Google, wherever it can, takes a hands-off approach to what appears on its pages. Indeed, company insiders have long said the king of internet search is "philosophically opposed" to passing judgment on what should and should not appear on its sites.

Its mission is to organise the world's information, they argue, not to police it.

The Australian case could turn this lucrative laissez-faire model – Google reported a $1 billion profits in its latest quarter, the vast majority from search-based advertising – upside down.

"Brand hijacking" is nothing new. Sites have long attempted to fool web surfers into thinking they are somebody they are not in order to attract clicks and pinch sales from under the noses of rivals. BMW was effectively blacklisted from Google last year for allegedly fishing for clicks through what the search engine claimed was a misleading web page (the carmaker denied doing so). Such practices are known as "black hat" techniques, but often fall into a grey area under the law.

In a similar vein, it is alleged that Trading Post, the Australian classified ads magazine at the centre of the current case, bought sponsored links on Google's homepage – by bidding for keywords - in the name of two car dealerships. People clicking on the names of those businesses in Google found themselves on Trading Post's website.

The threat to Google is that the courts will rule that it has a responsibility to proactively police and prevent such behaviour.

Google sells millions of search key words every day. Regulating auctions to make sure bidders own any trademarks they are trying to buy would be horribly complicated.

The real risk, however, is that similar rules would spill over into other parts of Google's business and make the company responsible for all search results, not just the the sponsored ones that appear on the rights-hand-side of results pages which are being disputed in this case.

The company's lawyers have already been busy tackling allegations of copyright infringement claims from a publisher over its online books service and from newspapers over Google News.

The group is also involved in a legal battle involving YouTube. After buying the world's largest video-sharing site for $1,65 billion last year, Google found itself slapped with a $1 billion lawsuit from Viacom, the media giant behind MTV, which alleged that Google wasn't doing enough to prevent the appearance of bootlegged clips.

On this front, the law as it stands is on Google's side. As long as the company removes pirated material from YouTube in a timely manner when alerted by a disgruntled owner, it has done its duty, lawyers say. Google may well argue a similar line in Australia.

However, Viacom is seeking to test that law and is using the fact that Google has already been forced to rejig its stance as leverage.

Google is working on a filtering system that would automatically identify pirated material posted on YouTube. Something similar could be rolled out to regulate the auction of trademark keywords, but these systems are tricky. Google promised to add an anti-piracy filter on YouTube by January. None has emerged yet.

If the courts agree with Viacom and Australia's car dealers, that Google needs to be a pro-active policeman as well as a reactive philosopher, the world of search and the wider web could be radically changed.