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Woods v. Google, 11-Cv-1263 (N.D.cal. Aug 10, 2011)

Woods v. Google, 11-Cv-1263 (N.D.cal. Aug 10, 2011)

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Court dismisses putative class action against Google alleging improprieties in its administration of AdWords program.
Court dismisses putative class action against Google alleging improprieties in its administration of AdWords program.

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Published by: Venkat Balasubramani on Oct 16, 2011
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10/16/2011

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12345678910111213141516171819202122232425262728This disposition is not designated for publication in the official reports.
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Case No. 5:11-cv-1263 JFORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND(JFLC3)
**E-Filed 8/10/2011**
IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF CALIFORNIASAN JOSE DIVISION
RICK WOODS, Individually and On Behalf of AllOthers Similarly Situated,Plaintiff,v.GOOGLE INC.,Defendant.Case Number 05:11-cv-1263-JFORDER GRANTING MOTION TO
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DISMISS WITH LEAVE TO AMEND[Document No. 41]Plaintiff Rick Woods brings this putative class action on behalf of advertisers enrolled inGoogle’s AdWords program, alleging breach of contract; breach of the implied covenant of goodfaith and fair dealing; violation of the California Unfair Competition Law (UCL), Cal. Bus. &Prof. Code § 17200; and the California False Advertising Law (FAL), Cal. Bus. & Prof. Code§ 17500. Google moves to dismiss Woods’ complaint pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief may be granted. The Court has considered the moving
Case5:11-cv-01263-EJD Document64 Filed08/10/11 Page1 of 14
 
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Case No. 5:11-cv-1263 JFORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND(JFLC3)
and responding papers and the oral argument of counsel presented at the hearing on July 8, 2011.For the reasons discussed below, the motion will be granted, with leave to amend.
I. BACKGROUNDA.AdWords and AdSense
Google offers two advertising products: AdWords and AdSense. AdWords allowsadvertisers to display advertisements on Google.com’s search results pages and on the sites of Google’s third-party partners. ( Compl. ¶ 28.) Advertisers pay each time their ad is “clicked.”AdSense allows third parties, known as publishers or partners, to provide advertising space ontheir websites for AdWords advertisers. (
 Id.
) These publishers receive a share of the revenueGoogle receives for each click on an AdWords advertisement that appears on their websites.(
 Id.
)Advertisers join the AdWords program online by clicking through and accepting theGoogle Inc. Advertising Program Terms (Agreement). (
 Id.
¶ 53-54, ex. A.) The Agreementstates that it “constitutes the entire and exclusive agreement between the parties with respect tothe subject matter” thereof, and that “[n]o statements or promises have been relied upon inentering into this Agreement except as expressly set forth” and “any conflicting or additionalterms contained in any other document . . . or oral discussions are void.” (
 Id.
ex. A § 9.) It alsostates that “[p]rogram use is subject to all applicable Google and Partner policies.” (
 Id.
ex. A§ 1.) Under the Agreement, advertisers agree that their ads “may be placed on . . . any content or  property provided by Google.” (
 Id.
ex. A § 2.) Advertisers also may choose to have their advertisements placed the sites of Google’s AdSense partners, and in doing so they agree that theadvertisements may be placed on “any other content or property provided by a third party(“Partner”) upon which Google places ads.” (
 Id.
) The Agreement states expressly that theadvertiser “authorizes and consents to all such placements.” (
 Id.
) It also provides that “[t]o thefullest extent permitted by law, Google disclaims all guarantees regarding positioning, levels,quality, or timing of” clicks and the adjacency or placement of ads within a program. (
 Id.
ex. A §5.)
Case5:11-cv-01263-EJD Document64 Filed08/10/11 Page2 of 14
 
12345678910111213141516171819202122232425262728The Google Ad Traffic Quality Resource Center, while not referenced as an exhibit, is
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mentioned repeatedly in the complaint. (
See, e.g.
, Compl. ¶ 79-80.) The page appears to containthe fullest discussion of invalid clicks on one page. Accordingly, the Court takes judicial noticeof the statements on that URL: http://www.google.com/adwords/adtrafficquality/index.html (“AdTraffic Resource Center”).
See Branch v. Tunnell 
, 14 F.3d 449, 454 (9th Cir. 1994),
overruled on other grounds by Galbraith v. County of Santa Clara
, 307 F.3d 1119, 1127 (9th Cir. 2002)(holding that “documents whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the pleading, may be considered inruling on a Rule 12(b)(6) motion to dismiss”).3
Case No. 5:11-cv-1263 JFORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND(JFLC3)
B.Click Fraud and Invalid Clicks
Because AdWords advertisers are charged by the click, Google maintains policies to prevent “click fraud”–which it defines as clicks generated with malicious or fraudulent intent–bynot charging advertisers for what it has identified as “invalid clicks.” The “Google Ad TrafficQuality Resource Center” defines “invalid clicks” as “clicks on AdWords ads that Googlesuspects may constitute click fraud.” The AdWords Help Center page entitled, “Invalid Clicks”
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defines such events as “[c]licks that Google does not charge to your account because wedetermine they were generated by prohibited methods.” (Degnan Decl., ex. 12.) Google detectsinvalid clicks through a combination of filters, offline analysis, and investigations prompted byadvertiser inquiries. (Compl. ¶ 82; Resource Center.) The “AdWords Help Center” indicatesthat “[r]eal-time systems filter out activity fitting a profile of invalid behavior (such as repetitiveclicks),” and that “[c]licks and impressions from known sources of invalid activity areautomatically discarded.” (Degnan Decl., ex. 12.)Section 5 of the Agreement states that the“[c]ustomer’s exclusive remedy, and Google’sexclusive liability, for suspected invalid impressions or clicks is for [c]ustomer to make a claimfor a refund in the form of advertising credits.” (Compl. ex. A § 5.) Section 7 of the Agreementstates that “[t]o the fullest extent permitted by law, Customer waives all claims relating tocharges (including without limitation any claim for charges based on suspected invalid clicks)unless claimed within 60 days after the charge.” (
 Id.
ex. A § 7.)Separately, in its agreement with AdSense publishers, Google prohibits a variety of advertisement implementations identified in AdSense Program Policies. (Compl. ¶ 74.) Thecomplaint labels these policies as Banned Ad Implementations. (
 Id.
) Google also prohibits the
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