Flowbee International, Inc. et al v. Google, Inc.

Filing 43

ERRATA re 42 Answer to Complaint and Counterclaim, by Google, Inc. (Attachments: # 1 Exhibit A)(Galvin, Cheryl) (Filed on 2/22/2010) Modified on 2/23/2010 (cjl, COURT STAFF).

1 QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP Margret M. Caruso (Bar No. 243473) 2 [e-mail] Cheryl A. Galvin (Bar No. 252262) 3 [e-mail] 555 Twin Dolphin Drive, 5th Floor 4 Redwood Shores, California 94065-2139 Telephone: [phone] Facsimile: [phone] 6 Attorneys for Google Inc. 7 8 9 10 11 FLOWBEE INTERNATIONAL, INC. and FLOWBEE HAIRCUTTER LIMITED 12 PARTNERSHIP, 13 14 vs. 15 GOOGLE, INC., 16 17 18 19 20 21 22 23 24 25 26 27 28
Case No. 4:10-cv-00668-LB ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA, SAN JOSE DIVISION

CIVIL ACTION: CASE NO. 4:10-cv-00668LB ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC. AND FLOWBEE HAIRCUTTER LIMITED PARTNERSHIP FOR BREACH OF CONTRACT DEMAND FOR JURY TRIAL

Plaintiffs and CounterDefendants,

Defendant and Counterclaimant.

Trial Date:

1

5.

Google admits that it allows third parties to bid on keywords that may trigger

2 display of their advertisements as Sponsored Links. Google denies the remaining allegations of 3 Paragraph 5. 4 6. Google denies the allegations of the fourth sentence of Paragraph 6 and denies the

5 implication that it allows "the misuse of the Flowbee Mark." Google admits that it currently has 6 a different trademark policy in Europe than in the United States. Google lacks knowledge or 7 information sufficient to form a belief as to the truth or falsity of the remaining allegations, and 8 therefore denies the same. 9 10 7. THE PARTIES Google lacks knowledge or information sufficient to form a belief as to the truth or

11 falsity of the allegations of Paragraph 7, and therefore denies the same. 12 8. Google lacks knowledge or information sufficient to form a belief as to the truth or

13 falsity of the allegations of Paragraph 8, and therefore denies the same. 14 9. Google admits that it is a corporation organized under the laws of the State of

15 Delaware with a principal place of business in Mountain View, California and the last sentence of 16 Paragraph 9. Google denies the remaining allegations of Paragraph 9. 17 18 10. JURISDICTION AND VENUE Google admits that in this action Flowbee attempts to assert claims under the

19 Lanham Act, 15 U.S.C. §§ 1114 and 1125, and that this Court has federal question jurisdiction 20 over such claims and supplemental jurisdiction over the Texas state law claims, but Google denies 21 the substance of all alleged claims. 22 11. Because this action has been transferred since the Complaint was filed, Google

23 denies that the allegations of Paragraph 11 need to be responded to, and on that basis denies them. 24 12. Google denies that venue is proper in Texas on the grounds of a forum selection

25 clause in a contract it has with Flowbee, but admits that venue is proper in this District, where its 26 principal place of business is located. 27 28
Case No. 4:10-cv-00668-LB 2 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

1

37.

Google admits that searchers for "flowbe.com" are shown the question, above any

2 results, "Did you mean: flowbee.com," followed by a natural listing for the searched for site 3 "flowbe.com." Google denies the remaining allegations of Paragraph 37. 4 5 38. 39. Google denies the allegations of Paragraph 38. Google admits that advertisers bid on the placement of their advertisements, and

6 the amount of such bids is one factor that may determine placement of the advertisement. Google 7 denies the remaining allegations of Paragraph 39. 8 9 10 11 40. 41. 42. 43. Google denies all of the allegations of Paragraph 40. Google denies all of the allegations of Paragraph 41. Google denies all of the allegations of Paragraph 42. Google admits that Internet users may add a Google Toolbar on their Internet

12 browsers to allow for Google searching even when not viewing a web page that features Google's 13 search engine, and the allegations of the first two sentences of Paragraph 43. Google denies the 14 remaining allegations of Paragraph 43. 15 44. Google lacks knowledge or information sufficient to form a belief as to the truth or

16 falsity of the allegations of Paragraph 44, and therefore denies the same. 17 45. Google admits that it offers a program called AdWords through which it offers

18 advertisers the opportunity to bid on keywords and have their advertisements displayed on the 19 Internet, including on Google's search engine in the form of "Sponsored Links" that appear above 20 or to the right of "organic" links. Google denies the remaining allegations of Paragraph 45. 21 46. Google admits that it has previously stated that "[k]eywords are the advertiser's

22 window into the customer's thinking ­ the most important basis for directing an advertising 23 message to precisely those people who want to see it." See "An in-depth exploration: why 24 search advertising works," available at http://www.google.ca/ads/indepth.html (last accessed Feb. 25 11, 2010). Google also admits that it has previously stated that "[a] list of keywords is, in turn, a 26 snapshot of the people who will use them ­ incomplete, to be sure, but also uncannily accurate in 27 its ability to bring buyers and sellers together." See id. Google denies the remaining allegations 28 of Paragraph 46.
Case No. 4:10-cv-00668-LB 5 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

1

47.

Google admits that many advertisers agree to pay Google for each time a web user

2 clicks on a "Sponsored Link" that appears on Google's search results page. 3 4 48. 49. Google denies all of the allegations of Paragraph 48. Google admits that keywords selected by an advertiser may trigger advertisements

5 in response to user search queries corresponding to keywords selected by an advertiser, and that 6 sometimes advertisers choose to include keywords in the text or body of their advertisements. 7 Google denies the remaining allegations of paragraph 49. 8 50. Google admits that it has adopted a trademark policy and trademark complaint

9 procedure and that Google takes allegations of trademark infringement seriously. Google admits 10 that its terms and conditions prohibit intellectual property infringement by its AdWords 11 advertisers, which are responsible for selecting keywords and ad creatives that do not infringe 12 others' intellectual property rights. Google denies all remaining allegations of Paragraph 50. 13 14 51. 52. Google denies the allegations of Paragraph 51. Google admits that it could set different rules for its AdWords program, but denies

15 that it makes "infringing use of proprietary marks," and denies all remaining allegations of 16 Paragraph 52. 17 18 53. 54. Google denies all of the allegations of Paragraph 53. Google admits that its April 29, 2004 S-1 SEC filing reported that it "recently

19 revised [its] trademark policy in the U.S. and Canada" and, as a result, it "no longer disable[s] ads 20 due to selection by our advertisers of trademarks as keyword triggers for the ads." See Form S-1 21 Registration Statement, Google, Inc. (Apr. 29, 2004), available at 22 http://www.sec.gov/Archives/edgar/data/1288776/000119312504073639/ds1.htm (last accessed 23 Feb. 11, 2010). Google denies all remaining allegations of Paragraph 54. 24 55. Google admits that it has the technical ability to stop advertisers from using certain

25 non-descriptive keywords as AdWords triggers. Google denies the remaining allegations of 26 Paragraph 55. 27 56. Google admits that the quoted language appeared in its 2004 S-1. Google denies

28 the remaining allegations of Paragraph 56.
Case No. 4:10-cv-00668-LB 6 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

1 2 3 4

140.

Google denies all of the allegations of Paragraph 140. SEVENTH CLAIM FOR RELIEF: TRADEMARK DILUTION UNDER TEXAS LAW TEX. BUS. & COM. CODE § 16.29

141.

Google incorporates its responses to each and every allegation contained above

5 with the same force and effect as if fully set forth herein. 6 142. Google lacks knowledge or information sufficient to form a belief as to the truth or

7 falsity of the first sentence of Paragraph 142, and therefore denies the same. 8 9 10 11 145. 12 with the same force and effect as if fully set forth herein. 13 146. 14 denies them on those grounds. 15 147. 16 148. 17 149. 18 150. 19 20 21 151. NINTH CLAIM FOR RELIEF: MISAPPROPRIATION UNDER TEXAS LAW Google incorporates its responses to each and every allegation contained above Google denies all of the allegations of Paragraph 150. Google denies all of the allegations of Paragraph 149. Google denies all of the allegations of Paragraph 148. Google denies all of the allegations of Paragraph 147. The allegations of Paragraph 146 constitute legal conclusions and Google therefore Google incorporates its responses to each and every allegation contained above 143. 144. Google denies all of the allegations of Paragraph 143. Google denies all of the allegations of Paragraph 144. EIGHTH CLAIM FOR RELIEF: UNFAIR COMPETITION UNDER TEXAS LAW

22 with the same force and effect as if fully set forth herein. 23 152. The allegations of Paragraph 152 constitute legal conclusions and Google therefore

24 denies them on those grounds. 25 153. Google lacks knowledge or information sufficient to form a belief as to the truth or

26 falsity of the first sentence of Paragraph 153, and therefore denies the same. 27 28 154. 155. Google denies all of the allegations of Paragraph 154. Google denies all of the allegations of Paragraph 155.

Case No. 4:10-cv-00668-LB 12 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

1 2 3 4

156. 157.

Google denies all of the allegations of Paragraph 156. Google denies all of the allegations of Paragraph 157. TENTH CLAIM FOR RELIEF: MONEY HAD AND RECEIVED Google incorporates its responses to each and every allegation contained above

158.

5 with the same force and effect as if fully set forth herein. 6 159. The allegations of Paragraph 159 constitute legal conclusions and Google therefore

7 denies them on those grounds. 8 160. Google lacks knowledge or information sufficient to form a belief as to the truth or

9 falsity of the first sentence of Paragraph 160, and therefore denies the same. 10 11 12 13 14 15 161. 162. 163. 164. Google denies all of the allegations of Paragraph 161. Google denies all of the allegations of Paragraph 162. Google denies all of the allegations of Paragraph 163. Google denies all of the allegations of Paragraph 164. FURTHER ANSWER AND AFFIRMATIVE DEFENSES By way of further Answer and as affirmative defenses, Google denies that it is liable to

16 Plaintiffs on any of the claims alleged and denies that Plaintiffs are entitled to damages, treble or 17 punitive damages, equitable relief, attorneys' fees, costs, pre-judgment interest or to any relief 18 whatsoever, and states as follows: 19 20 21 165. FIRST AFFIRMATIVE DEFENSE (Failure to State a Claim) The Complaint, on one or more counts set forth therein, fails to state a claim upon

22 which relief can be granted. 23 24 25 166. SECOND AFFIRMATIVE DEFENSE (Fair Use) The claims made in the Complaint are barred, in whole or in part, by the doctrines

26 of fair use, nominative fair use and/or descriptive use. 27 28
Case No. 4:10-cv-00668-LB 13 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

1 2 3 167.

THIRD AFFIRMATIVE DEFENSE (First Sale Doctrine) The claims made in the Complaint are barred, in whole or in part, by the first sale

4 doctrine. 5 6 7 168. FOURTH AFFIRMATIVE DEFENSE (Functionality) The claims made in the Complaint are barred, in whole or in part, on the basis that

8 any marks and use of marks at issue are functional. 9 10 11 169. FIFTH AFFIRMATIVE DEFENSE (Innocent Infringement) The claims made in the Complaint are barred, in whole or in part, because any

12 infringement, if any, was innocent. 13 14 15 170. SIXTH AFFIRMATIVE DEFENSE (Statutes of Limitations) The claims made in the Complaint are barred, in whole or in part, by applicable

16 statutes of limitations. 17 18 19 171. SEVENTH AFFIRMATIVE DEFENSE (Laches) Plaintiffs' claims are barred by laches, in that Plaintiffs have unreasonably delayed

20 efforts to enforce their rights, if any, despite their full awareness of Google's actions. 21 22 23 172. EIGHTH AFFIRMATIVE DEFENSE (Res Judicata and Collateral Estoppel) The claims made in the Complaint are barred, in whole or in part, on the basis that

24 prior actions based, in whole or in part, on the same allegations and underlying facts have already 25 been adjudicated. 26 27 28
Case No. 4:10-cv-00668-LB 14 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

1 2 3 173.

NINTH AFFIRMATIVE DEFENSE (Waiver, Acquiescence, and Estoppel) Each of the purported claims set forth in this Complaint is barred by the doctrines

4 of waiver, acquiescence, and estoppel. 5 6 7 8 9 10 175. 174. TENTH AFFIRMATIVE DEFENSE (Non-Infringement) Defendant has not infringed any applicable trademarks under federal or state law. ELEVENTH AFFIRMATIVE DEFENSE (No Causation) Plaintiffs' claims against Google are barred because Plaintiffs' damages, if any,

11 were not caused by Google. 12 13 14 176. TWELFTH AFFIRMATIVE DEFENSE (No Damage) Without admitting that the Complaint states a claim, there has been no damage in

15 any amount, manner or at all by reason of any act alleged against Defendant in the Complaint, and 16 the relief prayed for in the Complaint therefore cannot be granted. 17 18 19 20 21 22 178. 177. THIRTEENTH AFFIRMATIVE DEFENSE (Unclean Hands) Plaintiffs' claims are barred by the doctrine of unclean hands. FOURTEENTH AFFIRMATIVE DEFENSE (Lack of Irreparable Harm) Plaintiffs' claims for injunctive relief are barred because Plaintiffs cannot show that

23 they will suffer any irreparable harm from Google's actions. 24 25 26 179. FIFTEENTH AFFIRMATIVE DEFENSE (Adequacy of Remedy at Law) The alleged injuries or damages suffered by Plaintiffs, if any, would be adequately

27 compensated by damages. Accordingly, Plaintiffs have a complete and adequate remedy at law 28 and are not entitled to seek equitable relief.
Case No. 4:10-cv-00668-LB 15 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

1 2 3 186.

TWENTY-SECOND AFFIRMATIVE DEFENSE (No Punitive Damages) Google alleges that no punitive or exemplary damages should be awarded arising

4 out of the claims made in the Complaint under the law of the United States and California 5 because: (i) an award of punitive or exemplary damages would be unconstitutional under the 6 United States and California Constitutions; specifically, the First Amendment to the United States 7 Constitution and Article I, Section 2 of the California Constitution; (ii) any recovery of punitive or 8 exemplary damages arising out of the claims made in the Complaint would constitute the 9 imposition of a criminal fine or penalty without the substantive or procedural safeguards 10 guaranteed by the Fifth and Fourteenth Amendments to the United States Constitution and by 11 Article I, Section 7 of the California Constitution; (iii) the imposition of any punitive or exemplary 12 damages in this lawsuit would constitute an excessive fine or penalty under Article I, Section 17 of 13 the California Constitution; (iv) any such award is precluded or limited pursuant to Section 3294 14 of the California Civil Code or the United States Constitution and the due process clause; and (v) 15 punitive damages would violate the United States and California Constitutions and common law 16 because such an award is based from procedures that are vague, open-ended unbound in 17 discretion, arbitrary and without sufficient constraints or protection against arbitrary and excessive 18 awards. 19 20 187. ADDITIONAL DEFENSES Google reserves the right to assert additional defenses based on information learned

21 or obtained during discovery. 22 23 24 WHEREFORE, Google prays for judgment as follows: 1. That Flowbee takes nothing by way of its Complaint; 2. That the Complaint, and each and every purported claim for relief therein,

25 be dismissed with prejudice. 26 27 28
Case No. 4:10-cv-00668-LB 17 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

3. That Google be awarded its costs of suit incurred herein, including attorneys' fees and expenses; and

1 2

COUNTERCLAIM Defendant and Counterclaimant Google Inc. ("Google"), for its counterclaim against

3 Plaintiffs and Counter-Defendants Flowbee International, Inc. ("Flowbee Int'l") and Flowbee 4 Haircutter Limited Partnership ("Flowbee L.P."), (collectively "Flowbee") state as follows: 5 6 1. NATURE OF THE CASE Google brings this action for breach of contract against Flowbee under California

7 State Law. 8 2. By originally filing the instant action against Google in the United States District

9 Court, Southern District of Texas, Flowbee breached the mandatory venue selection provision of a 10 contract it entered with Google. That contract required Flowbee to bring "all claims arising out of 11 or relating to . . . Google's Program(s)" in "the federal or state courts of Santa Clara County, 12 California, USA." (See Exhibit A, attached.) The United States District Court for the Southern 13 District of Texas held that this contract was valid, enforceable and applied to Plaintiffs' claims. 14 See Flowbee Int'l v. Google, Inc., Civil Action No. C-09-199 (S.D. Tex. Feb. 8, 2010) (attached as 15 Exhibit B). 16 3. As a result of Flowbee's breach of this contract, Google was forced to expend

17 money and resources to seek the transfer of the instant action from the improper venue of the 18 Southern District of Texas to the Northern District of California. Google seeks recovery of these 19 damages. 20 21 4. PARTIES On information and belief, Plaintiff and Counterdefendant Flowbee International,

22 Inc. is a corporation organized under the laws of the state of Wyoming with its principal place of 23 business in Corpus Christi, Texas. 24 5. On information and belief, Plaintiff and Counterdefendant Flowbee Haircutter

25 Limited Partnership is a limited partnership organized under the laws of the state of Texas with its 26 principal place of business in Corpus Christi, Texas. 27 6. Defendant and Counterclaimant Google Inc. is a corporation organized under the

28 laws of the State of Delaware with a principal place of business in Mountain View, California.
Case No. 4:10-cv-00668-LB 19 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

1 2

PRAYER FOR RELIEF ON COUNTERCLAIMS WHEREFORE, Google requests that judgment be entered in its favor and against Flowbee

3 as follows: 4 A. Awarding Google all damages resulting from Flowbee's breach of the Agreement,

5 including all attorneys' fees and costs associated with its litigation in the Southern District of 6 Texas. 7 B. An Order granting Google such other and further relief as this Court may deem just

8 and proper. 9 10 DATED: February 18, 2010 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Case No. 4:10-cv-00668-LB 23 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

Respectfully submitted, QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP

By

/s/ Margret M. Caruso Attorney for Google Inc.

1 2 3 4 DATED: February 18, 2010 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

DEMAND FOR JURY TRIAL Google hereby demands a jury trial on all issues which can be heard by a jury.

Respectfully submitted, QUINN EMANUEL URQUHART OLIVER & HEDGES, LLP

By

/s/ Margret M. Caruso Attorney for Google Inc.

Case No. 4:10-cv-00668-LB 24 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

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CERTIFICATE OF SERVICE I HEREBY CERTIFY that on February 18, 2010, I will electronically file the foregoing

3 with the Clerk of Court using the CM/ECF system, which will then send a notification of such 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Case No. 4:10-cv-00668-LB 25 ANSWER TO PLAINTIFFS' COMPLAINT AND AFFIRMATIVE DEFENSES AND COUNTERCLAIM AGAINST FLOWBEE INTERNATIONAL, INC et al

filing (NEF) to the following: David T. Bright Mikal C. Watts Christopher V. Goodpastor Watts Guerra Craft, L.L.P. Tower II Building 555 North Carancahua, Suite 1400 Corpus Christi, Texas 78478-0801 [phone] [phone] (facsimile) Counsel for Plaintiffs Flowbee International, Inc. and Flowbee Haircutter Limited Partnership. By /s/ Margret M. Caruso Attorney for Google Inc.