FELDMAN v. GOOGLE, INC.

Filing 16

Memorandum in Support re 8 Amended MOTION to Dismiss Amended Complaint filed by GOOGLE, INC.. (Attachments: # 1 Exhibit A# 2 Exhibit B# 3 Certificate of Service)(LINDY, JEFFREY)

FELDMAN v. GOOGLE, INC.

Doc. 16 Att. 1

Case 2:06-cv-02540-JG

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LAWRNCE E. FELDMAN & ASSOCIATES
ATTORNEYS AT

LAw

432 Tulpehocken Avenue

Elkins Park, PA 19027
tel: [phone]: fax [phone]; leflaw.com

Lawrence E. Feldman Roseann E. Weisblatt*
* Admitted to P A and NJ Bars

June 1,2006

VIA FACSIMILE AND FIRST CLASS MAIL
David J. Silbert, Esquire KEKER & VAN NEST 710 Sansome Street San Francisco, CA 94111-1704

Re: Feldman v. Google, Inc.
c.c.P. March Term 2006. Docket No. 000735

Dear Mr. Silbert:

, Enclosed please find the Complaint in the above-captioned matter which was sent to the
Cour for fiing today. Accordingly, there is no need to continue the June 15, 2006 Status

Conference scheduled by the Court.
I look forward to meeting you there.
Very trly yours,

/1 ". )¡J
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~. Weisblatt
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Enclosure

Dockets.Justia.com

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LAWRENCE E. FELDMAN & ASSOCIATES
ATTORNEYS AT LAW 432 Tulpehocken Avenue

Elkins Park, PA 19027
tel: [phone]: fax [phone]; leflaw.com

Lawrence E. Feldman Roseann E. Weisblatt*
* Admitted to P A and NJ Bars

June 1,2006

Court of Common Pleas Second Filing City Hall, Room 280 Philadelphia, P A 19102
Re: Feldman v. Google, Inc.
c.c.P. March Term 2006. Civ.No. 000735

Dear SirlMadam:

Enclosed for fiing please find an original and one copy of the Complaint in the abovecaptioned matter. Kindly time-stamp the copy and return it to me in the envelope provided. A civil cover sheet is already on fie in this matter and a status conference is scheduled for June 15, 2006 at 10:30 a.m. in Court Room 613C.

Than you for your assistance in this matter.

Very truly yours,

V í','Li2.t-il1i.. . c l/L")L~!5I~/fj

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R.osean E. Weisblatt

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Enclosure cc: David J. Silbert, Esquire

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LAWRENCE E. FELDMAN, ESQUIRE LA WRNCE E. FELDMAN & ASSOCIATES
432 Tulpehocken Avenue

Elkins Park, PA 19027 [phone]

Attorney for Plaintiff

LAWRENCE E. FELDMAN d//a LA WRENCE E. FELDMAN & ASSOCIATES
432 Tulpehocken Avenue

COURT OF COMMON PLEAS

Elkins Park, P A 19027
v.

PHILADELPHIA COUNTY

MARCH TERM 2006
GOOGLE, INC.

.1600 Amphitheatre Parkway Mountain-Valley, CA 94043

No. .000735

COMPLA.INT-ie (Contract) Plaintiff by and through its undersigned counsel, brings this action against Defendant, and
in support thereof avers as follows:
1. Plaintiff

Lawrence E. Feldman d//a Lawrence E. Feldman & Associates is an

unincorporated law firm with an office in Montgomery County, the Commonwealth of
Pennsylvania. The firm practices in the five county area, including Philadelphia County and
advertises in print media in those counties as well as on the Internet.
2. Defendant Google, Inc. is a corporation organzed under the laws of the State of

Delaware, with its principle place of business in Mountain View, California. Google provides
Internet search engine services to Internet users and advertising services to individuals,

businesses as well as governental and educational entities.
3. This cause of action arose out of

transactions or occurences which took place in
1

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whole or in part in Philadelphia.
4. This Cour has personal jurisdiction over the Defendant.

THE CONTRACT
5. On or about Januar 2003, Plaintiff entered into a written contract ("the Contract)

with Defendant for the purchase of advertising from Defendant's "AdW ord" Program. A true
and correct copy of

the Contract (s) are attached hereto as Exhibit A, and is incorporated herein

by reference pursuant to Pa. R. C. P. 10 19(h). The terms of the contract required Defendant to

provide internet advertising services through it "Google Adwords" program in exchange for
payment from Plaintiff per click as explained in the following paragraphs.

6. This AdWord program is keyword-triggered much like Google's traditional
search engine

service, wheïeby a pûtentialcûnsumer/custûmer enters aSèarch word or words
website links of

in Google's search engine, which results in a hierarchy of

business or other

entities that signed up with AdWords to have their business website link be among the search

results for those words. In this way, the consumer is likely to then "click" on the advertiser's

web link, giving the advertiser the opportnity to sell its goods or services to that customer.
7. Advertisers can purchase as few or as many key or "Adwords" as they wish.

Many law firms have used the Adwords campaign to advertise for clients. For example, Plaintiff
purchased Adword "Vioxx" at or around the time when the aritis medication Vioxx was

removed from the market. People searching on Google for a law firm handling injuries from
Vioxx would see Plaintiff s website as one of their search results.
8. If

the searcher clicked on Plaintiffs' website, then Defendant would charge

Plaintiff for that click. This is now widely known as "pay per click" advertising. According to

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Defendant's website "With Google AdWords you create your own ads, choose keywords to help
us match your ads to your audience and pay only when someone clicks on them."
9. Advertisers such as Plaintiff make bids for the key words that will trigger their

advertisements to appear in a search performed by a potential customer. The highest bidder for a
key word or phrase wil find its ad at the top of

the list of a search result performed by a potential

consumer. Advertisers such as Plaintiff, are charged by Defendant for each and every time

someone clicks on its advertisement (tyically, a hyperlink to the advertiser's own
website).Charges can average as low as 50 cents, but can be as high as $60 or $70 per key word

for those words that are heavily sought afer, such as Vioxx.

10. Whle Defendant touts that advertisers can reach more than 80% of Internet
users, the "pay per click" system has a serious flaw. This flaw inkown colloquially as "click
fraud." Defendant's name for it is "improper clicks."
11. These improper clicks or click fraud describe the practice of clicking(with a

mouse) on a search advertisement with no intention of doing business with the advertiser. These

il-intended puroseful clicks are done to drive up the price an advertiser pays to Google by way
of

the "pay per click" modeL. Fraudulent clicks could be perpetrated by an advertiser's

competitor, with the intent to use up a rival's advertising budget, causing the advertiser to cease

advertsing altogether, in an effort to boost their own position on the hierarchy, thereby stealing

potential customers. Some of these perpetrators are even ared with software programs that
automatically click on designated ads hundreds or thousands of times.
l2. This fraudulent activity is preventable by using efforts to track the use of a pay

per click advertisement, including who is doing the clicking and how often the same
individual/entity clicks on it.
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13. This tracking can be accomplished by computer programs that count the number

of clicks originating from a single source and whether or not those clicks result in a sale. Another
effective mechanism for tracking is to track it at the website on which the advertisement appears.
Web

sites that host advertisements provide tracking data to Google with every click.
14. Google admitted that click fraud is a pervasive problem as recently as 2004 when

its Chief Financial Officer, George Reyes, characterized it as "the biggest threat to the Internet

economy." Later these fears were downplayed by Google's co-founder, Sergey Brin. In fact,

some analysts believe that as many as 20% of clicks are fraudulent. Other studies show this
number to be as high as 30%.
15. Google has in the past, provided a relatively small number of advertisers a refund

on those clicks that it deems to be improper clicks, so Google has some mechansm in place to
ascertain which clicks are improper or fraudulent after the fact.

16. In its 2005 Anual Report, Google stated that it was exposed to the risk of
fraudulent clicks on its ads by persons seeking to increase the advertising fees paid to Google
Network members. Approximately 99% of

Google's revenue is derived from AdWords.

17. From the inception of its AdW ords and AdSense Programs, Google took no effort

to track or prevent the instance of click fraud and failed to adequately war Plaintiff about it.
18. Staring in or around Januar 2003, Plaintiff

purchased Adwords for Vioxx,

Bextra, Celebrex and other advertising campaigns in an effort to steer potential clients who may
have been hared by these drugs which were under scrutiny by the FDA and one of

which,

Vioxx, that was voluntarily withdrawn from the market.
19. Plaitiff

was charged in excess of$100,000.00 in AdWords between Januar

2003
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and December 31, 2005.

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20. Plaintiff contacted Defendant on April 14, 2006 to request an investigation of his

account because

he believed he was a victim of click fraud.

21. Defendant refused, stating that id does not keep any records on any account
for more than the most recent three months.

22. Defendant claims that it does not keep any records on an advertiser's account and
click history for more than the past three months.
23. Despite this fact, Defendant has its staff

respond to requests for investigation and

refud of advertising dollars by saying that it canot conduct a full investigation because it
"disclaimed liability for clicks older than 60 days pursuant to the Terms and Conditions of

the

your contract. As a result, we are unable to conduct an invalid click investigation for the dates
you requested." Thus,

-- - - _.... -"'."e_' by its own business practices, Defendant has a built in system whereby it

charges its customers such as Plaintiff for clicks whether they are fraudulent or not.

COUNT I (Breach of Contract)
24. Plaintiff

incorporates paragraphs 1 through 23 as though the same were set fort

below at length.
25. On or about Januar 2003, Plaintiff contracted with Defendant regarding the
Google AdWords Program. A copy of

the Agreement is attached hereto as ExhibitA. The terms

of the AdW ords Program are revised from time to time, but remain substantively the same.
26. Plaintiff

was required to accept these new Terms and Conditions in order to

advertise with the AdW ords program.

27. According to the Agreement, Plaintiff agreed to be "charged based on actual

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clicks or other billing methods you may choose online." See, Exhibit A, ir 5 Payment. The

Agreement fuher provides that charges are "solely based on Google's click measurements.
Refunds (if any) are at the discretion of Google and only in the form of advertising credit for
Google Properties." See, Exhibit A, ir 5 Payment.
28. Plaintiff

was offered these terms by Defendant on a "take it or leave it basis." The

Agreement contained a provision stating that its terms were governed under California law.
29. Implied in the Agreement drafed by Defendant, was an implied covenant of good

faith and fair dealing which required Defendant to not do anything that would have the effect of

injuring the Plaintiff s right to receive the full benefit of the Agreement.
30. Nonetheless, during the time period between Januar 2003 and December 31,

2005, Plaintiff

was the victim of click fraud.
covenant of good faithancl fairdealing by

31. Defendant breachedthis

failing to

protect Plaintiff

from click fraud, even though Defendant was aware that this was a pervasive

problem with its service. Defendant fuher breached this covenant of good faith and fair dealing
by failing to take any significant measures to

track or prevent click fraud, and failed to adequately

advise and war Plaintiff about this problem before entering into the Agreement.
32. Defendant fuer breached the Agreement by charging Plaintiff

for fraudulent

clicks, which was not agreed to by the paries. Plaintiff agreed only to be biled for actual clicks.
33. As a direct and proximate result of Defendant's breach of

the covenant of good

faith and fair dealing, Plaintiff

has been damages in an amount in excess of$lOO,OOO.OO

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COUNT II
(Negligence)
34. Plaintiff incorporates paragraphs 1 through 34 as though the same were set forth

below at length.
35. Defendant owed a duty to Plaintiff

to monitor its Adwords program for click

fraud and to protect Plaintiff from this unscrupulous practice by utilizing appropriate software
and other measures to track fraudulent clicks so that Plaintiff would not be charged for them.
36. Defendant breached its duty to Plaintiff resulting in damages of

in excess of

$100,000.00

COUNT TII (Unjust Enrichment)
37. Plaintiff

incorporates paragraphs 1 through 36 as though the same were set forth

below at length.
38. Defendant received money from Plaintiff

for a specific purose, to wit, to pay for

actual, legitimate clicks to Plaintiff s advertisement though Defendant's Adwords Program.
39. Defendant has wrongfully charged Plaintiff

for and received money belonging to

Plaintiff which was not applied for the specific purpose of purchasing legitimate clicks on

Plaintiffs advertisements under the Adwords Program.
40. To the contrar, Defendant took Plaintiffs money and applied it toward

all clicks on Plaintiffs advertisements under the AdWord Program, including fraudulent clicks.
41. Defendant has received money which in equity and in good conscience it is not

permitted to keep and therefore should be paid over to the Plaintiff.
42. Accordingly, Defendant must be disgorged of all improper monies it has received

from Plaintiff.
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(Violation of Business Professions Code 17200, et. seq.)
43. Plaintiff

incorporates paragraphs l through 42 as though the same were set forth

below at length.
44. The Agreement between Plaintiff and Defendant provides that it shall be

governed by the law of the State of California. See, Exhibit A, ir7.
45. California Business & Professions Code § 17200 provides that "unfair

competition shall mean and include any unlawfl, unfair or fraudulent business act or practice."
46. Defendant's conduct in charging Plaintiff

for fraudulent clicks constitutes an

unawfl, unfair or fraudulent business act or practice under the Code.
47. Defendant's failure to keep computer logs on Plaintiff's entire Adwords
caipaign in order totrack, n:onitQrand refuClany monies vvrongfully charged to Plaintiff

likewise constitutes and unlawful, unair, or fraudulent business act or practice.
48. As a proximate result of Defendant's conduct alleged herein, Plaintiff

has

sustained damages in excess of$100,000.00
49. Unless restrained by ths Cour, Defendant wil continue to engage in the

unlawfl ,unfair and fraudulent business practices alleged herein, violating Section l7200 of

the

Business and Professions Code.
50. Plaintiff is entitled to the disgorgement of any profits Defendant obtained as a

result of its unawful conduct, restitution of monies it paid for fraudulent clicks throughout the
period of its Agreement with Defendant, as well as 'attorneys' fees provided by Californa Code
of

Civil Procedure, section 1021.5.

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WHEREFORE, Plaintiff demands judgment in its favor and against Defendant.
j
Dated: June 1,2006
LA ._.-'w;. ;6"L:X.. -'c~' E. .." E¿Ó~ & ASSOCIATES d~~~,V'

BY:

/~;nr~ .,

Lawrence E. Feldman, Esquire 432 Tulpehocken Avenue Elkins Park, PA 19027 [phone] [phone]
Attorney for Plaitiff

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VERIFICATION
Lawrence E. Feldman, hereby verifies that he is the Plaintiff in this action and that the facts
stated in the foregoing Complaint are true and correct to the best of his knowledge, information

and belief. This verification is made subject to the penalties of 18 Pa.C.S.A. § 4904 relating to
unsworn falsification to authorities.
i

Date: June L 2006

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Lawrence E. Feldman

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Google Inc. AdWords Program Terms
These Google Inc. AdWords Program Terms ('Terms") are entered into by

you and Google Inc. ("Goog'e") regarding the Google AdWords Program ("Program") as further described in the Program's frequently asked
. questions at htts:/ladwords.ooogle.com/SUPDOrtbin/index.OV?fulldump::1 . (the "FAQs") (collecively, the "Agreement"). "You" or "you" means the party listed on the account you create and you represent you have the
. authori to agree to this Agreement for

that part. You represent and warrnt that you are authonzed to act on behalf of, and bind to this .
Agreement, any third part for which you generate ads. You hereby

and acknowledge: .
policies, including without limitation the Editonal Guidelines (adwords.gooole.comfselectlauidelines.hfml), Google Privacy Policy
(ww.aooale.com/orivacv.html) and Trademark Guidelines

agree

1 Policies. Program use is subject to all applicable Google and Parter

(ww.aooa,e.comfoermissiOnslrademark.html). Policies may be modified any time. You shall direct only to Google communications regarding your ads on Parter Properties. Some Program features are identifiedas"Beta."

. ."AdExpeiimeñt, "õrõtherWse iinsüPPörtd rBelFeatùresH). Beta
Features are provided lias is" and at your option and risk. You shall not
disclose to any third part any information from, existence of 'or access to

Beta Features. Google may modify ads to comply with any Google

Propert 9r Parter Propert policies.
2 The Program. You are solely responsible for all: (a) keywords and ad targeting options (coflectively 'Targets") and all ad content and ad URLs ("Creative"), whether generated by or for you;'and (b) web sites proximately reachable from Creative URLs and your services and products (coJfectively"Services"). You shall protec your passwords and take full responsibilty for your own. and third part, use-of your accounts. Ads may

be placed on (y) any content or propert provided by Google ("Goole
Propert"), and unless opted.out by you (z) any other content or propert

Target for any or no reason. You may independenUy cancel online any campaign at any time (such cancellation is generafly effective within 24 hours): Google may -cncer immediatery any ro, the Program or these Terms at any time with notice (additional notice is not required to cancel a
rectvated account). Google may modify the Program or these Terms at

provided by a third part ("Parter") upon which Google places ads ("Partner Property"). Google or Partners may reject or remove any ad or

any time without fiabilty and your use of the Program after notice that

Terms have changed indicates acceptance of the Terms. Sections 1,2, 4,
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5. 6 and 7 wil survive any expiration or termination of this Agreement.

3 Prohibited Uses. You shall not, and shall not authorize any part to:
(a) generate automated, fraudulent or otherwise invalid impressions or clicks; or (b) advertse anything ilegal or engage in any ilegal or fraudulent business practice in any state or countr where your ad is displayed. You represent and warrant that (x) all your .information is correct and current; (y) you hold and grant Google and Parters all rights to copy. distribute and display your ads and Targets (.Use"); 'and (z) such Use and websites linked from your ads (including servces or products therein) wil not violate or encourage violation of any applicable laws. Violation of these policies may result in immediate tennfnation of this Agreement or your account without notice and may subject you to legal penalties and consequences.

4 Disclaimer and Limitation of liabilty. GOOGLE DISCLAIMS ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION FOR NONINFRINGEMENT, MERCHANTABILITY AND. FITNESS FOR ANY PURPOSE. Google disclaims aU guarantees regarding' positioning or the levels or timing of: (i) costs per click, (ii) click th:m..n;h:...¡-'¡;~(ii'..niiliuAru ~f 2n\! ;~""!!""~"';n~~ ..ft ~..u o--...."".. n..""""~... _=ul __ :' ii : ; ratOl: C.. .,d,.;i¡¡- ..,..¡-_.,¡ -r.. ....1 ....l'."'..~.....Q ,"II gii¥ . DIU.V'I I 1Vt-t;llY Google Propert or sectons of sljch propertes, (iv) clicks or (v) conversions for any ads or Tarets. EXCEPT FOR-INDEMNIFICATION AMOUNTS PAYABLE TO THIRD PARTIES HERÈUNDER AND YOUR
BREACHES OF SECTION BY LAW: (a) NEITHER PARTY WILL

1. TO THE FULLEST EXENT PERMITTED

BE LIABLE FOR ANY CONSEQUENTIAL, SPECIAL, INDIRECT, EXEMPLARY, PUNITIVE, OR OTHER DAMAGES WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY; AND (b) EACH PARTYS AGGREGATE LIABILITY TO THE OTHER IS LIMITED TO AMOUNTS PAID OR PAYABLE TO GOOGL.E BY YOU FOR THE AD GIVING RISE TO THE CLAIM. Except for payment, neither part is liable for failure or deray resulting from a condition beyond the reasonable control of the part i inClUding but not ffmited to acts of God, government, terrorism. natural disaster, labor conditions and power failures.

5 Payment. You shall be charged based on actual clicks or other biling methods you may choose online (e.g. cost per impression). You-shall pay all charges in the cllrrency selected by you via your online AdWords accunt, or In such other currency as is agreed to in wrting by the parties. Charges are exclusive of taxes. You are responsible for paying (y) all taxes and government charges, and (z) rea~onabJe expenses and attorney fees

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Google incurs collecting late amounts. You waive all claims relating to charges unless claimed within 60 days afer the charge (this does not affect your credit card issuer rights): Charges are solely based on Google's click measurements. Refunds (if any) are at the discretion of Google and only in the form of advertislng credit for Google Propertes. You

acknowledge and agree that any credit card and related billng and
payment information that you provide to Google may be shared by Google

with companies who work on Google's behalf, such as payment .
proessors andlor credit agencies, solely for the purpses of checking

credit, effecting payment to Googfe and servicing your account. .Googfe .
may afso provide infonnatton in response to valid legal proess, such as subpoenas. search warrants and court orders, or to establish or exercise its legal rights or defend against legal claims. Google shall not be liable for any use or disclosure of such infonnation by such third parties.
6 IndemnifIcation. You shafllndemnify and defend Google, its agents,

affliates. and licensors from any third party claim or liabilty (including without limitation reasonable legal fees) arising out of your Program use.
. Targets, Creative and Services and breach of the

Agreement.

7 Miscllaneous. The Agreement must be constred as if both parties
jointly wrote it, governed by Cartfomia law except for its conflicts of laws principles and adjudicated in Santa Clara County, 'Callfornia. The

Agrement constitutes the entire agreement betw.en the parties with
respec to the subject matter hereof. You may grant approvals, permissions and consents by email, but any modifications by you to. the Agreement must be made in a writing (not including. email) executed by both partes. Any notices to Google must be sent to: Google Inc.. AdWords Program.' 1600 Amphitheatre Parkay, Mountain View, CA 94043. USA, with a copy to Legal Department,. via first class or air mall or overnight courier, and are deemed given upon receipt. Notice to you may be effected" by sending email to the email address specified in your account, or by
posting a message to your account interface, and is deemed'

received

when sent (for email) or no more than 15 days after having been posted (for messages in your AdWords inteiface). A waiver of any default is not a waiver of any subsequent default. Unenforceable provisions wif .be modified to reflect the parties' intention, and remaining provisions ofthe Agreement wif remain in full effect. You may not assign any of your rights hereunder and any such attempt is void. Google and you and Google and
Parters are not legal parters or agents, but are independent contractors.

Apri/19. 2005

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