Case5:15-cv-00109 Document1 Filed01/08/15 Page1 of 19 1 Mark Poe (S.B. #223714) – [email protected] Randolph Gaw (S.B. #223718) – [email protected] 2 GAW | POE LLP 4 Embarcadero, Suite 1400 3 San Francisco, CA 94111 Telephone: (415) 766-7451 4 Facsimile: (415) 737-0642 5 Attorneys for Plaintiff Super Cray Inc. 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SUPER CRAY INC. Case No. 11 Plaintiff, COMPLAINT 12 v. DEMAND FOR JURY TRIAL 13 GOOGLE INC. 14 Defendant. 15 16 17 Plaintiff Super Cray Inc. (“Super Cray”) hereby makes the following allegations: 18 1. Super Cray is the publisher of a popular entertainment website called 19 SuperCrayCray (www.supercraycray.com). It entered into an agreement with defendant Google 20 Inc. (“Google”) to publish Google’s AdSense advertisements on SuperCrayCray. 21 2. Super Cray fully complied with the requirements of the AdSense program when 22 displaying Google’s advertisements. On multiple occasions, Super Cray reached out to Google 23 AdSense representatives by e-mail and Google’s Internet chat program for confirmation that 24 Super Cray’s ad placements on SuperCrayCray were valid and conformed to all AdSense 25 policies, including those policies designed to ensure that the layout of AdSense advertisements 26 did not encourage “accidental clicks.” Super Cray received written confirmation on each of those 27 occasions from Google that everything was done in accordance with AdSense’s terms of service. 28 - 1 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page2 of 19 1 3. Encouraged by Google’s written confirmations, Super Cray invested significant 2 sums of money – over $300,000 – to accelerate the monetization of SuperCrayCray. Specifically, 3 Super Cray spent such money to have SuperCrayCray and its articles prominently placed and 4 displayed on various popular Internet websites, such as Facebook. With such placement, user 5 traffic to SuperCrayCray surged and many more users were exposed to Google’s advertisements 6 on that website. 7 4. According to Super Cray’s account records with Google AdSense, by October 21, 8 2014, Super Cray had accrued $535,000 in earnings under Google AdSense. But on that day, 9 which was supposed to be same day that Google would pay out all earnings under the AdSense 10 program to its participants, Google instead notified Super Cray that its AdSense account had been 11 suspended because its advertising layout “encourages accidental clicks.” 12 5. Super Cray has attempted to appeal Google’s decision but Google’s 13 representatives refuse to have any in-depth, substantive discussions regarding the purported 14 deficiencies of SuperCrayCray and refuse to acknowledge the prior actions of Google 15 representatives that had led Super Cray to believe it was fully complying with AdSense’s 16 requirements. 17 6. Google’s lack of response is not surprising, however, in light of growing reports 18 that Google systemically suspends and withholds payment on high-earning AdSense accounts for 19 arbitrary and capricious reasons, typically right before payouts on such earnings are due. Such 20 reports indicate that Google pockets those withheld earnings for itself, thereby improving its own 21 financial results at the expense of publishers like Super Cray. 22 PARTIES 23 7. Plaintiff Super Cray Inc. is a New York corporation that has its principal place of 24 business in New York. 25 8. Defendant Google Inc. is a Delaware corporation that has its principal place of 26 business in California. 27 28 - 2 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page3 of 19 1 JURISDICTIONAL STATEMENT 2 9. The Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332 because the 3 parties are all citizens of different states and the amount in controversy exceeds $75,000. 4 10. The Court has personal jurisdiction over Google because it transacts business in 5 California and because in the Google AdSense Online Terms of Service, it expressly consents to 6 personal jurisdiction in this Court. 7 11. Venue is proper in this district pursuant to 28 U.S.C. § 1391 because Google 8 resides and regularly conducts business in this district. 9 INTRADISTRICT ASSIGNMENT 10 12. Google’s headquarters is located in Mountain View, California, and therefore 11 assignment to the San Jose division of this Court is appropriate. 12 FACTUAL ALLEGATIONS 13 Background on AdSense 14 13. Google is the largest online marketing/advertising business in the world. The 15 AdWords Advertising Program (“AdWords”) is Google’s primary advertising program. AdWord 16 advertisements are displayed in a variety of formats such as text and/or images, alongside or 17 above search results, on webpages, in e-mails, on blogs, and/or in videos. 18 14. The Google AdSense Content program enables online publishers of websites to 19 partner with Google to earn revenue from AdWords advertisements displayed on websites under 20 their ownership, license, registration and/or other control. Google tracks each time Internet users 21 click on advertisements displayed on AdSense publishers’ websites and charges advertisers for 22 each click. Google pays the AdSense publishers a portion of the amount paid by advertisers for 23 the clicks, while retaining the remaining portion for itself. 24 15. According to Google, publishers participating in the AdSense Content program are 25 promised a 68% revenue share. (https://support.google.com/adsense/answer/180195?hl=en). 26 Furthermore, Google touts the superiority of its on-line advertising program against programs 27 offered by competitors, as it stated “Another ad network might offer an 80% revenue share, but 28 only collect $50 from advertisers, so you'd receive $40. With the vast number of advertisers - 3 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page4 of 19 1 competing to appear on AdSense sites, our system ensures that you're earning the most possible 2 for every ad impression you receive.” 3 16. The Google AdSense Online Terms of Service (“AdSense Agreement”) governs 4 the relationship between website publishers and Google for the AdSense Content program. 5 Google unilaterally drafts all contracts, policies, procedures, and guidelines governing the 6 relationship between Google and AdSense publishers, as well as any and all amendments and 7 modifications. 8 17. The AdSense Agreement provides the following policies and procedures for 9 payments to publishers: 10 Section 5: Payments 11 Subject to this Section 5 and Section 10 of these AdSense Terms, you will receive a payment related to the number of valid clicks on Ads displayed on your Properties, the 12 number of valid impressions of Ads displayed on your Properties, or other valid events performed in connection with the display of Ads on your Properties, in each case as 13 determined by Google. 14 … 15 Payments will be calculated solely based on our accounting. Payments to you may be withheld to reflect or adjusted to exclude any amounts refunded or credited to advertisers 16 and any amounts arising from invalid activity, as determined by Google in its sole discretion. Invalid activity is determined by Google in all cases and includes, but is not 17 limited to, (i) spam, invalid queries, invalid impressions or invalid clicks on Ads generated by any person, bot, automated program or similar device, including through any 18 clicks or impressions originating from your IP addresses or computers under your control; (ii) clicks solicited or impressions generated by payment of money, false representation, 19 or requests for end users to click on Ads or take other actions; (iii) Ads served to end users whose browsers have JavaScript disabled; and (iv) clicks or impressions co-mingled with 20 a significant amount of the activity described in (i, ii, and iii) above… 21 18. Further, the AdSense Agreement contains the following policies and procedures 22 for termination or suspension of AdSense publisher accounts: 23 Section 10: Termination 24 You may terminate the Agreement at any time by completing the account cancellation 25 process. The Agreement will be considered terminated within 10 business days of Google’s receipt of your notice. If you terminate the Agreement and your earned balance 26 equals or exceeds the applicable threshold, we will pay you your earned balance within approximately 90 days after the end of the calendar month in which the Agreement is 27 terminated. Any earned balance below the applicable threshold will remain unpaid. 28 - 4 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page5 of 19 1 Google may at any time terminate the Agreement, or suspend or terminate the participation of any Property in the Services for any reason. If we terminate the 2 Agreement due to your breach or due to invalid activity, we may withhold unpaid amounts or charge back your account… 3 4 19. Under California law, Google is contractually obligated to act in good faith and 5 deal fairly with AdSense publishers in implementing its stated policies and guidelines in the 6 AdSense Agreement. 7 20. In particular, Google is obligated, pursuant to the terms of Section 5 of the 8 AdSense Agreement, to act in good faith and deal fairly with AdWords publishers in: (a) 9 determining the validity of clicks, impressions, and other activities/events performed in 10 connection with the display of advertisements on the publisher’s websites; (b) accounting for the 11 payments owed to publishers under the AdSense Agreement; (c) and withholding payments 12 arising from activity Google deems invalid. 13 21. Additionally, Google is obligated, pursuant to the terms of Section 10, to act in 14 good faith and deal fairly with AdSense publishers in: (a) suspending or terminating the AdSense 15 Agreement; (b) suspending or terminating the participation of any website in the AdSense 16 program; (c) determining that an AdSense publisher breached the AdSense Agreement; (4) 17 determining that an AdSense publisher engaged in invalid activity; and (5) withholding or 18 charging back payments earned by an AdSense publisher under the AdSense Agreement. 19 Background on Super Cray 20 22. Super Cray completed an application to participate as a publisher in the Google 21 AdSense program for its SuperCrayCray website. 22 23. SuperCrayCray is a humorous website with the tagline “Where Ridiculous Meets 23 Entertainment.” Its founders spend time assembling photographs in the public domain of 24 celebrities and other famous people and then crafting “lists” and writing original content to 25 provide information about the featured personages designed to amuse the viewer or provoke 26 thoughtful discussion. 27 24. One example is a post on SuperCrayCray titled “7 Startups You Didn’t Know 28 Were Funded By A-List Celebrities,” which can be found at http://supercraycray.com/7-startups- - 5 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page6 of 19 1 you-didnt-know-were-funded-by-a-list-celebrities/. The post – broken up over several pages in a 2 style similar to other websites such as Buzzfeed or Cracked – features on each page a photograph 3 of a popular celebrity, such as Justin Bieber, Jared Leto, Lady Gaga and Ashton Kutcher. 4 Accompanying each photograph is an explanation of the startup company that counts that 5 celebrity as an early investor – viewers are informed that Justin Lieber is an investor in a 6 photograph-based startup called Shots, Jared Leto is an investor in the recently-acquired-by- 7 Google-for-$3.2 billion startup called Nest, Lady Gaga is an investor in a social network called 8 Backplane and Ashton Kutcher is an investor in Airbnb. 9 25. Google granted Super Cray’s application to participate in the AdSense program 10 and provided it with hypertext mark-up language (“HTML”) to insert in SuperCrayCray’s source 11 code to display the AdSense advertisements. SuperCray inserted the supplied HTML into 12 SuperCrayCray’s source code and the website began displaying targeted advertisements to its 13 viewers through the AdSense program in early September 2014. 14 26. Substantial time and resources were spent in developing SuperCrayCray and its 15 content for purposes of monetizing the website through advertising. 16 Google Affirms SuperCrayCray’s Compliance with AdSense Requirements and Policies 17 27. SuperCrayCray, and its formatting of Google’s AdSense advertisements, complied 18 with all of Google’s Ad Placement Policies, which are available to publishers at 19 https://support.google.com/adsense/answer/1346295?hl=en. 20 28. In particular, SuperCrayCray did not encourage accidental clicks. SuperCrayCray 21 did not display ads in such a way that they might have been mistaken for other website content. 22 SuperCrayCray did not place ads under misleading headers or titles. SuperCrayCray did not use 23 language to encourage users to click on ads. SuperCrayCray did not bring unnecessary or 24 unnatural attention to its ads. SuperCrayCray did not place ads on pages or sites where dynamic 25 content was the primary focus. SuperCrayCray did not place links, play buttons, download 26 buttons, games, drop-down boxes, or applications near ads. SuperCrayCray did not place ads on 27 noncontent-based pages. SuperCrayCray did not offer users compensation for clicking ads. 28 SuperCrayCray did not disguise ads on its webpages. SuperCrayCray did not attempt to associate - 6 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page7 of 19 1 specific images with individual ads appearing on their sites. SuperCrayCray did not display its 2 content below the fold. SuperCrayCray did not display ads in software applications. 3 SuperCrayCray did not display ads in e-mail messages. SuperCrayCray displayed ads only from 4 Google’s AdSense network. SuperCrayCray did not display ads from any other publishers. 5 SuperCrayCray did not display more than the maximum of three standard ad units, three link 6 units, and two search boxes on one webpage. SuperCrayCray did not display ads on password- 7 protected pages. SuperCrayCray websites did not have more than three pop-ups. SuperCrayCray 8 did not display ads in pop-up windows. 9 29. Furthermore, Google expressly affirmed to Super Cray on multiple occasions that 10 the advertisements it was displaying on its website fully conformed with Google’s AdSense 11 policies. 12 30. Google AdSense allows a publisher to “self-report” its website to Google so that 13 Google could verify that the website was fully compliant with AdSense policies. Publishers 14 might do this because, for example, they see a spike in their click-thru-rate (“CTR”) (i.e., the 15 percentage of website viewers that click on advertisements) and want Google to verify that the 16 increased CTR was not due to “click fraud,” improper advertisement, website formatting or other 17 factors that could cause Google to find an AdSense advertisement to be invalid. 18 31. Google encourages publishers to self-report so that those publishers can make any 19 necessary corrections to their website far in advance of the payout date. This benefits Google as 20 well, because advertisers are not likely to pay Google for advertisements that featured an 21 unusually high CTR. 22 32. On September 29, 2014, Super Cray co-founder Denis Ganev participated in an 23 Internet chat carried out on Google’s proprietary chat program with a Google AdSense 24 representative named “Ryan J” after Super Cray had performed a self-report on itself to Google. 25 In that conversation, the parties stated: 26 Denis: We reported our selves previously in the month asking to verify if our site is fully complaint (sic) with all TOS [Terms of Service]. We never received a response, does that 27 normally mean that it was checked and no issues were found? 28 - 7 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page8 of 19 1 Ryan J: Correct, warnings are resolved once you mark them as such. If there is a future issue the policy team will get back to you. 2 Denis: Honestly, our biggest concern was our CTR on our ads. We wanted to confirm if it 3 was inline with whats normal. We wanted to double check that the CTR was not in anyway a result of accidental clicks, or what not. Is that something that's checked 4 periodically when a site scales quickly? Or is that something checked in the 2 week period? 5 Ryan J: We do validate all clicks and impressions and are monitoring it constantly. 6 The CTR you are seeing is within the normal range. I'm also not seeing any concerns are you site, ex. implementation that could cause a high amount of 7 accidental clicks. 8 33. By the end of September 2014, SuperCrayCray had accrued $197,045.69 in 9 AdSense earnings according to Google. That number had been slightly reduced compared to 10 previous figures estimated by Google, so on October 1, 2014, Super Cray co-founder Ryan 11 Kalscheuer contacted Google with questions. In another Internet chat with “Ryan J,” Ryan J 12 explained that the estimated earnings had been reduced compared to the final earnings because of 13 CTR that Google determined to be invalid. In addition: 14 Ryan K: Is there any other reason for further adjustments for the month of Sept? Can I 15 count on receiving this amount, $197,045.69 later in the month? 16 Ryan J: Yes, those earnings have finalized and will be paid out on the 21st of the month. Then you will receive it a few days later. 17 18 34. Also on October 1, 2014, another Google AdSense representative called “Roy” 19 responded by e-mail to a separate query by Super Cray co-founder Kirill Fuchs. In Kirill’s e- 20 mail, he had asked: 21 Hello, 22 My question is regarding an ad placement we currently have. Our 336x280 (desktop) and 300x250 (mobile) both have a significant click through rate on the first page of some of 23 our articles. I wanted to verify that our ad placement is not generating invalid activity such as accidental clicks. Is there anyway to tell if our conversion rate for those ads are below 24 normal ranges? Thank you in advance, I understand it's difficult to accommodate every publishers request to verify such things. 25 An example page would be: 26 http://supercraycray.com/15celebritiesthatreallyhateeachother/ 27 28 - 8 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page9 of 19 1 35. Roy responded: 2 Hi Kirill, 3 Happy to help. I reviewed your account and website supercraycray.com , and found correct implementations for both 336x280 (desktop), and 300x250 (mobile). We definitely 4 appreciate your honesty and your efforts to keep your account in good standing. 5 For your reference, you can find tips and guidelines for keeping your account in good standing by visiting 6 https://www.google.com/support/adsense/bin/answer.py?answer=23921. Hope this is useful. Feel free to write me for any further clarifications. 7 Thanks, 8 Roy 9 The Google AdSense Team 10 36. Attached as Exhibit 1 and incorporated by reference in this Complaint is a true and 11 correct copy of the October 1, 2014 e-mail from Roy ([email protected]) to Kirill 12 which includes Kirill’s original e-mail to Google AdSense. 13 37. On October 6, 2014, Kirill contacted Google with questions regarding SuperCray’s 14 declining cost-per-click (“CPC”) that it was earning from its AdSense advertisers. In an Internet 15 chat with Google AdSense representative “Jacky G,” the parties stated: 16 Kirill: We tend to see higher CTR at the bottom of the page. But for some reason the CPC 17 is higher for the first unit of th page. We originally ran the 300x250 at the top but switched positions about a week ago since that one has higher CPC. 18 Jacky G: The ad unit at the top of a page will generally perform better because it's above 19 the fold and users will always see the ad. Ads further down a page are not guaranteed the same visibility. It's great that you've labeled your ads because this will reduce invalid 20 clicks. It's also possible that the 300x100 performed better because it doesn't take up as much space. Placing the 300x250 right below the article title would have pushed your 21 content below the fold and likely caused more accidental clicks. 22 I'd stick with your current implementation. 23 My only suggestion would be to increase the size of your navigation buttons just so they're obvious to your users. 24 Actually I just navigated past the first page and the previous and next buttons are 25 bright and obvious. 26 My suggestion would be to keep this implementation and monitor it's performance over the next few weeks. CPCs should adjust for the change soon and you'll likely start seeing 27 a boost because of the holidays. 28 - 9 - COMPLAINT Case5:15-cv-00109 Document1 Filed01/08/15 Page10 of 19 1 38. Encouraged by Google’s written confirmations to it on September 29, October 1 2 and October 6, Super Cray spent over $300,000 having SuperCrayCray and its articles 3 prominently advertised, placed and displayed on websites like Facebook. The idea was to 4 increase user traffic to SuperCrayCray and thus present more viewers to its AdSense 5 advertisements. Assuming that SuperCrayCray’s advertisements maintained its 2-3% CTR (the 6 standard for valid Google CTRs being 2-4%), Super Cray would make more money off the 7 increased advertisement revenue than it was spending on acquiring user traffic. 8 39. In fact, Google encourages publishers to increase their user traffic using such 9 means. As part of its suggested tips regarding site optimization on its Ad Traffic Quality 10 Resource Center, Google states that “[a]cquiring new traffic to your website is another common 11 way to generate increased traffic. Common ways to do this include search engine optimization, 12 advertising and partnering with traffic providers.” 13 40. Increasing traffic to an AdSense publisher’s website, after all, would also result in 14 added revenue to Google itself. 15 Google Damages Super Cray 16 41. By October 21, 2014, Super Cray’s accrued earnings from the AdSense program 17 were $535,000 according to Google. October 21 was also the day Google was supposed to pay 18 out its AdSense revenues to its publishers, as confirmed by Ryan J on October 1. 19 42. Instead of receiving a payout from Google, however, on October 21, 2014, Super 20 Cray received a notification from Google that its account had been suspended for “Layout 21 Encourages Accidental Clicks.” Google refused to pay anything to Super Cray. 22 43. Super Cray has repeatedly tried to discuss the issue with Google AdSense 23 representatives and point out that Google expressly validated SuperCrayCray’s layout on 24 September 29, twice on October 1 and also on October 6. 25 44. Google, however, has refused to carry on any in-depth substantive discussions 26 with Super Cray and has refused to pay anything despite Super Cray having caused Google to 27 earn over $786,000 in advertising revenue from AdSense. 28 - 10 - COMPLAINT