the sponsored link was an ad on the basis that it might be said by the ACCC that the whole page was the conduct which is complained about.

His Honour records the concession by the ACCC that the only thing relied upon was the publication of the individual ad to be looked at discretely and there was no case that the positioning of the ad on the page was relevant to whether or not a representation was made.  So the auction process which is referred to, the general evidence is it affected the positioning on the page.  It was no part of the case to say that the position on the page had any impact on misleading conduct, other than on whether or not there was a distinction between an ad and an advertisement.

On page 919, paragraph 39 records that the approach was limited to general users and not individual users.  That is also referred to in paragraph 40.  Page 923, paragraph 53, his Honour refers to – the second sentence “Sponsored links are created by advertisers”.  Then the following paragraphs relating to the quality score in the section over the next few pages.  As I said, that is background, not material to any particular allegation and, in particular, can I just indicate this.  There was no finding that any of the impugned ads was in fact selected by Google by any of its processes in preference to any other ad.

So although the auction process is a matter of theory it can involve a selection of ads.  There was no evidence or exploration as to what in fact happened in relation to any of these particular ads.  The fact that a similar search result produces different outcomes in terms of ads is equally consistent with somebody’s budget running out because the evidence indicates you have a budget and if the public - gets more than once you have got to keep on putting more money. 

If their case had been Google’s involvement and the conduct was its  process of - some sort of pre‑selection process to determine which ads it would show, not only is that not pleaded, but it involves a factual inquiry which does not even show on the material before you that any of these ads involved a selection over any other ad.  There is no evidence about it because it was not explored.  This material here referred to is just by way of background just explaining what our AdWords system was generally. 

Then at page 936 his Honour commences a section which deals with the Kloster Ford advertisements and the way it was pleaded.  At page 942 his Honour makes a finding in relation to keyword insertion at paragraph 102, so 942, paragraph 102.  His Honour says in the second sentence:

By this process keywords selected by the advertiser are automatically inserted –

Can I give your Honours a reference?  At 201, in the same judgment, at page 967, his Honour finds that:

So far as keyword insertion is concerned, it is the advertiser who determines whether or not keyword insertion will be used and what particular headlines will appear subject to –

those ads.  Again, it is a finding that is not overturned and not challenged.  Then we have given references in our submissions to his Honour’s findings in relation to what users would understand, but in particular, at paragraph 162, and we have given these references in our submissions and I will not go back over them, but at 162 his Honour says:

Since the advertisements that appear on the Google results page include links, the use of that word as part of the composite expression is not inapt.  The word “sponsored” is likely to convey to users that the links are paid for in the sense that their sponsors have paid Google to cause them to appear on the results pages delivered in response to search queries.

So the person responding is the advertisers - Google is publishing, but the response is dictated by the advertisers.  Then paragraph 239 on page 978, his Honour addresses Harvey World Travel and in a context of the involvement of Ms Wood.  We say the Full Court was correct.  This really goes to a notice of contention point, which I will not spend any time on, but just to give your Honours perhaps advance notice.  His Honour found that involvement of Ms Wood did not mean that Google was making the representation.  It may have been relevant to a 75B case, but it was not Google making the representation.

Could I say a few more things about the Full Court’s process of reasoning?  Sorry, yes, there is one other paragraph that I should emphasise, if I could take your Honours back to page 963.  Paragraph 186, his Honour picks up the point the Full Court picks up:

The mere fact that the relevant class may not have understood the representations to have been made by Google cannot be determinative –

At 187 in a process - and following paragraphs - which we say is an accurate reflection of the law and principle in the four dot points ‑ ‑ ‑

KIEFEL J:   Could I just interrupt you there?  A matter I raised with you earlier, his Honour says and the Full Court repeats that reference to the understanding that the representations were not made by Google cannot be determinative, but is it relevant because there is a finding by his Honour to that effect that they would not have understood Google to be making ‑ ‑ ‑

MR BANNON:   It is relevant.

KIEFEL J:   I think that ‑ ‑ ‑

MR BANNON:   The only question, we respectfully submit, in which what actually happened could really be relevant is if unbeknown to the – it is external conduct is the key.  If it be, for example, that surreptitiously Google or some other person ‑ ‑ ‑

KIEFEL J:   Was working behind the scenes.  Well, then they might be liable on another account.  In a case where the question really is what is conveyed, surely it must assume some importance, but the Full Court, in what I was attempting to raise with you earlier, seems to have regarded it as more or less irrelevant and to focus only upon steps taken by Google almost in a quantitative way to see how much conduct was involved.

MR BANNON:   We respectfully submit that does involve error because it is the conduct in trade or commerce and the particular conduct is the making of representations.  Who is making implied representations is determined by what appears on the screen which is determined by the advertiser.  Once you get over the ridge of people understanding that they are the advertisers and it is the advertiser making the message, which is the fact, and there is no surreptitious activity which says Google intends that message to be conveyed, then the answer is wholly dictated, we submit, by the external conduct.

KIEFEL J:   Well, are you saying that in a case like this - it may not be the same in all cases as you have said before when someone is surreptitiously working behind the scenes they will be held liable for their conduct but – or they might be made liable accessorially - either principal or accessorial - but, in this case, is it a question of whether Google is understood to be a conduit.  I mean, the question is about whether or not there is an acceptance or an endorsement raises the question, to whom?  To whom is Google seen to be endorsing or is a conduit?  It must – there would appear to be a requirement of assessing it from the point of view of the persons making the inquiry, on the Full Court’s approach.

MR BANNON:   Yes.

KIEFEL J:   At least to some extent, what Google in fact does cannot be irrelevant but to put the primary judge’s findings out of the picture might be a different question.

MR BANNON:   We say in this particular case the external conduct based on the trial judge’s findings is determinative of the matter which embraces within it critically the understanding of the ordinary user that this is a message paid for by the advertiser.  You add to that, as I say, there is no endorsement in fact by Google and there is no intention by Google to make any of those representations.  That ought to have been the end of the matter.

KIEFEL J:   Well, could I just ask you to – I will leave this topic alone after that – at the Full Court, paragraph 82, their Honours refer to the quotation from Gardam v George Wills.

MR BANNON:   Yes.

KIEFEL J:   The now Chief Justice says the issue is whether –

[t]he innocent carriage of a false representation from one person to another [occurs] in circumstances where the carrier is and is seen to be a mere conduit ‑ ‑ ‑

MR BANNON:   Yes.

KIEFEL J:   But then at paragraphs 89 and 90, at paragraph 89 in particular, their Honours take up the point that the reaction cannot be of an:

ordinary and reasonable member of the class is not solely determinative of the issue.

Well, that might be right, but a question may be what has the Full Court done with the primary judge’s findings about what readers would have understood and to what extent is that relevant to the question which falls for determination here?

MR BANNON:   We say a useful way of reading the Full Court’s judgment is to, every time it refers to a sponsored link, insert the finding of the trial judge, which was not challenged and not disturbed, to say when Google publishes the sponsored link which is understood to be an advertisement carrying a message conveyed by a third party, X, Y and Z, if you add those words in every paragraph where the Full Court’s process of reasoning, with respect, the reasoning just cannot stand because one thing is clear, they do not overturn those findings and no application was made to overturn those findings.  Perhaps critically in paragraph 96 of the Full Court’s reasoning:

It is no answer to the ACCC’s case to say that it is apparent that the sponsored links were advertisements for persons other than Google.

What we say is the very first thing you do in analysing the conduct is to start with the proposition that they were advertisements, third party advertisements, and understood to be so.  Reference to that appears at the very end of the process of reasoning, but it is the wrong way around.  So that if one goes back, for example, to paragraph 87, top of page 1075, where they say:

What appears on Google’s webpage is Google’s response to the user’s query.

That was to read “What appears on Google’s webpage is an advertisement published by Google which it indicates is an advertisement of a third party, and understood to be an advertisement of a third party carrying a message of a third party which is understood to be a message of a third party”.  One poses the question rhetorically “What is left?”  The last sentence of that paragraph –

In those circumstances, it is an error to conclude that Google has not engaged in the conduct of publishing the sponsored links –

We never suggested we did not publish the sponsored link.

KIEFEL J:   Is part of the Full Court’s approach explained by their description of Google’s conduct as a responsiveness to an inquiry as distinct from publishing the representation?

MR BANNON:   Yes.

KIEFEL J:   That is the point you are making about the pleading?

MR BANNON:   Yes, and evidence, and who the relevant person is making an inquiry and the inability to falsify, quite frankly, that response, having regard to the potential range of concealable relevance that ads might be, in my “antique shopping centre” example, without suggesting that is a personal ‑ ‑ ‑

FRENCH CJ:   You say really it changed from a representational case into something else at the Full Court level?

MR BANNON:   Yes.

KIEFEL J:   It changed into what Google did at various points and the extent to which it was involved, but critically, I suppose, in the response it provided, as Justice Crennan was discussing with you earlier.

MR BANNON:   Yes.  The word “response” is pregnant with possibilities, none of which are truly explained.

KIEFEL J:   But the Full Court also draws something, although it is not entirely clear what, from the keywords insertion.

MR BANNON:   Yes, and as explained, they do not overturn the finding that the ad is created by the advertiser, and the keyword insertion is a technical facility to make the ad appear.

KIEFEL J:   The keywords insertion is by way of permitting the advertisement – what Google does is to permit the advertisement to ‑ ‑ ‑

MR BANNON:   No, keyword insertion is a shorthand means of creating the text of the advertisement without having to write it out a thousand times.

CRENNAN J:   It is the headline, is it?

MR BANNON:   The headline part of the advertisement, yes.  Obviously, paragraphs 187 through to 195 of his Honour’s reasons are particularly important.  I will not pause to read them, but paragraph 192 at 965 is where his Honour addresses this keyword insertion point, and his Honour addresses that at 193, the technical facility point.  If I could then just come back to the Full Court’s reasons, again at 88, page 1075:

Google’s conduct consists relevantly of the display of the sponsored link –

Again, if one adds all the words of the findings unchallenged, the answer almost is inevitable.  Paragraph 89:

An ordinary and reasonable user would conclude from these circumstances that it was Google who was displaying –

Again, you add the third party message which is understood to be a third party message.

HAYNE J:   The reasoning of the Full Court hinges, does it not, on 92 and the notion in line 1 of 93, “the falsity of the response”?  The response is false.  It is the central hinge about which the reasoning turns, I think.

MR BANNON:   Yes.  Could I just lastly conclude by referring to some of the authorities we have ‑ ‑ ‑

HAYNE J:   At the risk of being a little captious, it rather suggests that the user sought the advertisement.

MR BANNON:   That is right, your Honour.  Advertisements are a cost of the free service.  They are not a blessing.  It is a free service and it has to be paid for.  That is part of the trial judge’s reasoning.  To suggest that advertisements - once they realise the advertisements are a source of attraction and that Google is representing something to them about them other than saying here is an advertisement which we are giving to you to pay for our service - one could expand the analogy to television advertising. 

There is no doubt that television stations sell advertising to particular potential advertisers by reference to, for example, programs.  They say “We have a fabulously successful program which is going to be shown”, or “It has rated well in the past, it is likely to attract a certain A, B demographic” or whatever demographic.  They have an interest in trying to get that advertiser to address particular types of people who might be responding to their program. 

In that sense it is a response by the television station or the media organisation to say here is some advertising which will perhaps be responsive to the sort of person who might be interested in watching that particular program.  But, again, the proposition you jump from there to say that the media station is responsible for all the content of the advertising we submit is not justified on the authorities or in fact.

Could I just refer to, firstly, this Court’s decision in ACCC v Channel Seven 239 CLR 305? In the reasons of your Honour the Chief Justice and Justice Kiefel in the context of a debate as to the extent of the scope of an exception to the exemption afforded by section 65A, your Honours firstly noted the finding referred to in paragraph 21 of the judgment at page 313 of the report, that in that particular case there were, in the Today Tonight program, statements by the reporter which involved adoption and endorsement by the station via the reporter. 

Then at paragraph 34 your Honours listed a number of arguments put on behalf of Channel Seven as to why the exception should be construed narrowly.  One of those arguments was that the second reading speech indicated that the Act is designed to ensure we have a strong and robust media.  It was in the context of addressing that argument at paragraph 42 of your Honours’ reasons that your Honours made reference to that argument, firstly at the opening words of paragraph 42.  A bit over halfway through that paragraph there is a sentence that commences:

Where, however, the information provider publishes matter in connection with goods or services which it itself provides, or publishes an advertisement for its own or someone else’s goods or services, the rationale of maintaining a free and vigorous press does not require its exemption from the prohibition of misleading or deceptive conduct.

Then in the next paragraph, paragraph 43:

The rationale for limits upon the exemption should be understood in the light of conditions that must be satisfied before an information provider is liable in respect of misleading or deceptive representations made by a third party and published by the information provider.  The publication, by an information provider, of third party statements about goods or services, does not, without more, amount to the adoption or making of those statements by the information provider.

So, we would respectfully submit that those reasons pray in aid that proposition as part of the reasoning process in support of the construction adopted by your Honours in that case of the exception in resisting a particular argument.  Indeed, that was the argument being put forward by the ACCC, which your Honours accepted.  Then to similar effect in Justice Gummow’s reasons at paragraph 57 on page 323 of the report, his Honour said:

Channel Seven submitted that the construction of s 65A for which the ACCC contends should be examined with particular caution because acceptance of it would inhibit and not advance the position of a free and vigorous press. 

His Honour referred to Justice Toohey’s decision and said –

it has become well established that, for the broadcasts in question here to give rise to contraventions of s 52 by Channel Seven, it was necessary at least for some “endorsement” or “adoption” of what was represented on the programs by the relevant third parties –

Then his Honour picks up what your Honour the Chief Justice said in Gardam, which you have seen before.  Then his Honour said at 58:

The evidence demonstrated that with respect to the alleged contraventions . . . there was –

relevantly the relevant adoption.  In relation to Gardam could I take your Honours to that? It is put in 82 ALR 415.

FRENCH CJ:   That was a labelling case, I think, was it not?

MR BANNON:   It was a labelling case.  Relevantly at page 427 ‑ ‑ ‑

HAYNE J:   What is the proposition you want to derive from this?

MR BANNON:   Two things, namely that the – well, perhaps three things, that external conduct is the key for determining whether a representation has been made or adopted; secondly, where one attributes the author of the underlying representation then that is a key factor to be taken into account in indicating that it has not been adopted or endorsed; and thirdly, that one can have a notion of innocent implied adoption.  Each of those propositions appears from the passage at 427 where, admittedly in the context of a labelling case, your Honour sets out at the top of that page:

The innocent carriage of a false representation . . . It will be a question of fact in each case, but in my opinion the wholesaler who resells goods labelled without attribution of authorship can be taken in ordinary circumstances to adopt the text of those labels . . . This approach does not deny the application of the defences conferred by s 85.  Indeed, by analogy with the argument in relation to mens rea, the availability of those defences supports the view that the term “falsely represent” as used in s 53(a) includes the innocent implied adoption of a false statement.

So that you can have a circumstance of not deliberately adopting because of your external conduct.  Then, at line 38, your Honour says:

I am concerned here not with the question whether a representation has been made to the ultimate consumer, but whether in the circumstances it can be said that a representation has been made at all.  This requires a consideration of the external elements of the conduct of the alleged representee.

HAYNE J:   How does this relate to the facts as found, whether at trial or by the Full Court?

MR BANNON:   Here, the findings of the trial judge were that the advertisement indicated who the advertiser was, that it was an advertiser, so that the source of the representation is made clear and all of the external conduct indicated that it was a third party message and that there was no adoption or endorsement.  So the principles referred to there, we submit, are reflected in the trial judge’s findings.  Then, if I could perhaps invite your Honours to refer to our summary of propositions, perhaps without taking your Honours to these cases, just expose this series of – this chronology. 

Guthrie has the statements which have been referred to in the judgments which, as I say, has Sir Nigel Bowen, Justice Nimmo, Justice Franki all saying that the statements made by a television broadcaster are, in fact, statements made – the broadcast of a third party advertisement, statements in that are made by the broadcaster. 

The next step - Yorke v Lucas is a Full Court decision.  The reference we have given is a reference to an argument which was put about a conduit and that was the argument which was ultimately taken up in the High Court or referred to.  One sees there that Sir Nigel Bowen is a member of that Full Court and Justice Lockhart and Justice Beaumont.  The next step is Global Sportsman.  In Global Sportsman again, with Sir Nigel Bowen and Justice Lockhart partly at the helm, there is a description of Guthrie – the statement in Guthrie is obiter. 

Then Australian Ocean Line, which Justice Gummow refers to - Justice Toohey’s decision which related to whether or not effectively you can have defamation proceedings cast as section 52 proceedings in relation to opinions and newspaper reports.  Page 586, point 8 to 587, point 3 is the part Justice Gummow refers to.  Page 582, point 7 is the recording of then Mr Gleeson, QC’s – may I put it - succinct and precise submissions which identify the particular problem, we say, with attributing to a newspaper or any media organisation, statements which are simply reporting of third party statements.

So the point is that the statements in Guthrie come at a point in time where there has not been the development or consideration that has emerged in both Butcher and ACCC v Channel Seven, but even the members of the Court involved in Guthrie were involved in a chronological watering away of the proposition which ultimately disappears, we respectfully submit, in Yorke v Lucas and the following cases.

HEYDON J:   To say something is an obiter dictum is not to say it is untrue.

MR BANNON:   No.

HEYDON J:   It was a carefully considered obiter dictum.

MR BANNON:   The purpose of the chronology is not to ‑ ‑ ‑

HEYDON J:   It took account of the relationship between section 52 and section 85(3).

MR BANNON:   That was a factor which influenced two of their Honours, I think Justice Nimmo referred to it and Sir Nigel Bowen referred to it but not Justice Franki from recollection.  There are a couple of difficulties with using section 85(3) to, in effect, wag the dog.

HEYDON J:   It was regarded as a very important provision when it was introduced.

MR BANNON:   We have had a look at the second reading speeches and the information memorandum.  There is no clue that we can find which informs its logical meaning beyond what appears from its terms.  There is some suggestion it may have derived from criminal legislation, the Trade Descriptions Act, a provision of that, but the difficulty with it as indicating, for example, that all publishers are responsible for representations made in all advertisements published by them we respectfully submit involves, at least firstly, this proposition.  The section is not cast as a mirror image of the terms, for example, of section 53.  In other words, section 53 is obviously the section which defines what is a contravention and it identifies certain conduct.

When one gets to section 85(3) it does not say a party who – well, section 52 does not say if you publish an advertisement you are responsible for the content of that advertisement.  So, section 85(3) is not the source of liability obviously, it is a defence which only arises if liability is established.  That is the first proposition.  The second proposition is what is or is not an advertisement will be a matter for debate in many cases.  Section 85(3) will capture the circumstance where a publisher publishes an advertisement without clearly indicating that it is such. 

One such example is an advertorial, an example referred to in the Channel Seven Case.  Other examples would include, for example, radio

programs and comments in the area of cash for comments, but it is not just limited to that or comments where the cash is undisclosed, but endorsement in programs may involve the publication of what is in truth an advertisement without it being expressly indicated as such and the notion of an innocent, implied adoption of an advertisement referred to by your Honour the Chief Justice in Gardam tells one that there is work to do in relation to 85(3) in that circumstance.

But we respectfully submit that 85(3) for those reasons does not determine what is conduct of a publisher, which is misleading conduct in the case of publication of an advertisement and, accepting that it was a considered judgment at the time, the point of the chronology is really to indicate that even the members of that court, or at least one of them, appear to judicially drift away somewhat from it as a proposition of general application.

Perhaps I should add two other aspects to Guthrie.  Both Justice Franki and Justice Nimmo refer to the fact that they were spoken words in the advertisement in that case, and Sir Nigel Bowen referred to the ephemeral nature of television advertising.  So to the extent that, for example, a television advertisement could comprehend the circumstance where somebody is in the room next door and listening to the TV, but not watching it, and seeing that the program has changed – or it may be ephemeral and the distinction between what is a third party advertisement or a statement by the broadcaster may be difficult to know or identify, then whatever be the circumstance in that case, that is not this case.  So for those reasons, we submit that ‑ ‑ ‑

FRENCH CJ:   Thank you, Mr Bannon.  Yes, Mr White.

MR WHITE:   May it please the Court.  The question of whether Google engaged in prescribed conduct in contravention of section 52, with respect, is a question of fact and requires a two‑step investigation.  Firstly, with respect, an identification of the features of the advertisements that were said to have a misleading quality and, secondly, the identification of the conduct of Google that was said to contribute to or result in the advertisements having that misleading quality.

The primary judge found the advertisements the subject of this appeal to be misleading, and his Honour made those findings at 228 of his Honour’s judgment at 3 appeal book, 975.  Your Honours will see there at paragraph 228 in relation to the Harvey World Travel advertisement that his Honour found, firstly, that a number of representations had been alleged to have been made by Google in 228, and his Honour sets them out, and he refers to them as “representation A” and following.  In 237, his Honour makes a finding that:

I am satisfied that representations B, C, G and H were made by STA Travel.  In particular, I am satisfied that by the publication of the Harvey World Travel advertisements STA Travel represented that it had a commercial association with Harvey World Travel and that information regarding Harvey World Travel and its products or services could be found at the STA Travel website.

Also at 238 his Honour made findings as to why those representations were misleading.  For example, towards the end of that paragraph he refers to evidence that made clear:

that at no relevant time did either HWT Group or HWT Franchises have any commercial association with STA Travel . . . that at no relevant time was there likely to have been any information regarding Harvey World Travel’s products or services available at the STA Travel website.

At 3AB 981 and 982 at paragraphs 246 and 251 his Honour makes findings in relation to the representations conveyed by the Honda advertisement. At 246 his Honour sets out the representations that were pleaded and at 251 his Honour says:

I am satisfied that the Honda.com.au advertisement was likely to mislead or deceive ordinary and reasonable members of the relevant class into thinking that by clicking on the headline to the advertisement they would be taken to the Honda Australia website.

His Honour then makes findings as to why that representation was misleading. In relation to the Alpha Dog advertisement, at 3AB, 1001, paragraphs 317 and 318, his Honour also makes findings that those advertisements were misleading. At 317 his Honour found that in his opinion the publication of those advertisements “was likely to mislead”. His Honour sets out the reasons why they were misleading. In 318 he is satisfied the “advertisement was in these respects misleading or deceptive”. Finally, the Just 4x4s Magazine advertisement at 3AB, 1009 at paragraphs 341 and 342, his Honour likewise states that:

I am also satisfied that by the publication of the Just 4 x 4s Magazine advertisement Trading Post made a representation that there was a commercial association between the Just 4 x 4s Magazine and Trading Post and a representation that information regarding Just 4 x 4s Magazine could be found at the Trading Post website.

In 342 he is satisfied that those representations were “misleading” and “deceptive”.  Those findings are not in dispute and the advertisements were found to have conveyed those representations by reason of the collocation of the search term that had been inserted in the blue clickable headline, together with the advertiser’s URL appearing underneath. 

Now, the primary judge, with respect, does not make that finding expressly in terms but it appears that is the only way upon which his Honour could have found the representations to have been misleading. The closest the primary judge comes to it is at 3AB, 948 at paragraph 127 where his Honour is there dealing with one of the advertisements, and this reasoning follows through to all the advertisements, where his Honour said in relation to the Kloster Ford advertisement, which is no longer the subject of this appeal:

conveyed any one or more of the eight representations to ordinary and reasonable members of the class is to be considered on the footing that they would not only see the URL appearing immediately below the headline but that they would also appreciate that it was the address of the webpage to which they would be taken if they clicked on the headline.

In our respectful submission, therefore one of the real issues is what did Google do to display the blue clickable headline and collocation with the advertiser’s URL?  In our respectful submission, the starting point is a consideration of everything relevant that Google did leading up to the display and publication of the advertisements in response to the user’s search term, and that analysis, with respect, is supported by a number of decisions of this Court including, of course, Butcher v Lachlan Elder Realty 218 CLR 592 at paragraphs 39 and 109, where ‑ ‑ ‑

FRENCH CJ:   Are you saying this is not a case about Google adopting a representation made by somebody else?

MR WHITE:   Correct.  That is what is we are saying, your Honour.

CRENNAN J:   But, Google is a principal in relation to the conduct alleged.

MR WHITE:   Yes.  Of course a principal can adopt a representation of another and his Honour the primary judge, with respect, approached it through the perspective of an advertisement and considered, by reference only to the content of the display page, whether there was anything on it that suggested Google adopted or endorsed the representations. 

The Full Court, with respect, took a different approach and the correct approach, which required an analysis, not only of the publication and display of the advertisement, and in particular the blue clickable headline containing the user’s search terms in collocation with the URL, but also all the steps that Google took, and those steps, with respect, determined whether the advertisement would be displayed at all. 

It was up to Google to decide through its algorithms and its systems whether the advertisement would be displayed at all.  This was not a case of an advertiser placing copy with a newspaper and the newspaper printing it on the printing press.  This is a case where Google decided whether it would be published and in what form. 

CRENNAN J:   It is possible to look at page 794 in terms of you explaining the argument because that was looked at before?

MR WHITE:   Yes.  If your Honours have 794, and what I am about to say applies really in respect of, in fact, all of the ads, the search term has been entered by the user at the top of the page in the search box next to the word – in large coloured type “Google”.  What has been delivered up in response are organic searches which appear below the yellow colouring, but above the organic searches to the left of the screen in yellow background are two “Sponsored Links”, and your Honours see the words “Sponsored Links” appears to the right of the two that appear in the yellow box, and also on the right‑hand side of the page, also headed “Sponsored Links” a number of sponsored links or advertisements that were delivered up in response to the search term.

The impugned advertisement is the second one appearing in the yellow box, which has inserted by Google’s processes and systems, the search term that the user has entered, which is a blue clickable link which the trial judge found a user would understand if clicked upon would be taken to a website of the advertiser’s choosing which would be the website appearing in green under the blue clickable headline,  To the right of that is some text, which is referred to in the evidence as the “black text” which is chosen by the advertiser and which is thrown up when the advertisement is reproduced.

CRENNAN J:   The headline, which is the same as the search request, has been thrown up, as I understand it, because the advertiser has selected dynamic keyword insertion.  Is that right?

MR WHITE:   That is partly correct, yes.  The advertiser did choose in this case a keyword with keyword insertion “Just 4x4s Magazine”.  But it was Google’s processes, which I will need to take your Honours to, including the quality score it gave to this ad and to determine whether it went into the auction, which in part is determined on Google’s assessment of its relevance to the search term.  So in other words the advertiser does not even know if his ad or its ad is going to be reproduced because it depends on what Google says about its relevance and whether it should respond to this search term. 

HAYNE J:   But is that proposition any more than that there are two parties to the advertising transaction, Google and the advertiser?

MR WHITE:   They certainly are both involved in creating the advertisement.

HAYNE J:   But the bare observation that there are two parties involved takes us nowhere.  It is the further step that has to be taken beyond that that is legally significant, is it not, and is that not a step which you are describing as “Google determines whether the ad appears in that form”, or some such form of words.  Is that right?

MR WHITE:   Yes, that is right.

HAYNE J:   Does not a lot turn on the content that is lying behind the apparently simple proposition “Google determines that”?

MR WHITE:   Yes.  Of course, important in all of this is the functionality of the headline because it is not in dispute and the primary judge found that a person would understand that that was clickable and that a person seeing the search term in the headline would understand that by clicking on it he or she would go to a website which had some affiliation or association with the search term that had been inserted.

In this case it is 4x4s which the trial judge found was a business name, as in the case of Harvey World Travel, that someone typing in Harvey World Travel, for example, at page 799, is an example of Harvey World Travel, a similar situation where Harvey World Travel is the search term.  In this case there is only one sponsored link, as your Honours see, with a yellow background.  The search term has been inserted into the clickable blue headline and the advertiser is STA Travel.  It is not in dispute that the collocation of the search term in the headline and the URL gave rise to a false representation that there was an association between these two competitors.

Therefore, we come back to, with respect, what was Google’s conduct in all of that.  For your Honours, with respect, to have an understanding of that, I also need to take your Honours to the pleadings because the pleadings make clear that this was an aspect of the case that had been in issue.  The pleadings are in the first appeal book.  Your Honours have been taken through a number of the paragraphs in the pleading, which I will not trouble you with.  But at appeal book 67, your Honours will see that at paragraph 124 and following where the pleading has a title “THE USE OF COMPETITORS’ BUSINESS NAMES IN ADVERTISEMENTS PUBLISHED ON GOOGLE INC.’S WEBSITES”, it is there pleaded and your Honours can see it:

At all material times, Google . . . in dealing with actual or prospective advertisers:

(a)       has provided the Adwords Program which creates advertisements for its websites accessible in Australia when a person’s search term matches key words . . . 

(b)       has:

(i)suggested key words, which may include names of businesses; or

(ii)permitted advertisers to create advertisements for display on the Google Inc. websites . . . 

which have no relationship of sponsorship . . . or any other connection with those advertisers . . . and

(c)       has published such advertisements on its websites.

There are a number of examples given, which include a number of the advertisements the subject of the appeal.  Then:

Google Inc., by publishing on its websites results which are advertisements where there is a business name in the headline . . . makes [a number of] representations –

Your Honours can see what the representations are and in a real sense they are the representations that his Honour found were made, albeit made by the advertiser.  Then in 127:

In circumstances where any of one of the representations referred to in paragraph 125 is not true . . . the conduct of Google Inc. in displaying the advertisement . . . is . . . likely to mislead or deceive.

In 131:

By reason of its acts and conduct alleged in paragraphs 124, 125, 126 and 127 above, Google Inc. has engaged . . . in conduct that is misleading –

There was no issue, as far as the trial judge was concerned, that this was the subject of agitation at the trial. His Honour squarely raises it in paragraph 192 at 3AB 965, where his Honour says:

The ACCC’s argument for holding that the relevant representations were made by Google . . . depended to a considerable extent upon the proposition that ordinary and reasonable members of the relevant class would not have understood that sponsored links were advertisements.

We no longer press, of course, that part, but it is the next point:

However, the ACCC also relied upon Google’s use of keyword insertion to generate headlines that matched the terms of the search queries exactly.  The ACCC argued that “[i]n a very real sense Google itself is making the representations.  It cannot, particularly given keyword insertion, be regarded simply as adopting them and it is very far from ‘passing them on for what they are worth’”.

His Honour was attuned to the point.  His finding in relation to it is really in 193.  What his Honour basically is saying, with respect, in 193 and 194 is that it is a technical facility that enables an advertisement to be produced in a particular form.  Further down his Honour talks about broadcasters or publishers making available technical facilities that permit the advertisement to be seen or heard, but this is not any different from that.  Relevantly, his Honour says it does not follow that the broadcaster has thereby endorsed or adopted the information conveyed. 

Now, his Honour, therefore, is looking at the keyword insertion through the prism once again of whether this results in adoption or endorsement which we, with respect, submit is the wrong analysis of the keyword insertion feature.  This goes to, as the Full Court regarded it, as part of the conduct in determining whether Google made the representation. 

We do not cavil, with respect, with the proposition the keyword insertion does not have the consequence of endorsing or adoption.  That may well be so, but that is not the point, with respect.  The Full Court picked that up in their judgment and that is where the Full Court, with respect, departs from what the primary judge had to say in their analysis of all the facts.  I will come back to that in a moment, but if I can just in passing take your Honours back to paragraph 187 of the primary judge’s reasons, and he says that:

the knowledge that ordinary and reasonable members of the class would have understood –

four things.  If your Honours look at those four things, his Honour is talking about the display of the advertisement.  The word “displayed” appears a number of times in that paragraph.  It is clear that his Honour is looking at how the advertisements are displayed.  What the Full Court does is, with respect, accepts what his Honour says at 187 but says there is more to it than just the display of these advertisements as a result of the search query.  There are other things, one of which is keyword insertion.  That is where one says, with respect, that 187 is correct up to a point and the Full Court takes it beyond that and says well, these are other things that we have to look at which the primary judge did not do.

HAYNE J:   Now, you say there are “other things” to which attention must be paid.  One of them – perhaps the primary one – is keyword insertion.  When one has regard to those, what is the principle that is to be invoked by having regard to this additional thing?

MR WHITE:   The legal principle is that one has to have regard to all the relevant conduct that Google engaged in that was directed towards the display or production of this ad.

HAYNE J:   Be it so, with a view to demonstrating what?

MR WHITE:   That Google engaged in misleading conduct.

KIEFEL J:   Is it a quantitative test?

MR WHITE:   It depends, with respect, what your Honour means by quantitative?

KIEFEL J:   Well, is there some sort of point you get to when you say they are sufficiently connected?  You opened - I think your second sentence was “Google’s conduct as contributing to or resulting in the effect of misleading”.

MR WHITE:   Yes.

KIEFEL J:   So is that what you are talking about?

MR WHITE:   Yes.

KIEFEL J:   At some point you say they are sufficiently involved to be held liable under section 52?

MR WHITE:   Yes.  In Butcher v Lachlan ‑ ‑ ‑

FRENCH CJ:   This is a bit like pulling out of a cloud of facts a characterisation.  You say you look at all the facts and then out pops the answer, did Google or did it not engage in misleading ‑ ‑ ‑

MR WHITE:   It does, your Honour, because ‑ ‑ ‑

FRENCH CJ:   Well, just a minute.  What is it that you say that Google did that can then be characterised as engaging in conduct that was misleading or deceptive or likely to mislead or deceive?

MR WHITE:   Well, that requires an analysis of some of the material that I need to take your Honours to with respect to the facts so that your Honours have an understanding of what are the facts that we rely on to show ‑ ‑ ‑

HAYNE J:   I understand you want to take us to the facts and you will no doubt do so, but I would like to have some understanding of what is the principle or what I am to look for in those facts.  I would understand it to be the proposition that, looking at the facts, it should be concluded that Google made the representation.  Is that right?  Is that the endpoint of the inquiry to which you would have us come?

MR WHITE:   That is the endpoint and important in that endpoint, or getting to that endpoint, is that Google determined itself whether the ad would be published at all; if so, in what order and how it would appear, and also, of course inserting the keyword or search term into the searchable, clickable blue headline.

KIEFEL J:   Do you say in this process that whether or not Google would be understood as making the representation to people is not relevant?

MR WHITE:   Your Honour, I am not saying it is not relevant.  I am saying it may be a relevant matter to have regard to.

KIEFEL J:   Well, how relevant, though?  In this context, granted that the liability of principles might alter, in this context where, akin to an information provider, there is a search engine that is responding to an inquiry, how relevant do you say it is?  It is a matter of some significance?  I say that in particular because his Honour made a finding, the primary judge made a finding at paragraph 191 that “Google did no more than represent” these as advertisements, and that it is:

most unlikely that they would have understood Google to be endorsing or adopting a representation –

that is to say, making a representation itself.

MR WHITE:   Well, his Honour, with respect, was in error in that regard because of the way in which he did not assess the entirety of Google’s conduct and at 188 his Honour makes a similar finding - at the end of 188:

Even so, ordinary and reasonable members of the relevant class would have understood the message being conveyed to them by the publication of such an advertisement was one from the advertiser rather than the publisher.

KIEFEL J:   I am sorry.  So, your point is, as I think was discussed earlier, that this may be a case where it does not matter that readers did not realise Google was representing anything more than an advertisement?  What has to be gone into is what Google actually did in the background before the representation was made.

MR WHITE:   Yes.

KIEFEL J:   But does that not mean that you constrict the consideration of Google’s conduct to a point immediately before the making of the representation and you deny the representation itself and the making of it as relevant to Google’s liability?

MR WHITE:   No.  The conduct included the display of the blue clickable headline containing the search term in collocation with the URL.  That was the endpoint of what Google did.  So, it is everything Google did up to and including that point which is relevant and, of course, in the context that this was a search result in response to a search query.

KIEFEL J:   But the part that you exclude is what it conveyed in its entirety, including about Google.

MR WHITE:   Yes.  But what was known to the user, by looking at the screen, was that its search term had been placed into a blue clickable headline in collocation with the URL.  It may not have known anything else about what Google did and, in our respectful submission, that is sufficient for our purposes as well.

FRENCH CJ:   You have to say, have you not, that Google can be said to have constructed the statement that appears on the website even if it was not the only party involved in that?

MR WHITE:   Yes.

CRENNAN J:   On your argument you ignore the advertiser’s text.  You are only looking at a representation about affiliation or association between two parties arising out of the keyword insertion process and the URL.

MR WHITE:   Yes.  It was never a part of our case, of course, that the black text was being represented by Google.  His Honour points to the black text as an example of why Google did not make the representation, but that, with respect, is not an answer to the question because whilst the black text may not have been a representation by Google, it does not mean that of course Google was not making the representation that his Honour found to be misleading.

CRENNAN J:   But the text is part of the sponsored link, though?

MR WHITE:   Yes, it is part of the sponsored link.

KIEFEL J:   The black text makes it more clear to a reader that it is an advertisement involved.

MR WHITE:   Yes.  There is no dispute, of course, now that what we are talking about are advertisements, and users would have understood them to be advertisements.  With respect, because his Honour considered them to be advertisements then dealt with them, as many cases do, about whether Google was a mere conduit or whether it did more and adopted or endorsed, which are the authorities his Honour turned to.  With respect, his Honour did not start at the very first starting block and say, “What was Google’s conduct?” which is what the Full Court did and, with respect, we say correctly so. 

But of course, all of this is in a context of a search engine which delivers up search‑based results relevant to the search term and the applicant’s defence conceded that sponsored links were ranked according to relevance.  That is in paragraph 10 of their defence in the first appeal book at page 96, paragraph 10(e) where Google pleaded in defence that:

the position and order on the results page of the sponsored links is determined by the AdRank of the sponsored link, which is calculated –

in a particular way –

multiplying the price per click that the third party has agreed to pay by a ‘quality score’ . . . based on the click‑through rate for the sponsored link, the relevance of the sponsored link to the search query, and other factors ‑ ‑ ‑

HAYNE J:   What is the significance you are attaching to where on the page the misleading statement appears?

MR WHITE:   None.  Only to make the point that there was no issue that the advertisements were displayed by reason of relevance to the search query and that it was Google, as your Honours will see in a moment, that – well, it is even pleaded and accepted that it was Google that determined relevance.  That is part of the conduct, we say, that is relevant to assessing whether Google engaged in prescribed conduct. 

HAYNE J:   A newspaper determines the place in which an advertisement will appear in its pages by charging different prices for location.

MR WHITE:   Indeed, but in this situation it is Google determining whether the advertisement appears at all, based on whether Google regards it as sufficiently relevant to the search query.

HAYNE J:   Yes, that is the criterion it employs, I understand that fact.  What is the legal significance of that fact?

MR WHITE:   The legal significance of it is that Google, in response to the search term, is delivering up an advertisement which contains in its blue clickable headline the search term in colocation to the URL in response to and said to be relevant to the searcher’s inquiry.

KIEFEL J:   The decision by Google is to whether it is said at all?

MR WHITE:   Yes.

KIEFEL J:   What does it say about what Google says about its contents?

MR WHITE:   Google determines whether the keyword responds to the search term.  By reference to broad match, which is a facility that Google uses, it also determines whether the keyword has a sufficient association with the search term to warrant it being displayed in response to the ad.

KIEFEL J:   I think the description or the finding his Honour made was that, in a sense, as a publisher it permits the advertisement to occur.  That is all of its processes and the keywords have that effect, it is a kind of permission.

MR WHITE:   It is a kind of permission.

KIEFEL J:   It passes through the gate.

MR WHITE:   A filtering process through the gate and determines whether it is to be published.

KIEFEL J:   But we still have not got to what Google is saying about the content of the advertisement?

MR WHITE:   Well, Google places the search term in the blue clickable link and it is the collocation of that search term with the URL that is said to give rise to the misleading representation.  It is only Google that determines, with respect, whether the keyword is inserted and displayed.  True it is that the advertiser selects the keyword and even selects where the keyword insertion is to be engaged, but it is Google that decides whether that advertisement in that form is going to be delivered up to the search term.

KIEFEL J:   Is that the critical step in your argument?

MR WHITE:   That is a critical step in our argument, yes.

CRENNAN J:   But the technology permits the response to be shown the way it is.

MR WHITE:   Yes, or in other words to create the - or to produce the advertisement in response to the search term.  As Mr Dulitz says, Google determines whether, if and how the advertisement is displayed.  That was not an issue in the case.  The Full Court, with respect, regarded that as important and a piece of conduct on the part of Google in the analysis of all of its relevant conduct to say that Google made the representation.

FRENCH CJ:   But you must go further than to say that Google simply allows somebody else to do something on its website.  You must take the further step, as I understand your argument, to show that Google can be said to have constructed this statement.

MR WHITE:   Yes, your Honour, with respect, is correct. Can I take your Honours to 2AB, 549 of the appeal book? This is a Google document and your Honours see at 549 at about line 20, this deals with what Google says are the benefits of advertising on Google because of the targeted nature of the advertisements, as opposed to traditional advertising which is disseminated to a wide range of persons who may or may not be interested in the advertising. Of course, we are all, I suppose, familiar with that concept:

Targeting enables you to show your ad only to those users who specify particular keywords.  Search advertising also enables you to target your ads to the right customers at exactly the right time – when they are looking for your product or service.  Targeting works hand in hand with relevance to improve the effectiveness of your search advertising campaign. 

Relevance.  A measure of how closely a search result – or a search ad – matches the user’s query.  Relevance is key to harnessing the power of search advertising.  The more relevant your ad, the more likely the audience will be motivated to respond to your call‑to‑action.  At the same time, the relevance of your ad and your ad’s landing page can enhance the user’s search experience, while irrelevant ads can cause users to ignore advertising altogether.

Now, at 768 of the same book, at line 30, or slightly above line 30, at line 25 maybe:

These ads are ranked by performance – that is, their positions are determined by both cost‑per‑click amounts and clickthrough rates.  Therefore, advertisers cannot remain in the top position(s) unless their ads are relevant . . . 

With traditional advertising and most forms of online advertising, ads are simply broadcasted to a wide range of audiences.  Google AdWords ads, however, are targeted to people’s specific interests.

When a user enters a search query on Google, they see the natural search results for that query, along with AdWords ads that are highly targeted to the search topic.  Thus, AdWords ads are as relevant and useful as Google’s search results.  Your ads will reach users at the precise moment they are looking for your product or service.

So, in other words, a search engine is in every sense an information retrieval system that seeks to guess what the user is looking for and to achieve the best guess Google puts in place processes and systems which determine whether, how and if the ad is displayed, and that appears at 1 appeal book 164, paragraph 8 where. in the evidence of Mr Dulitz, who is the senior product officer of Google, in paragraph 8 Mr Dulitz says:

Whether, how and in what order those Sponsored Links appear along with Organic Search Results is the product of a complex process that is Google’s proprietary design.  Likewise, whether, how and in what order the links to context on the Web appear in the Organic Search Results is the product of a complex process –

Now, in our respectful submission, this process of seeking to guess what is the best result means that Google does more than simply publish an advertisement as a mere conduit, but is in every sense the maker of it.

HAYNE J:   Sorry, in every sense is ‑ ‑ ‑

MR WHITE:   The maker of the advertisement, together with the advertiser.

CRENNAN J:   Do you mean going beyond formatting?

MR WHITE:   What I mean is, its processes in determining the relevance of the ad as part of its conduct create or make the final product.  The insertion of the search term in the blue clickable headline is the result of Google’s systems and processes designed to make the ad as relevant or responsive to the search term.

HEYDON J:   But the fixing together of “Just 4x4s Magazine” and “ Google did not make that.  It took that.  Is that not so?

MR WHITE:   When your Honour says “it took it” ‑ ‑ ‑

HEYDON J:   Mr Bannon this morning told us that what was misleading about page 794 was that it gave the impression that “Just 4x4s Magazine” had some connection with “tradingpost”.  Now, that two lines of text was not made by Google, or am I wrong - page 794.

MR WHITE:   Yes, that is true, but Google makes systems available that bring that together, and deliver it up together with the clickable link.

HEYDON J:   If you can demonstrate that well and good, but I had understood that those two lines were composed by someone in “Just 4x4s Magazine”.  That was handed to Google, those two lines.  They might place those two lines in conjunction with other bits of information, and follow the points that Mr Dulitz was making, but just those two lines by themselves were, as it were, a given for Google.

MR WHITE:   True it is that “Just 4x4s Magazine”, the words appearing in blue, were selected by the advertiser as keywords and selected then to be the subject of keyword insertion which is the system made available by Google and either at the same time or some other time provided the URL which is the letters in green.  It was Google’s system that displayed the ad in this way in response to the search term “Just 4x4s Magazine” and embedding the search term into the headline.  Only Google could do that.  Google determined whether there was a sufficient relevance or association between the ad and the search term such that the search term would be included in the headline.

KIEFEL J:   When you say determined, you mean an algorithm or algorithms applied in a program run this through and determine it, that is determination you are attributing to Google?

MR WHITE:   Yes, placing of the keyword in an auction, its eligibility for the auction based on relevance in part, determined by Google, amongst other things, and then where it appears on the screen, again the result of Google’s algorithms, and the insertion of the search term in the headline.  All the client does is identify in a database that we want “Just 4x4s Magazine” the subject of keyword insertion.  It is then up to Google to decide whether that is going to occur.  The advertiser does not know beforehand whether, if and how this ad is going to be published.

KIEFEL J:   So far I think you have pointed to Google allowing an advertisement, determining its relevance in order, and giving advice to advertisers.  You are going to take us to some further steps after lunch, are you?

MR WHITE:   Yes.

FRENCH CJ:   That would be an appropriate moment to adjourn?  We will adjourn until 2.15.

AT 12.50 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.15 PM:

FRENCH CJ:   Yes, Mr White.

MR WHITE:   Could I just return to a comment that Justice Heydon made before the adjournment.  True it is that the advertiser provides the keyword and selects keyword insertion for the purposes of the publication of the ad.  It is only Google that makes available the functionality, being the clickable blue headline, which is the basis for the making of the representation. 

This is not a static document.  The critical component of the display page is the functionality that is embedded in the blue headline, being its clickability.  As the trial judge found, users would understand that by clicking on the blue headline they would be taken to a website that had some association or affiliation with the search term that they had entered and which also appeared in the headline.  This is not a case about formatting or content.  This is a case about the importance of the clickability of the headline and only Google can make available that functionality.

CRENNAN J:   Could I ask you, by reference to a page in appeal book 741, just about those issues you are identifying in the context of what Justice Heydon did put to you before lunch?

MR WHITE:   Yes.

CRENNAN J:   I have chosen over lunch the request relevant to the Just 4x4s Magazine issue that we have been talking about.  There has been occasion to look at appeal book 794 in this context earlier.  Looking, then, up at the top left there is a reference to “Sensis”, which I understood from the evidence was engaged by Trading Post to handle their AdWords account.

MR WHITE:   Yes.

CRENNAN J:   Then if you look at the top of the page on the left side, the second band, there are two text ads which appear to have been added to the account.

MR WHITE:   Yes.

CRENNAN J:   It is in that context, is it, that there would be a link to the Trading Post URL?  That is to say, it would be a request from Trading Post.

MR WHITE:   I think so, but can I answer your Honour’s question this way?

CRENNAN J:   Yes.

MR WHITE:   If it is unhelpful, of course, no doubt I will be told.  But at 738 there is what is known as a keyword report in relation to the 4x4 Magazine account.  A keyword report summarises the details of each time an advertisement, the subject of keyword insertion, responds to a search term that contains the keyword.

CRENNAN J:   Yes.

MR WHITE:   For example, can I just take you to 738.  Your Honour sees the first column has a number of numbers – 1, 2, 3, 4 and 5.  If one goes to No. 4 and reads across the page, these are the relevant details in relation to the 4x4 ad that was published.  Your Honours sees, for example, under column B at the top of the page the AdGroup is entitled or labelled “4WD”, four wheel drive, and then the Ad Text further along, it appears that Google has given the text that is going to be thrown up some abbreviation – ABWB.  We know under the heading “Impressions” that this ad was seen 107 times by people who had inserted as a search term “4x4 magazine”.

There were 26 click throughs, so on 26 occasions someone clicked the blue clickable headline and was taken through to the URL of the advertiser.  There is some information there about the cost per click, and the keyword under the heading “Keyword” in column J, is “just 4x4s magazine”.  That is the keyword that was nominated by the advertiser.  Then you see under the heading at column L, line 1 – this is the first line, so this is the heading of the advertisement, what is to appear – because it is within what Google calls “curly brackets” this is an instruction to use dynamic keyword insertion.  So whenever the keyword appears within curly brackets, keyword insertion is on and the keyword is “just 4x4s magazine”.  Then your Honours will see after it says “KeyWord:Trading Post – Auto”, the words “Trading Post – Auto” are known as default words, because if the keyword is too long for keyword insertion in the headline a default mechanism applies and those words “Trading Post – Auto” will appear instead.

Then you have got the text, which is lines 2 and 3.  If your Honours go to the actual ad, which is at 794 of the appeal book, you will actually see the impugned ad contains the keyword “Just 4x4s Magazine”, and lines 2 and 3 of the text as identified in this report, “New & Used 4WD Cars”, et cetera.  There are keyword reports for each of the advertisements in question.

Your Honours will also see under column O, “VisibleUrl”.  That is the URL that appears in the advertisement that the advertiser has nominated.  Here it is “ The “DestinationUrl”, which is the next column, whilst that may have been the visible URL, the advertiser can actually identify the page to which the user will be taken to, which may be different to the visible URL – that is, of course, when they click on the blue headline.  They may not be taken to the visible URL that appears below.  The advertisements appeared between the two dates under columns Q and R, 1 January 2007 and 1 June 2007.

CRENNAN J:   Can I now, if I may, just pursue with you page 741, which is, as I understand it, the request.  I had just mentioned to you that there were two text ads added and then if you look in the first block, five lines from the bottom there is a reference to 246 keywords being added.  So on the occasion of the two text ads being added, together undoubtedly with the URL, there were 246 keywords added.  Do you see that?

MR WHITE:   Yes.

CRENNAN J:   Then in the second block, in the second line, for example, you have got “cheap 4x4”.  Do you see that? There are two blocks on the page.  In the second block you have got, I presume, the 246 added keywords, starting with the words “a hummer”.

MR WHITE:   Yes, I have got that.

CRENNAN J:   In the second line there, there is “cheap 4x4”.

MR WHITE:   Yes.

CRENNAN J:   I am just picking the examples.  First of all, this page shows, I think – and tell me if I am wrong – that the advertiser chooses, or can choose, a whole group of keywords; in this instance, 246 keywords.  So it is always the advertiser who chooses the keywords, which is the proposition, I think, Justice Heydon put to you.  If the dynamic keyword process is chosen, one of these 246 – if it matches the search inquiry – will come up as the headline.

MR WHITE:   Yes.

CRENNAN J:   So “cheap 4x4”, for example, if it comes up with the headline, there is no problem, I would not think.  Then if you look 10 words from the bottom there is a reference to “just 4x4s magazine” in that second block in that group.  Putting all of that together it seemed to me that, in a sense, what is happening is Google has a template and the advertisers can then make a request to have an advertisement which will follow, in some respects, the template.

What they can do is add a text of an advertisement.  You have pointed out that that is the black lettering, I think, and they can add a great number of keywords.  I suppose the alternative is what I think Mr Bannon was suggesting this morning; they could have 246 texts and pick one of these keywords per text and achieve the same result.  He was advancing that proposition as being an advantage, if you like, to the advertiser of the dynamic keyword process.

MR WHITE:   Yes.  The Google documents disclose the real purpose of dynamic keyword insertion.

CRENNAN J:   One could look at that too, I am sure.

MR WHITE:   Yes, which does not talk about the benefits that my friend directed your Honour’s attention to.

CRENNAN J:   No.  I am just wanting to see from the primary materials how it all works.

MR WHITE:   Yes.

CRENNAN J:   It seems to me there is a template and it seems to me the advertisers choose the content they want in conformity with the template and then, as I understand it, we are coming to your point, which is that somehow Google’s processes are involved in the conjunction of the keyword chosen by the advertiser and the URL which would have been identified in the context of the text.

MR WHITE:   Yes.

CRENNAN J:   I have assumed from the evidence that I have read that when there is a process in place for Google to work out just which advertisements will respond to a search inquiry, there would be all sorts of considerations like budget, or I think it is called the cost per click that an advertiser is willing to pay.  I think you have referred to quality; I am not sure what that covers.

MR WHITE:   I think quality score was one of the things I certainly made reference to.

CRENNAN J:   How do those considerations result in Google, on your case, making the misleading and deceptive representation as found by the trial judge?

MR WHITE:   Because Google determines which ad responds to the search query, it therefore determines what the response should be and, in so responding in the way it does, presents the advertisement which has the functionality of a blue clickable headline in collocation with the URL.  I cannot emphasise too much the importance to our case, at least, of the blue clickable headline.  It is a functionality which gives rise to the representation that by clicking on it there is an association between the search term, which becomes the headline, and the webpage to which one will be directed.  If this was a static document there would be probably no representation, certainly of that kind, made available.

CRENNAN J:   Is that not just something done by the technology in relation to Google’s template and the advertiser’s choice of multiple keywords?

MR WHITE:   Well, it is Google that determines whether that keyword chosen by the advertiser is going to respond and be triggered by the search term.  There is that part of it, the determination of the ‑ ‑ ‑

HAYNE J:   Why does Google choose that?

MR WHITE:   I beg your pardon, your Honour?

HAYNE J:   The advertiser surely chooses that.  Why does Google choose it?

MR WHITE:   Because Google’s processes determine the relevance or responsiveness of the ad to the search term.

HAYNE J:   It selects from the 246 available headlines which one will display, and every one of the 246 is chosen by the advertiser, is it not?

MR WHITE:   There may be a number of advertisers in the auction bidding for its keyword to be inserted in the headline, and it is Google that determines which of the how many hundreds ‑ ‑ ‑

CRENNAN J:   They might all have 250 chosen keywords, I suppose.

MR WHITE:   They may well do.  They may have many more, but Google determines which ones shall be reproduced and, importantly, it is Google’s functionality that makes available the clickable headline.  Without that, there is no representation.  Without that blue clickable headline, we accept that there is no representation being made.

HAYNE J:   So the bare fact of Google providing a hypertext link makes Google responsible for the misleading, or it makes it mislead or deceive, does it?

MR WHITE:   In response to the search term entered by the user.

HAYNE J:   Is that not the hinge about which your argument turns – namely, the phrase “in response to the search term put in by the user”?

MR WHITE:   It is part of the conduct that Google engages in, and it is not just, with respect, the search term.  It is in collocation with a website that Google has delivered up in response to the search term and which Google has, via its functionality, inserted into a blue clickable headline that gives rise to the representation.

KIEFEL J:   But you say Google’s conduct goes beyond the response identified by the Full Court.  In your notice of contention you identify the part it plays with keywords and then, I think in your submissions, other conduct which you aggregate.

MR WHITE:   Yes.

KIEFEL J:   So it is not just the responsiveness.

MR WHITE:   No, it is not just the responsiveness.

KIEFEL J:   It is everything that Google does that plays any part in the representation being displayed.

MR WHITE:   Yes.  We say that is because in the decision of this Court in Butcher v Lachlan Elder Realty, which is reported in (2004) 218 CLR 592 at page 605 in paragraph 39, the majority said:

It is not right to characterise the problem as one of analysing the effect of its “conduct” divorced from “disclaimers” about that “conduct” and divorced from other circumstances which might qualify its character.  Everything relevant the agent did up to the time when the purchasers contracted to buy the Rednal land must be taken into account.

In paragraph 40 :

For the following reasons, the agent did not engage in the conduct . . . which was misleading.

Their Honours said:

The agent did no more than communicate what the vendor was representing . . . That conclusion flows from the nature of the parties, the character of the transaction contemplated, and the contents of the brochure itself.

In paragraph 109 of Justice McHugh’s reasons, at page 625, his Honour said:

The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact.  In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole.  It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances.  It is an objective question that the court must determine for itself.  It invites error to look at isolated parts of the corporation’s conduct.  The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct . . . The court is not confined to examining the document in isolation.  It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document.

Following on from that, one cannot confine oneself to examining the display results in isolation.  We must have, with respect, regard to all the conduct of Google in relation to the display page, including its preparation, its distribution and any action or inaction in connection with the display page, if I can use that terminology by reference to this case.

KIEFEL J:   But, the conduct referred to in Butcher v Lachlan Elder of the agent had to be taken as a whole towards a conclusion about whether or not it could have misled.  So it was not just the brochure.  It was what was said about the brochure; it was all of that which, added together, may or may not have conveyed a representation.  That is not the exercise we are really engaged in here, is it?  The exercise that you are talking about is not whether Google said this, presented that and you add it together and it amounts to a representation.  We are talking about a representation which may be seen to be made and the question here is whether Google made it.

It is the making of the representation rather than, as I understand your argument, whether, as I have said before, you look, as you seem to, to each aspect of Google’s processes and what involvement it may have had in the display of the response and say, “Well, it’s had sufficient involvement for it to be characterised as connected with someone else’s misleading conduct”.  There seems to be more of a connection than a direct answer to an inquiry, did Google itself misrepresent and, if it did not itself misrepresent the facts, did it accept or adopt someone else’s misrepresentation?  That is the area we are in.  I am sorry; that is very discursive.

MR WHITE:   No, not at all, your Honour.  Thank you, because it does assist my thinking.  Can I posit this?  As I mentioned before, the user inserts the search term and gets a response which contains the search term in a blue clickable headline.  It is Google that displays the blue clickable headline and only Google that displays it and permits the functionality that gives rise to the representation.  As his Honour found, by clicking on it, a user ‑ ‑ ‑

KIEFEL J:   It is simply allowing the advertiser’s words to go forward.

MR WHITE:   It is more than that.  It is providing a functionality that permits the user to be sent to a web page that he or she believes has an association with their search term.

KIEFEL J:   The provision of functionality is misleading conduct?

MR WHITE:   We say that that is part of the conduct that is misleading.  It is the end result of many steps involving Google that has resulted in the display of the ad in response to the search term that has a blue clickable headline in collocation with the URL.  That is, with respect, all, we would submit, of Google’s doing.  As I say, true it is that the advertisers apply the URL address and the keyword, but it is Google that determines whether that ad responds to the query and makes available the functionality of the blue clickable headline and permits the insertion of the keyword into that blue clickable headline.  We would submit that is the making of a representation.  That is Google’s representation.  It is making a representation – there is an association between your search term and this URL.

HEYDON J:   How can Google avoid contravention, assuming your argument is correct?  It would sort of annihilate their business, would it not?

MR WHITE:   Your Honour, they have in place policies and procedures to prevent this from happening.  They have policies in relation to trademarks and they have policies in relation to deceptive business names.  This is just part of their business.  They take on this role, then they have to put in place, presumably, proper mechanisms to ensure that this is not abused.

HEYDON J:   Why is it that the trial judge dealt with 85(3) but it is not being considered by us?  If you are correct and the old section 52 has an extraordinarily wide impact in this area, and it is helpful to try and work out what the construction of 85(3) or the application of it in those circumstances, why are we not looking at that?

MR WHITE:   Because all of the ads that are the subject of this appeal were found by his Honour not to have the benefit of the defence afforded by section 85(3).

HEYDON J:   Google is not challenging that?

MR WHITE:   That is not challenged.  That is the answer to your Honour’s question, I believe.  If Google are found to be publishing and making advertisements of this kind then, like any other broadcaster of advertisements, they have the benefit of section 85(3).  If they have no reason to believe that the advertisement is misleading, then they have a defence.  The world does not stop spinning because Google might be placed in this position.  They have taken steps to protect themselves by putting in place policies in relation to the abuse of this very thing.

HAYNE J:   Where do I find the trial judge’s treatment of 85(3)?

HEYDON J:   196?

MR WHITE:   Page 966 of the appeal book at paragraph 196 and following.  His Honour there is dealing with it in relation to the publication of the Kloster Ford and Charlestown Toyota advertisements.  He also deals with it in the context of each of the other advertisements.  In relation to the Harvey World Travel advertisements, he deals with it at page 978 and 979, paragraph 242.  If I can make this submission:  our notice of contention contends that the Full Court was in error in not having regard to the involvement of Google employees in relation to the conduct that we asserted Google engaged in – the making of the representations.

The upshot of the evidence was – and your Honour sees it at 241 – in relation to the Harvey World Travel advertisements the involvement of a Ms Wood, who was aware that the relevant ad group contained the keyword “Harvey World Travel” and she had uploaded it into an ad group called “Generic Travel Competitor AdGroup”.  That contained 17 keywords, all of which were competitors of STA Travel.  We submitted to the Full Court that that was a relevant matter that their Honours should take into account in considering whether Google made the representation.  Their Honours found, we say erroneously, that that may have been relevant to a section 75B knowing involvement case, but it was a relevant consideration in relation to a principal contravener.

KIEFEL J:   The evidence relating to Ms Wood and Harvey World Travel, was that the only evidence of an employee having this direct connection to the keyword, or was it across the board with the others?

MR WHITE:   There was another example, and there are only two – that one and the Honda advertisement, where a Mr Bayley, his Honour found, recommended that a competitor named Honda .com.au to be included in the keyword ad group.  His Honour, at 984 of the appeal book, paragraph 256, said:

I infer that Mr Bayley knew that the additional 46 keywords which he added to the account . . . included the keyword “Honda .com.au” and that it would therefore be made to appear as the headline for a CarSales advertisement –

Those are the two situations in which the evidence established involvement of Google employees in recommending or having knowledge of competitors’ business names being used as keywords by the advertiser.  We respectfully submit that the Full Court was in error in failing to have regard to that involvement in considering all the relevant conduct of Google in making the representation.

Can I then briefly turn to what the evidence is and where it can be found concerning, firstly, the auction process, whereby each time a keyword is entered by a user in the search term an auction is conducted by Google.  That is conveniently set out in the evidence at volume 1 of the appeal book, page 170.  The evidence of Mr Dulitz can be found at paragraph 36, at the bottom of the page, where Mr Dulitz stated:

Every time a user enters a query, an “auction” . . . is triggered that determines which Sponsored Links to show, which order to show them in and how much to charge the AdWords customers in question.

In 39 he then talks about the uniqueness of each auction and the factors that influence it:

Google first determines whether the ad text is eligible to participate in the auction.  Eligibility is a function of several factors that determine the ad text’s “Quality Score”, which takes into account factors such as the relevance of the ad text to the query and the historical user experience with the page associated with that ad text when it appears as a Sponsored Link.  Ad text or Sponsored Links of insufficient quality are not eligible.  Once the ad text is selected by this score, they are subsequently ranked by virtue of the auction process, which is a complex proprietary process.

Now, the quality score referred to in that paragraph which determines eligibility is also referred to at 202 of the appeal book in a document prepared by Google.  Your Honours will see at about line 11 it is entitled “What is ‘Quality Score’ and how is it calculated?”  At about line 31:

Quality Score helps ensure that only the most relevant ads appear to users on Google –

Over the page, at about line 13:

A Quality Score is calculated every time your keyword matches a search query – that is, every time your keyword has the potential to trigger an ad.  Quality Score is used in several different ways, including influencing your keywords’ actual cost-per-clicks –

and so forth.  At line 20:

Below is a list of the factors that make up Quality Score –

Then under the heading “Quality Score Formula” there are a number of matters your Honours will see that make up the quality score formula, including:

The relevance of the keyword to the ads in its ad group

and –

The relevance of the keyword and the matched ad to the search query

If Google permits the ad to go into the auction its ranking or ad rank appearance is based on the cost per click multiplied by the quality score.  That appears at 204, line 15, where your Honours see:

For Google and the search network, Ad Rank is defined by your keyword’s Quality Score and cost‑per‑click (CPC) bid.  Quality Score in this instance differs from the factors listed above in two ways . . . 

When calculating ad position on a search network placement, Quality Score considers the CTR on that particular search network –

So a low quality score result in an inactive keyword and not eligible for auction.  That appears at 2 appeal book 765, line 30.  So if Google determines that the quality score is too low, it will not be eligible for auction.  At 765, line 30:

When you submit a keyword, we first evaluate how it will perform on Google by determining its quality through its Quality Score.  The Quality Score is determined by your keyword’s click‑through rate (CTR), relevance of your ad text, historical keyword performance and other relevancy factors specific to your account.

Then, based on this Quality Score, we calculate your keyword’s minimum bid.  Keywords with a high Quality Score will be assigned a low minimum bid and vice versa.  If your maximum cost‑per‑click (CPC) meets this quality‑based minimum bid, your keyword will enter into an active state.  If it does not, the keyword will be marked as inactive for search.

Then your Honour sees a bit further down:

Google’s Mission . . . 

Internet users use Google search because they believe that they will find the information they are looking for.  To make this happen, Google focuses on providing the most relevant ads –

Over the page, at about line 20:

Inactive for search:   These keywords don’t have a high enough Quality Score and CPC bid to trigger ads on Google and the search network . . . This means the minimum bid is higher than your CPC bid.

That is how Google determines whether the keyword is eligible for participation in the auction.  If the keyword is eligible for the auction, in addition Google makes available a number of options to the AdWords customer as to how they wish their keyword to match up and trigger or be triggered by the search term.

Could I take your Honours briefly to 1 appeal book, page 171.  Firstly, if I may take you to 1 appeal book 123, where Mr Dulitz there is giving evidence about the systems used to determine relevance.  Your Honours see, at about line 18, where he describes the various matching options, which are exact match, phrase match and broad match.  In relation to exact match:

Google to match the ad only when the advertiser’s key word, you know, directly match an abstracted version of the‑ is querying another as phrase match, you know, which I am less familiar with but I believe it involves the advertiser’s key words matching the subset of the user’s query and expanded broad match is, you know, a mechanism that the advertiser may choose to allow Google to perform its own, you know, broader matching and show the ad even on queries that, you know, may not contain the exact key words but that, in Google’s opinion, are sufficiently related that they would provide a good experience –

So in the case of broad match, it is Google that determines whether the ad has sufficient responsiveness to the search term. At 1AB 171, paragraph 37, Mr Dulitz in his affidavit describes the matching options that are available and, in particular, broad match, which triggers the links based on known associations determined by Google’s proprietary algorithms. The evidence is that, by default, keywords are set to broad match. No decision is made as to which matching option the advertiser wishes to choose from; broad match is the default setting. I will not take your Honours to it, but that appears at 2 AB 569, line 20.

Now, the other important system that Google has in place to ensure as much as possible that the best guess is given to the user’s search term is dynamic keyword insertion.  Can I take your Honours to page 580 in the second appeal book.  Under the heading “Shape ads around keywords”:

Google offers “dynamic keyword insertion”, a tool which automatically inserts your keywords into your ads.  Because it enables you to insert keywords into each creative, they are even more relevant to every search.

Then there is a reference to creating a keyword within the curly brackets, which your Honours saw in the keyword report, in respect of the 4x4 advertisement. In relation to keyword insertion, one further reference: 1AB 263. Your Honour sees the heading at about point 3:

4.        Create straightforward, targeted ads.

A bit further down:

Include keywords in your ad text . . . 
Include your keywords in your ad text (especially the title) to show users that your ad relates to their search.  If your ad shows when a user searches on a keyword in your ad group, the keyword will appear in bold in your ad text.

In our respectful submission, the relevance of keyword insertion in a blue clickable headline conveys the representation to the user that there is an association or affiliation between the search term and the website of the advertiser.  That is made clear, with respect, from Google’s own evidence.

FRENCH CJ:   What you are taking us to rather looks like a play box for the advertisers, does it not, rather than Google constructing, which was the term I put to you earlier?  I thought you had accepted the statement which is said to be the misleading representation.

MR WHITE:   Google does more, with respect, than provide a toolbox.  It provides, and only it provides, the clickable blue headline.  That is the functionality it provides in the display for the ad.

FRENCH CJ:   It is the fact that the headline is clickable and that it takes you to the URL, which appears on the ad.  That is an outcome of conduct by Google in making a misleading statement or participating in the construction of a misleading statement?

MR WHITE:   It is the conduct of Google, which we say involves each of the matters I have just taken your Honours to, resulting in the display in response to a search term, an advertisement that contains within a blue clickable headline that search term in collocation with the URL.  It is only Google that can make that happen.

HAYNE J:   What do you mean it is only Google who can make that happen?

MR WHITE:   Google owns the search engine ‑ ‑ ‑

HAYNE J:   Yes, I understand that.

MR WHITE:   That is the response that they deliver up to the search query, and the search query is answered by delivering up a blue clickable headline with the search term in collocation with the URL.  It must be, with respect, Google saying, “Here is an association between the search term you have entered and this website”.

HAYNE J:   Why?

CRENNAN J:   Why?

MR WHITE:   Because it is only Google that can provide the interactive functionality of the blue clickable headline, albeit the keyword chosen by the advertiser.  It is still Google’s response and it is still Google’s technology that permits that to happen.

CRENNAN J:   But how is Google representing the association or affiliation?

MR WHITE:   Because a user understands that if he or she clicks on the blue clickable headline containing their search term, they are going to be taken to a website which they believe has some affiliation with that website, that their search term has some affiliation or association with the advertiser’s website.

CRENNAN J:   Both those bits of information have been provided by the advertiser.

MR WHITE:   Correct, but not the functionality of the blue clickable headline.

FRENCH CJ:   But what is the difference in principle between attributing responsibility to Google on the basis of that functionality, and attributing responsibility to a television broadcaster on the basis that without the television broadcaster, the ad could not be broadcast?

MR WHITE:   Because one, this is in response to a search query and, two, users understand that by clicking on the blue clickable link they will be taken to a website that has some information about that search term on that website.

HAYNE J:   Well, where is the finding to that effect?

MR WHITE:   It is page 964 of the appeal book, paragraph 187 of the primary judge’s reasons, and the second bullet point.

HAYNE J:   Yes:

they will be taken to the website address displayed –

You put forward a very different proposition, I think, namely, response to the search term.  Where do I identify a finding to that effect?

MR WHITE:   If I can take your Honours to 975 of the appeal book, paragraph 228, his Honour set out the representations that were alleged and his Honour found representation B, Court, G and H were made.  The first two relate to association or affiliation, the third relates to:

information regarding the Harvey World Travel Businesses or any of them could be found at the STA Site (representation G); and

information regarding the travel services provided by the businesses associated with the name “Harvey World Travel” could be found at the STA Site (representation H)

HAYNE J:   Again, I think those are propositions different from the proposition you previously advanced.  The proposition I had understood you to advance – correct me if I am wrong – was a proposition that connected the blue clickable headline with response to a search and that the headline was, if you like, responsive to the user’s search.  That is as I understood it.  Do correct me if I am wrong.  The only thing of which I am aware – and this may be a statement about my ignorance and nothing greater than that, it is a very large subject, my ignorance – is paragraph 92 of the Full Court reasons at 1076, the last two lines.

MR WHITE:   Paragraph 10 of the defence, which I took your Honours to before the adjournment, states that the sponsored link appears having regard to its relevance to the search term.  The sponsored link contains the blue clickable headline, the URL and the two lines of black text.  There was no dispute that these ads were delivered up because they were regarded as responsive to the search term inserted by the user. 

Indeed, in one sense it is self‑evident because that is the whole purpose of a search engine.  Why would one deliver up non‑responsive ads to the user and, indeed, all of Google’s documents point to making sure that the advertisement is relevant and responsive to the search term and the whole process is trying to make the best guess as to what the user wants.  The systems that I have taken your Honours through, that Google have engaged in, seek to bring about a result in which the advertisement is responsive to the search term.

It therefore follows, we would submit, that Google does make the representation when it is delivering up an advertisement in response to a search term that contains a clickable line in collocation with the URL.  It determines whether it is triggered and its processes enable the functionality of the clickable blue headline.

CRENNAN J:   So are you saying that the fact that the content of the sponsored link is responsive to the user’s query makes Google responsible for any misleading aspect of the content of the sponsored link?

MR WHITE:   The fact that it is responsive is a relevant part of the conduct that we say, seen in its entirety, not in isolation, points to Google having made the representation.  The Full Court regarded responsiveness as important.  They also regarded the AdWords program as important as well.  They regarded both as important.  With respect, we put the case on the basis that both are important because they are both relevant to understanding the conduct of Google.  They did not see it just simply as a response.

The Full Court had regard to the AdWords and the ability of Google to determine if, when and how the advertisements are delivered up.  Would your Honours just pardon me a minute?  At page 911 of the appeal book, the primary judge in paragraph 5 where his Honour talks about sponsored links not always appearing:

in response to a search request but when they do so they appear either above or to the right –

I have taken your Honours to the reasons of the learned primary judge and the point that the primary judge emphasised and appeared to solely be concerned with the fact that it was an advertisement and whether Google adopted it by reference to what was displayed on the page.  His Honour does not seem to have regard to the fact that the functionality of the blue clickable headline was critical to the question whether there was an association between the search term and the advertiser’s URL.

At paragraph 241, which is at page 979 of the appeal book, his Honour considers the Harvey World Travel advertisement.  He turns to the involvement of Ms Wood in that campaign and he says:

In any event, the key question is whether Google could be said to have endorsed or adopted the representations . . . Leaving aside Ms Wood’s involvement in the selection of keywords, the circumstances in which the Harvey World Travel advertisements appeared were not relevantly different to those in which the Kloster Ford advertisement or the Charlestown Toyota advertisement appeared.  In particular, there was nothing about the way in which the Harvey World Travel advertisements were presented on results pages to suggest that Google had endorsed or adopted –

any of those.  So it is quite clear that is what his Honour confined his analysis to.  Paragraph 187 of his Honour’s reasons, which points out four important matters that his Honour considered a reasonable user would understand from looking at the display page does not have regard to keyword insertion or any of the other matters that we say one must take into account when considering whether the representation was made by Google.

The Full Court looked at the matter quite differently and the critical passages, with respect, appear from paragraphs 87 through to 96, which is 1074 and following.  Paragraph 96 is where their Honours posit the relevant question, which is what was Google’s conduct in responding to the search query?  The conduct they identified is back in paragraph 88, which is:

the display of the sponsored link in response to the entry of the user’s search term in collocation with the advertiser’s URL.

That must be understood to mean the display of the headline in the sponsored link in collocation with the URL.  That which is displayed by Google is called up by Google’s facility as its response to the search and the clickable link when clicked takes the user directly to the advertiser’s URL.  Having regard to those circumstances the Full Court found that a reasonable and ordinary user would conclude it was Google who was displaying the link in collocation with the URL, in response to the user’s search.  Important, with respect, in that finding is the fact that the link is a clickable link, which is what their Honours found or said in paragraph 88.  Then in 90 their Honours say:

Critical to this conclusion is the fact that the sponsored link is displayed on the screen in response to the user’s query –

In 91:

What the user is therefore told is that the advertiser’s message and the advertiser’s URL are an answer to the user’s query about the subject matter of the keyword –

Now, we submit all of that is Google’s conduct and that conduct is linked to, and is part of, the misleading representation.  In 92:

The conduct is Google’s because Google is responding to the query and providing the URL.  It is not merely passing on the URL as a statement made by the advertiser for what the statement is worth.  Rather, Google informs the user, by its response to the query, that the content of the sponsored link is responsive to the user’s query about the subject matter of the keyword.

In 94 their Honours say:

This conclusion is reinforced by a consideration of the nature of Google’s search engine, and the AdWords program.

Towards the end of paragraph 94:

Although the keywords are selected by the advertiser, perhaps with input from Google, what is critical to the process is the triggering of the link by Google using its algorithms.  That is a further reason to conclude it is Google’s conduct as a principal, not merely as a conduit, which is involved in each of the four instances –

Then their Honours distinguish, in 95, this circumstance from “a bill‑board owner or an owner of a telephone network or the publisher of a newspaper” where:

the medium is not concerned with the content of the advertiser’s message –

FRENCH CJ:   If one had to put it in one sentence, and maybe one cannot – I am trying to get away from this global formula of “all the conduct”, which always raises queries – is it right to say that on your case Google provides a clickable link in answer to a query from a user and to that extent Google makes a statement or conveys a representation about the relationship between the headline and the URL?

MR WHITE:   Yes, with this caveat:  that in your Honour’s observation the words “in collocation” provides the functionality of a clickable blue headline in collocation with the URL.  I think that, in one or two sentences, summarises the position.

CRENNAN J:   Does that mean that ordinary and reasonable users would invariably expect that whatever is thrown up in response to the user’s inquiry by Google is relevant to the keyword which has been inserted?

MR WHITE:   Being a search engine, one would imagine Google does its best to provide a response to the search term.  That is the whole rationale for Google’s existence.

CRENNAN J:   But is not the whole point of a search engine that they are trawling through vast amounts of material?

MR WHITE:   Yes, indeed, and carrying out an auction and determining eligibility for whether an ad should be displayed in response to the search term.  We do not have any problem with that.  The problem we have is they are providing a functional clickable blue headline that contains a search term of a business name that suggests some affiliation with the Google client which does not exist.

If it was a piece of paper that Google was handing about, a static document that simply had that ad text, I do not think we would be here.  But because users believe that by clicking on the link they are going to be taken to a website with some association or affiliation with their search term, that gives rise to the misleading quality.  Google is very much, we would submit, involved in producing or creating the advertisement in that sense.  I do not have anything further, your Honours. 

FRENCH CJ:   Thank you, Mr White.  Yes, Mr Bannon.

MR BANNON:   In response to the proposition that the blue clickable link either is the key or a key or we would not be here but for the blue clickable link submission, could I direct your Honours to the finding in relation to the HWT ad, firstly, at page 975 of the trial judge’s findings.  At paragraph 228 the first representation, “representation A”, might be thought to capture what my learned friend says was the key misleading conduct:

by clicking on the Harvey World Travel advertisement a person would be taken to a website –

That was representation A.  That was what his Honour found at 229 over the page at 976 which was one of the representations which was not made.  There was no appeal against that.  His Honour gave his reasons.  That is true of all of the impugned ads the subject of this appeal, other than Honda.com.au.  That is the only advertisement in respect of which his Honour made a finding that somebody would think that by clicking onto the link “they would be taken to the Honda Australia website” and that is at page 982 at 251. 

In relation to every other one of those advertisements, representation A was found not to be conveyed, which only exposes the proposition that their case was that the advertisement was self‑contained and conveyed representations of association, some of which were established.

Against the possibility that there is still any doubt at all that the position is that the advertiser determined the content of the advertisement, can I just - a little bit of repetition but 924, paragraph 57 of the trial judge’s finding, his Honour made it clear, the second sentence, that each sponsored link consisted of the three elements, namely the heading, the text and the URL.  At paragraph 53 his Honour had said, over the previous page that:

Sponsored links are created by advertisers –

His Honour said it again at 201 on page 967 specifically in the context of keyword assertion.  They choose the headline.  That followed, of course, from his Honour’s address at 965 in 192 and following, the additional argument which the only additional piece of conduct which my learned friend has submitted was identified in the pleading, namely the use of keyword insertion in paragraph 124.  His Honour addressed that and found and there is no disturbing of that finding that they directed the heading. 

The page your Honour Justice Crennan referred to is a good guide - that is at 738 of volume 2.  That is a report which is available to the advertiser and they can see there in the clearest of terms the combinations of their ads which they have dictated.  The elements are lines 1, 2, 3 and the visible URL.  All of those matters are chosen by them.
           My friend is correct in saying that the keyword there means that the keyword goes in and correct there is a size limitation, and that is the default headline.  Again, that default headline is chosen by the advertiser.  If one does refer to paragraph 124 of the pleading, it is worth noting that the matter identified in that paragraph ‑ ‑ ‑

HAYNE J:   Page?

MR BANNON:   Page 67.  The particular matter which was relied upon by my learned friend relating to the use of keyword insertion is at 124(b)(ii), where the allegation is:

(ii)permitted advertisers to create advertisements for display . . . which insert key words –

From beginning to end the case has always been, and it is the fact, and it has never been contradicted, that the advertiser creates the advertisement.  If you did not have an advertiser, there would not be an advertisement.  They are the ones who have to pay the money to enter into the auction.  They are the ones who say what they want to say.  It is accepted in relation to a couple of the matters that a couple of Google assistants or advisers made some recommendations and advice which resulted in the 85(3) defence not being available, but the responsibility for the ad always was – that is, advice which is accepted or rejected – the advertiser.  They created the ad.  That conduct may or may not have warranted a 75B allegation was never made.  The Full Court in that respect was absolutely correct that that conduct is irrelevant to a primary allegation of whether Google made the representations.

If I could just give your Honours a reference, at volume 3, 926 at paragraph 8, point 5 on that page, is part of the terms in which everybody signs up for, and that is one of the terms in which the – I am sorry, I will just make sure I have the right page.  At 926 it is recorded in the judgment, I am sorry, yes, at about line 40, as one of the terms set out that the advertiser agrees that they are responsible for the content of the ad.  Your Honour Justice Heydon raised a question, section 85(3).  Section 85(3) does have an indirect relevance, at least in two ways.  If one refers to the trial judge’s judgment at 966, at the foot of that page at 197, his Honour said it is clear that the contravention:

relates to an alleged contravention of Part V of the Act committed by the publication of an advertisement.

His Honour proceeds on the next page to deal, in particular at 200 and 201, with a contention put forward by the ACCC that the advertisement was not received in the ordinary course of business by Google because it was produced by Google’s automated processes.

That was not a matter which was further pursued and we were successful on some 85(3) defences and the ACCC did not appeal against that.  That was a critical element to the finding in relation to 85(3).  So that to the extent an argument is now sought to be put or was sought to be put before the Full Court that the ad was somehow or other created by Google, it is inconsistent with the approach they took before the trial judge and did not pursue.  So to that extent it is relevant.

It also has perhaps a wider element to which your Honour Justice Heydon may have been alluding.  His Honour at 198 refers to perhaps competing approaches in relation to 85(3) and in particular over the page at 968 approach is referred to in Guthrie as to whether or not 85(3) would permit one to escape liability if, notwithstanding why it did not have a system in place.  It may be accepted that there may be potentially unsettled controversy in relation to that. 

But whatever be the rights and wrongs in relation to that, the difficulty with the position put forward by the ACCC is that let it be assumed that they are right and the primary responsibility is for Google for any one of these advertisements.  Somebody brings one action or makes one complaint, the next time it happens or that particular advertiser – advertisers – does that mean Google has to investigate every one of their keywords, look at all the potential combinations of ads and ask the sometimes difficult questions as to whether there is misleading conduct?

Your Honours may or may not have the benefit of seeing the number of battery cases which appear.  Eveready versus Energiser and misleading conduct, they are seasonal, they have repeat performances.  Similarly, Optus v Telstra in relation to – or if the ACCC gets involved – claims as to unlimited ISP access.  What is the position that somebody such as Google or some equivalent position to do if they know of such cases?  If they know, for example, Optus or Telstra has a history of sometimes misleading do they have to examine each one of their advertisements. 

Section 85(3) and its potential inability to grapple with whatever view one takes in relation to it, to grapple with all the potential difficulties of putting primary responsibility on somebody like Google for all of these advertisements, is such that the Google business would be decimated.  You could not possibly handle the task of dealing with the problem.  One of the orders made by the Full Court was a compliance program.  It was inconceivable to know where you would begin and end in relation to a compliance program.  How are you supposed to comply? 

So in that sense it is, although not raised by the ACCC, worthy of consideration to recognise that 85(3) cannot possibly provide the protection for – and was not designed to provide the protection – to make a publisher responsible, either in this sort of case or generally, simply because they publish third party advertisements.

My learned friends rely on the auction process.  There are a couple of things to be said about that.  Firstly, the mere fact that Google internally determines that some people should have to pay more and some people less does not affect the question as to whether or not Google endorses or adopts or is responsible for the content of the particular ad.  My learned friend refers to certain relevance criteria.  None of that is explored in evidence and it is as equally available that such relevance is sufficient that the keyword insertion adopted by the advertiser matches the keyword which was selected by the user.

The reason why there is no investigation of that – because one can search the whole pleading and one will not find an allegation that the relevant conduct which made Google responsible for this was some internal selection process of the ads.  On the contrary, to the extent they made assertions in relation to Google’s conduct, it was limited to the involvement of particular account assistance.

Perhaps I should also add, going back to 85(3), that defence applies where the conduct is by reason of publication.  If the conduct alleged was not conduct by publication, which is the way we always saw the case, but some other anterior conduct, then 85(3) would not be a defence anyway.  They should have appealed those findings in relation to 85(3), on any view, but they did not.  It may be inferred they did not because the pleading says what it says – namely, that the relevant conduct is the publication and that is the form of the declaration.

The last matter I was going to refer to was the references in relation to broad match.  The evidentiary references given by my learned friend at 123 and 127 do not affect the proposition which I indicated in‑chief – namely, by reference to Ms Barker’s evidence – namely, that the content of an advertisement is not affected by the broad match process.  In other words, broad match may cause an advertisement to be triggered but it will not change the content of the advertisement selected by the advertiser because the content of the advertisement will only ever be the headline they select, either by an independently written out headline or a headline which involves keyword insertion.

I think to the extent broad match was used here, I think the more precise position is broad match was selected by the advertisers in this case.  In fact, it was not implemented in 99 per cent of the cases, or it did not need to be implemented because the search term exactly matched the keyword in any event.  May it please the Court.

FRENCH CJ:   Thank you, Mr Bannon.  The Court will reserve its decision.  The Court adjourns until 1.45 pm on Friday next, 14 September.

AT 3.28 PM THE MATTER WAS ADJOURNED