In a recent decision, the Brazilian Superior Court of Justice (STJ) surprised many by condemning a search platform – and not just the advertising company (i.e., the platform user) – to pay compensation for unfair competition.
The conviction was imposed due to an advertisement contracted by the platform user, in which the brand of a competing company was linked to the advertiser’s website, generating confusion and diversion of clientele.
Currently, one of the most used means of ensuring digital presence is hiring sponsored links on search platforms, through which the company pays for its website to appear as the top result in searches for certain terms, increasing visibility. However, many companies have been using this strategy to link keywords related to competitors to highlight their own websites and divert customers, a practice that has already been recognized as unfair competition by the STJ since 2022.
According to the STJ, there is unfair competition (and, therefore, liability) when: the tool (or any platform that publicizes online ads) is used to purchase a keyword corresponding to the competitor’s trademark or business name; the owner of the brand or name and the acquirer of the keyword operate in the same business sector, and the use of the keyword is likely to violate the identification and investment functions of the brand and business name.
However, in such recent decision, the joint liability of the search platform drew attention – despite the lack of legal provision. Even though the Brazilian Internet Civil Act (legislation that regulates the Internet and the application providers’ liability regime in Brazil) does not impose a duty to monitor content posted by users (third parties) in digital media, the STJ understood that the platform’s liability would arise from the simple dissemination of the ad considered parasitic and illegal.
Even though the Internet Civil Act is completing 10 years in force this April, Brazilian case law is still defining relevant guidelines on the matter, including for purposes of imposing duties on platforms and companies that operate online.
Expanding liability and changing expectations regarding the performance of companies without prior indication in law exposes platforms to litigation and creates legal uncertainty, which may discourage the development and/or arrival of new technology companies in Brazil.
