Digital Envoy Inc., v. Google Inc.,

Filing 212

Brief re 210 Brief, Digital Envoy's Supplemental Brief In Support Of Digital Envoy's Motion To Compel filed byDigital Envoy,Inc.,. (Attachments: # 1 Exhibit A# 2 Exhibit B# 3 Exhibit C part 1# 4 Exhibit C part 2# 5 Exhibit D# 6 Exhibit E# 7 Exhibit F# 8 Exhibit G# 9 Exhibit H# 10 Exhibit I# 11 Exhibit J# 12 Exhibit K# 13 Exhibit L# 14 Exhibit M [Filed Under Seal])(Related document(s)210) (Blackman, Brian) (Filed on 7/5/2005)

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Digital Envoy Inc., v. Google Inc., Doc. 212 Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 1 of 14 1 P. CRAIG CARDON, Cal. Bar No. 168646 BRIAN R. BLACKMAN, Cal. Bar No. 196996 2 KENDALL M. BURTON, Cal. Bar No. 228720 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP 3 Four Embarcadero Center, 17th Floor San Francisco, California 94111-4106 4 Telephone: 415-434-9100 Facsimile: 415-434-3947 5 6 TIMOTHY H. KRATZ (Admitted Pro Hac Vice) LUKE ANDERSON (Admitted Pro Hac Vice) 7 MCGUIRE WOODS, L.L.P 1170 Peachtree Street, N.E., Suite 2100 8 Atlanta, Georgia 30309 Telephone: 404.443.5500 9 Facsimile: 404.443.5751 10 Attorneys for DIGITAL ENVOY, INC. 11 12 13 14 DIGITAL ENVOY, INC., 15 16 v. Plaintiff/Counterdefendant, UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION Case No. C 04 01497 RS DIGITAL ENVOY'S SUPPLEMENTAL BRIEF IN SUPPORT OF DIGITAL ENVOY'S MOTIONS TO COMPEL. [Filed Pursuant to Court at Hearing on June 22, 2005] The Honorable Richard Seeborg 17 GOOGLE, INC., 18 19 20 21 22 23 24 25 26 27 28 W02-SF:5BB\61460194.1 Defendant/Counterclaimant. SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Dockets.Justia.com Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 2 of 14 1 2 3 I. 4 II. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. 2. B. 4. 3. TABLE OF CONTENTS Page INTRODUCTION................................................................................................................. 1 ARGUMENT & AUTHORITIES......................................................................................... 1 A. Digital Envoy Is Entitled to Conduct Discovery of Information and Documents Relevant to Its Claims and Defenses In This Case. ............................... 1 1. 2. Digital Envoy's discovery requests regarding AdSense are inclusive covering both AdSense for Search and AdSense for Content.................... 2 Digital Envoy is entitled to discover the identity of Google's Network Members which utilized Digital Envoy's technology.................... 3 Digital Envoy is entitled to discovery the quantity and nature of the revenue Google derived from its products utilizing Digital Envoy's technology. .................................................................................................... 6 Google has failed to meet its burden that the discovery Digital Envoy seeks is "burdensome." ...................................................................... 7 In Its Effort to Avoid Any Significant Discovery In This Case, Google, Through Its Counsel, Has Consistently Misrepresented the Facts of the Case to the Court................................................................................................................ 7 1. Contrary to the facts, counsel for Google erroneously asserts that third party web sites "do not care" about geo-targeting................................ 8 Contrary to the Law, Google Misstates the Basis For Digital Envoy's Recovery of Damages. .................................................................... 9 CONCLUSION ................................................................................................................... 11 -iW02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 3 of 14 1 2 Federal Cases 3 Contratto v. Ethicon, Inc., 4 TABLE OF AUTHORITIES 225 F.R.D. 593 (N.D. Cal. 2004) .............................................................................................. 1 Schlegenhauf v. Holder, 279 U.S. 104 (1964) .................................................................................................................. 1 5 6 U.S. v. $160,066.98 from Bank of America, 7 202 F.R.D. 624 (S.D. Cal. 2001)............................................................................................... 7 U.S. v. American Optical Co., 39 F.R.D. 580 (N.D. Cal. 1966) ................................................................................................ 7 8 9 University Computing Co. v. Lykes-Youngstown Corp., 10 504 F.2d 518 (5th Cir. 1974)................................................................................................... 10 Vermont Microsystems, Inc. v. Autodesk, Inc., 138 F.3d 449 (2d Cir. 1998)...................................................................................................... 6 11 12 Federal Statutes 13 Fed. R. Civ. P. 26 ........................................................................................................................ 5, 6 14 Fed. R. Civ. P. 26(b)........................................................................................................................ 1 15 Fed. R. Civ. P. 26(b)(1) ................................................................................................................... 1 16 State Statutes 17 Cal. Civ. Code 3426.3 ............................................................................................................ 7, 10 18 Cal. Civ. Code 3426.3(a)............................................................................................................ 10 19 Cal. Civ. Code 3426.3(c)............................................................................................................ 10 20 21 22 23 24 25 26 27 28 -iiW02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 4 of 14 1 2 I. INTRODUCTION Google continues to mount an all-out effort to avoid meaningful discovery in this case. 3 First, it attempts to impose on Digital Envoy significant preliminary burdens of essentially proving 4 its case, not contemplated by the discovery rules, before Google will engage in discovery. 5 Second, Google has complained loudly that responding to Digital Envoy's discovery requests 6 would be "burdensome." Digital Envoy in an effort to use the meet and confer process to address 7 Google's complaints, offered to modify its discovery requests to minimize Google's alleged 8 "burden." In response, Google has refused to budge, despite Digital Envoy's significant reduction 9 in the scope of its relevant discovery requests, still insisting that Digital Envoy must offer 10 "evidence" of its entitlement to the requested information. Finally (and perhaps most distressing), 11 Google continues to misrepresent the factual context in which Digital Envoy is seeking discovery 12 by minimizing the value and importance of Digital Envoy's technology in Google's AdSense 13 products and misconstruing the damages available to Digital Envoy due to Google's 14 misappropriation. This case should be decided on the merits, not on the basis of Google's ability 15 to maneuver through the discovery process. For these reasons, the Court should grant Digital 16 Envoy's motions to compel. 17 18 A. 19 20 II. ARGUMENT & AUTHORITIES Digital Envoy Is Entitled to Conduct Discovery of Information and Documents Relevant to Its Claims and Defenses In This Case. Federal Rule of Civil Procedure 26(b) provides that: "Parties may obtain discovery 21 regarding any matter, not privileged, that is relevant to the claim or defense of any party. . . ." See 22 Fed. R. Civ. P. 26(b). In interpreting the federal rules, "[t]he Supreme Court has consistently held 23 that the discovery rules should be accorded a `broad and liberal scope.'" Contratto v. Ethicon, 24 Inc., 225 F.R.D. 593, 595 (N.D. Cal. 2004) (citing Schlegenhauf v. Holder, 279 U.S. 104, 114-115 25 (1964)). Thus, "[u]nless information is specifically privileged or otherwise protected by statute, it 26 is discoverable under Rule 26(b)(1)." Contratto, 225 F.R.D. at 595. 27 Digital Envoy has propounded discovery requests seeking information relevant to its claim 28 that Google misappropriated Digital Envoy's trade secrets by licensing Digital Envoy's -1W02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 5 of 14 1 technology to third parties as part of Google's AdSense programs in violation of the parties' 2 Licensing Agreement. Specifically, Digital Envoy is seeking limited information and documents 3 related to Google's negotiation and licensing of its AdSense programs to third parties, as well as 4 the magnitude and detail of the revenue Google earned as a result of its utilization of Digital 5 Envoy's technology. Digital Envoy's legitimate and legally-sanctioned discovery requests are no 6 wild goose chase or fishing expedition. Here, Google cannot dispute that: 7 8 9 10 Based on these undisputed facts, Digital Envoy is entitled to discover the nature and i) ii) Google's AdSense programs made use of and were enhanced by Digital Envoy's technology for geo-targeting purposes; and Google earned substantial revenues from its AdSense programs. 11 magnitude of Google's licensing scheme for purposes of establishing Google's liability and 12 Digital Envoy's damages. Digital Envoy has even attempted, through the meet and confer 13 process, to modify and more finely target its discovery requests in response to Google's 14 complaints regarding the alleged burdensomeness of Digital Envoy's discovery requests. See June 15 28, 2005 Letter from Robert J. Waddell, Jr. to David H. Kramer, attached hereto as Exh. A. 16 Google has refused any meaningful compromise and remains steadfast in its refusal to produce 17 relevant and proper discovery information. See July 2, 2005 E-mail from David H. Kramer to 18 Robert J. Waddell, Jr., attached hereto as Exh. B. Google continues to insist, as a condition of 19 responding to discovery requests, that Digital Envoy meet a higher burden than that imposed by 20 the Federal Rules. For these reasons, the Court should grant Digital Envoy's motions to compel. 21 22 23 1. Digital Envoy's discovery requests regarding AdSense are inclusive covering both AdSense for Search and AdSense for Content. As an initial matter, Digital Envoy is properly seeking documents and information related 24 to Google's AdSense programs including both AdSense for Content and AdSense for Search. 25 Google's assertion that the Amended Complaint addresses only AdSense for Content is betrayed 26 by the actual allegations in the Amended Complaint. By way of example, in its Amended 27 Complaint, Digital Envoy alleges: 28 -2W02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 6 of 14 1 2 3 4 At the time of the Agreement, Google had just begun to sign agreement with other Internet companies to power search services on those companies' sites. However, Google did not supply advertising services to third party sites at that time, had not contemplated providing such services and did not disclose to Digital Envoy its intention to enter this business. 5 See Amended Complaint, 35 (emphasis in original). Digital Envoy also expressly describes how 6 (i) Google's providing advertisements on third party websites to which it was providing web 7 search services (the so-called AdSense for Search Program or "AFS") and (ii) Google's 8 syndication of advertisements on third party sites (the so called "AdSense for Content Program" or 9 "AFC") both violate License Agreement. See id., 37 39 (under the bolded heading "Google 10 Misuse of Digital Envoy's Technology"). 11 Indeed, repeatedly throughout the Amended Complaint, Digital Envoy refers generally to 12 Google's "AdSense Program." Nowhere in the Amended Complaint does Digital Envoy limit its 13 allegations to AdSense for Content. In fact, nowhere in the Amended Complaint does Digital 14 Envoy even distinguish between the two programs. Digital Envoy plainly and explicitly alleges 15 that Google's incorporation of Digital Envoy's technology into "AdSense" all of AdSense 16 constitutes a violation of the License Agreement. Digital Envoy's ability to conduct discovery of 17 relevant issues should not be hindered by Google's late-breaking effort to impose its own 18 extremely narrow reading of Digital Envoy's allegations on the discovery process. 19 20 21 2. Digital Envoy is entitled to discover the identity of Google's Network Members which utilized Digital Envoy's technology. There is no dispute that Google employed Digital Envoy's technology in products that 22 Google licensed to third parties. See, e.g., Transcript of June 22, 2005, Motions Hearing 23 ("Transcript"), copy attached hereto as Exh. C, at 46 (Google's counsel conceding that Digital 24 Envoy's technology "is used in everything"). Therefore, the essence of Digital Envoy's discovery 25 requests is to learn precisely, i.e., by name and contract, which third parties acquired access to 26 Digital Envoy's technology through the AdSense programs. See Exh. A. In addition, Digital 27 Envoy is seeking to learn about Google's marketing to and communications with those third 28 -3W02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 7 of 14 1 parties to ascertain the precise nature of Google's use of Digital Envoy's geo-targeting technology. 2 See id. 3 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 -4W02-SF:5BB\61460194.1 The information Digital Envoy seeks is plainly relevant for many reasons: To ascertain which third party web sites had access to Digital Envoy's technology, when they had it and under what circumstances in was provided (e.g., through a request from the third party, an offering by Google, or by the terms of the AdSense licensing agreement between Google and the third party); Because Google admits that it "licenses" AdSense to third parties, Digital Envoy requires copies of these licenses to ascertain for itself whether its technology is included within them (and thus, "licensed" to third parties in violation of the clear prohibition in the Licensing Agreement). Digital Envoy further needs the communications related to these licenses to understand how Google represented the geo-targeting features to these customers and the extent to which geo-targeting affected those customers' decision to deploy AdSense; Because many of the largest web sites received geo-targeted ads from Google, in violation of the License Agreement, they are unwilling to buy it directly from Digital Envoy, or, instead, they would purchase it from Digital Envoy at a reduced price because a large portion of their need was already being met by Google, thereby resulting in harm to Digital Envoy's potential market; Google operates a pay-per-click business model with its advertisers. Each agreement it has with different advertisers has varying terms. Digital Envoy therefore needs to discover how much each of Google's advertisers paid Google in order to calculate the amount of damages and whether the individual advertisers elected geo-targeting at all. Without this information, Digital Envoy has no way of knowing which (and how many) of Google's advertisers geo-targeted through Google; and Digital Envoy seeks to discover, from each of these advertisers, how important the availability of geo-targeting was in their decision to advertise with Google. Digital Envoy needs to discover how Google marketed Digital Envoy's geo-targeting technology (i.e., did Google describe this as "sharing" the technology with the advertisers?); Digital Envoy seeks to discover what other targeting attributes Google offered its potential advertisers in order to balance the importance of geo-targeting relative to other targeting technologies; and Digital Envoy also needs these documents to determine which, if any, of Google's advertisers were actual or potential clients of Digital Envoy. SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 8 of 14 1 In an effort at compromise, and in order to address Google complaints regarding the 2 alleged burdensomeness of responding to the discovery requests, Digital Envoy has proposed a 3 preliminary modification of its requests that limits Google's "burden" significantly: 4 5 6 7 8 9 10 11 12 13 14 15 16 Digital Envoy has offered to limit its requests of the broadest scope essentially to Google's top-100 customers for which Google would provide copies of the relevant agreements, and documents and communications related to the agreements and their negotiation.1 See Exh. A; For Google's premium customers, Google would be required to produce the agreements between Google and those customers (because those agreements are described as "heavily negotiated" in Google's filings with the SEC) and all communications with those customers referring or relating to the provision by such Google Network Member of the Internet Protocol Addresses ("IP Addresses") of its users/visitors to Google (as well as referring or relating to a Google Network Member's failure to provide, or agreement or request not to provide, IP Addresses of its users/visitors to Google) and those communications that refer or relate to geotargeting by those customers. See id.; and For Google's remaining ad network members, Google would only be required to identify those Members who utilized Digital Envoy's technology and produce a sufficient set of exemplar standard contracts in order to inform Digital Envoy of the nature of the licensing arrangement between Google and these third parties. Digital Envoy's proposed modification significantly limits Google's "burden" by reducing 17 the number of customers and negotiations to somewhere in the neighborhood of 100 negotiations 18 not "hundreds of thousands" as Google suggests. (Indeed, to the extent that Google's 19 representations are correct, Digital Envoy is scaling the request down by a factor of more than a 20 1000.) Google's counter-offer to produce information related only to those customers for which 21 "Digital Envoy can offer some evidence that it lost a licensee because Google offered geotargeting 22 in [AdSense for Content]" simply will not do. See Exh. B. First, Google's proposal misrepresents 23 Digital Envoy's obligations in the discovery process. Federal Rule of Civil Procedure 26 does not 24 require that Digital Envoy "prove" its case on Google's terms prior to receiving relevant 25 discovery. 26 27 28 1 Digital Envoy has previously offered evidence that these customers represent the most likely direct Digital Envoy customers and prospects. See Declaration of Robert Friedman In Support of Digital Envoy's Motions to Compel, 9. -5SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL W02-SF:5BB\61460194.1 Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 9 of 14 1 Second, Google's counter-offer appears to be based on Google's miscomprehension of the 2 law related to Digital Envoy's misappropriation claim and the damages available under California 3 law. Google's licensing of Digital Envoy's technology to third parties, as prohibited by the 4 Licensing Agreement, constitutes misappropriation for which Digital Envoy is entitled to damages 5 in the form of Digital Envoy's actual losses, Google's unjust enrichment, or, if the other bases for 6 damages are unavailable, a reasonable royalty. See Cal. Civ. Code 3426.3; see also Vermont 7 Microsystems, Inc. v. Autodesk, Inc., 138 F.3d 449, 452 (2d Cir. 1998) (recognizing that California 8 law permits recovery of damages measured either by the plaintiff's losses or by the profits unjustly 9 received by the defendant). Directly relevant to Digital Envoy's claim, and the statutory damages 10 to which it is entitled, is information related to the magnitude and nature of Google's 11 misappropriation. This is the discovery to which Digital Envoy is entitled and all that Digital 12 Envoy seeks. 13 14 15 3. Digital Envoy is entitled to discovery the quantity and nature of the revenue Google derived from its products utilizing Digital Envoy's technology. Through its interrogatories numbered 6, 10 and 11, Digital Envoy is seeking a detailed 16 analysis of the revenue Google achieved through its products utilizing Digital Envoy's revenue. 17 Based on the multiple methods for establishing damages for misappropriation under California 18 law, see Cal. Civ. Code 3426.3, this information is plainly relevant to Digital Envoy's claims 19 and, thus, discoverable. See Fed. R. Civ. P. 26. Google has responded to Digital Envoy's request 20 by making generalized claims of "burdensomeness." See Exh. B. However, Google has yet to 21 state with specificity what is so difficult about providing the revenue numbers Digital Envoy 22 seeks. Digital Envoy has stated to Google its willingness to modify this request in an effort to 23 alleviate Google's alleged "burden" or to accept documents from which this information is 24 derived, provided the conditions of Federal Rule of Civil Procedure 33(d) are met. Google has 25 refused to respond meaningfully to Digital Envoy's offer and continues to make generalized 26 complaints that the information Digital Envoy seeks would be "difficult" to provide. Google's 27 objection is improper and provides neither Digital Envoy nor the Court the ability to address 28 -6W02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 10 of 14 1 Google's complaints. Under these circumstances, Google should be compelled to respond to 2 Digital Envoy's legitimate requests for relevant information. 3 4 5 6 7 8 9 10 U.S. v. American Optical Co., 39 F.R.D. 580, 587 (N.D. Cal. 1966) (emphasis in original) 11 (citations omitted). Google attempts to shift the burden to Digital Envoy by claiming it will have 12 to engage in a significant document production in order to respond, "[b]ut the fact that the 13 production of documents may involve inconvenience and expense is not alone a sufficient reason 14 for refusing discovery which is otherwise appropriate." See U.S. v. $160,066.98 from Bank of 15 America, 202 F.R.D. 624, 628 (S.D. Cal. 2001) (internal citations omitted). Google has yet to do 16 anything but claim general "inconvenience and expense" of responding to Digital Envoy's 17 discovery requests. To be sure, Digital Envoy's requests may call for a significant amount of 18 information; however, the amount of information at issue is directly related to the magnitude of 19 Digital Envoy's claim. Google should not be allowed to avoid its obligations in the discovery 20 process by pointing to the magnitude of the problem of its own creation (e.g., through Google 21 licensing of Digital Envoy's technology to a huge number of third parties). 22 B. 23 24 In Its Effort to Avoid Any Significant Discovery In This Case, Google, Through Its Counsel, Has Consistently Misrepresented the Facts of the Case to the Court. Digital Envoy takes significant issue with Google's counsel's repeated 4. Google has failed to meet its burden that the discovery Digital Envoy seeks is "burdensome." As a court in this district has previously held, Only undue burden or expense provides a potential basis for relief from legitimate discovery demands. Undue burden requires parties to show more than expense or difficulty. Rule 26(c) authorizes a protective order when discovery would be unduly burdensome. This requires more than some expense or difficulty, especially in the case of a party to the action. 25 mischaracterizations to the Court of the facts of the case and the nature of Digital Envoy's claims. 26 Ostensibly, Google's counsel is attempting to minimize the merits of Digital Envoy's case and to 27 shape the Court's impression of the relevance of the information sought by Digital Envoy's 28 -7W02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 11 of 14 1 discovery requests. Because these mischaracterizations arguably relate directly to Digital Envoy's 2 motions to compel, Digital Envoy cannot let Google's counsel's statements go unaddressed. 3 4 5 1. Contrary to the facts, counsel for Google erroneously asserts that third party web sites "do not care" about geo-targeting. During the course of the June 22 hearing, Google's counsel repeatedly minimized the 6 importance of Digital Envoy's geo-targeting technology. See, e.g., Exh. C at 48 ("Geotargeting 7 isn't mentioned in Google's materials to publishers" and third parties "have no idea whether the 8 ads their getting are geotargeted or not")), 54 (third party web sites "don't know" whether they are 9 getting geo-targeted advertisements) and 55 (Other advertising networks, such as DoubleClick and 10 Adverstising.com "don't care" about geo-targeting). Counsel's statements are simply not true, and 11 are directly and repeatedly contradicted by statements of his client and others. By way of 12 example, 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Google has clearly stated the importance of geo-targeting and the fact that in its own words "publishers are very excited to use it." See, e.g., http://searchenginewtach.com/searchday/article/php/3099591, copy attached as Exh. D (quoting Google "We want all the syndication partners [i.e., AdSense Publishers] to work with [regional targeting], and generally they are very excited to do it" emphasis added); Google itself emphasizes the importance of geo-targeting to publishers on its own website. See, e.g., http://www.google.com/adsense/greenwich2000?hl=en_GB, copy attached as Exh. E, (quoting a publisher/customer "We were attracted to Google for several reasons, the main one being that Google is the only company which has the ability to link content to local audience advertising"); http://www.google.co.uk/services/adsense_tour/page4.html, copy attached as Exh. F, (noting that ads are targeted by geography, so global businesses can display local advertising with no additional effort and use AdSense in multiple languages); http://www.google.com/adsense/ourhometown, copy attached as Exh. G, (quoting customer "'Relevant ads appear on relevant pages.' And, he adds, `The advertising information is so unique. We're seeing ads that are geographically appropriate . . ..'"); http://www.google.com/adsense/wifinder, copy attached as Exh. H (quoting customer "Google's AdSense lets us show geographically targeted ads" and that "AdSense advertising revenue is consistent enough to hire an employee dedicated to improving geographical listings, increasing the effectiveness of WiFinder.com searches"). Geo-targeting is clearly important to Google's advertisers: http://siliconvalley.internet.com/news/article.php/3098431, copy attached as Exh. I ("[Geo-targeting is] an incredibly powerful tool for local and regional advertisers . . -8W02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 12 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 . "[i]t could be used by national advertisers looking to message locally, speaking differently to different audiences"); http://volokh.blogspot.com/2004/10/bellsouthsalliance-with-google.html>, copy attached as Exh. J, ("Google is excited to add a new way to reach prospective advertisers, while continuing to provide users with relevant local information and advertisements"). Advertising.com and DoubleClick have not stated that geo-targeting is unimportant. In fact, Scott Spencer of DoubleClick actually testified: Q. Has any web site publisher ever told DCLK that geo-targeting in general was important to participate in DART for Publishers? A. Having geodata is important, yes. Q. So publishers have said geo-targeting is important? A. Yes. Q. And who told you that? A. Geotargeting is a common feature provided by every provider of ad serving solutions. ... It's in almost every RFP as a check box, do you have geotargeting, yes. Deposition of Scott Spencer at 49-50, relevant portions attached hereto as Exh. K. Likewise, Advertising.com's Michael Polk did not testify that geo-targeting was unimportant or that publishers would not license geo-targeting directly from Digital Envoy, but rather that he does not work directly with publishers and that "it depends", not that it would never happen. See Deposition of Michael Polk at 7374, relevant portions attached hereto as Exh. L. Therefore, contrary to the assertion of Google's counsel, evidence that geo-targeting is 20 important to Google's AdSense customers is legion. Digital Envoy's discovery requests seeking 21 information related to Google's licensing of its AdSense programs (and, necessarily, Digital 22 Envoy's technology included therein) is thus very relevant to the misappropriation claim. 23 24 25 2. Contrary to the law, Google misstates the basis for Digital Envoy's recovery of damages. Calling Digital Envoy's damages theory "a pipe dream" and seeking to limit Digital 26 Envoy's potential damages to Google's narrow interpretation of Digital Envoy's "actual loss", 27 Google's counsel misstates the available damages under California law. See, e.g., Transcript at 28 55-56. As shown above, damages for misappropriation are available under three theories: actual -9W02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 13 of 14 1 loss, unjust enrichment, or (if neither of the other two are available) a reasonable royalty. See See 2 2 Cal. Civ. Code 3426.3(a). 3 Google devotes its entire critique of Digital Envoy's damage theory to the actual loss 4 prong of recovery, and ignores the fact that Section 3426.3 permits Digital Envoy to recover 5 Google's unjust enrichment due to its unauthorized use of Digital Envoy's technology. See Cal. 6 Civ. Code 3426.3(a). Therefore, Google's "pipe dream" analysis notwithstanding, the nature 7 and extent of Google's profits attributable to the misappropriation of Digital Envoy's technology 8 is directly relevant to Digital Envoy's claim that Google was unjustly enriched. See University 9 Computing Co. v. Lykes-Youngstown Corp., 504 F.2d 518, 536 (5th Cir. 1974) (an appropriate 10 measure of damages for misappropriation of a trade secret are "the benefits, profits, or advantages 11 gained by the defendant in the use of the trade secret"). 12 In addition, throughout the litigation and at the June 22 hearing, Google continues to 13 downplay the importance of the geo-targeting feature of its AdSense programs (despite the fact 14 that, based on one of the few documents that Google has thus far produced in discovery, Google's 15 internal business models show well over a 100% increase in click-thrus for a substantial portion of 3 16 its customer base due to use of Digital Envoy's geo-targeting). Digital Envoy therefore is 17 anticipating that Google will claim that the profits from its AdSense program are only minimally 18 attributable to its inclusion of Digital Envoy's technology in its effort to mitigate the effects of its 19 misappropriation. Digital Envoy is therefore entitled to demonstrate, through discovery, that 20 Google is understating the value of geo-targeting technology by pointing to Google's marketing, 21 negotiation, and agreements with third parties that point to those parties' expectations of and 22 benefits from geo-targeting capabilities through Google's provision of advertisements that will 23 induce the web site's visitor to click on the advertisement provided. Google's ability to provide 24 25 2 26 27 28 3 Digital Envoy is also seeking punitive damages on the grounds that Google's misappropriation was willful and malicious. See Cal. Civ. Code 3426.3(c). See Deposition of Susan Wojcicki at Exh. 61, attached hereto as Exh. M. -10- W02-SF:5BB\61460194.1 SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL Case 5:04-cv-01497-RS Document 212 Filed 07/05/2005 Page 14 of 14 1 the most enticing advertisements (including geographically relevant advertisements) forms the 2 entire basis for Google's AdSense program and its customers' expectations of sharing in revenue. 3 4 III. CONCLUSION For these reasons and those presented in Digital Envoy's opening briefs and arguments at 5 the June 22, 2005 hearing, Digital Envoy respectfully requests that the Court grant its motions to 6 compel. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -11W02-SF:5BB\61460194.1 DATED: July 5, 2005 SHEPPARD, MULLIN, RICHTER & HAMPTON LLP By /s/ Brian Blackman P. CRAIG CARDON BRIAN R. BLACKMAN TIMOTHY H. KRATZ (Pro Hac Vice To Be Applied For) LUKE ANDERSON (Pro Hac Vice To Be Applied For) MCGUIRE WOODS, L.L.P 1170 Peachtree Street, N.E., Suite 2100 Atlanta, Georgia 30309 Telephone: 404.443.5706 Facsimile: 404.443.5751 Attorneys for DIGITAL ENVOY, INC. SUPP. BRIEF ISO DIGITAL ENVOY'S MOTION TO COMPEL

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