Google click fraud plaintiff gets 'cold feet'

By Reuters

Published: December 9, 2005, 5:18 AM PST

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Click Defense, which had filed a lawsuit against Google, claiming that the Web search leader's advertising-sales practices were fraudulent, said on Thursday that it is seeking to withdraw as lead plaintiff in the suit in order to focus on its own business.

The company said in a statement that it wanted to withdraw as the lead plaintiff named in a lawsuit seeking class-action status it had filed against Google in June in the U.S. District Court for the Northern District of California.

Still, Click Defense said it plans to press its claims against Google.

"We are only withdrawing as a representative plaintiff," Click Defense Chief Executive Scott Boyenger said in a statement, adding that the company was doing so in order to focus on its business as a provider of technology used to detect "click fraud" in online-advertising campaigns.

Virtually all of Google's revenues derive from so-called pay-per-click advertising, in which advertisers pay only for ads on which Web users have clicked to view more information.

Click fraud is not "fraud," as defined under the law. Rather, it is an industry term used to describe the deliberate clicking on Web search ads by users with no plans to do business with the advertiser. Rival companies might employ people or machines to do this because the advertiser has to pay the Web search provider for each click.

Click fraud can run up thousands of dollars in advertiser costs or benefit a Web site operator that gets a cut of advertising revenue from Internet search providers.

Google declined to comment on the pending case. At the time the lawsuit was originally filed, it stated, "We believe the suit is without merit, and we will defend ourselves against it vigorously."

In general, Google says its credits advertisers who can show that they have fallen prey to "invalid click" schemes.

The complaint filed by Click Defense, of Fort Collins, Colo., alleged that Google has refused to take steps to thwart fraudulent advertising-billing practices, "even though the company was well aware of the practice."

"We remain a member of the class, and our click fraud claims against Google will still be litigated when and if the class is certified," Boyenger said.

Click Defense said it would withdraw after another potential plaintiff had stepped forward to act as representative plaintiff.

In other news:

On Wednesday, AIT, a $34 million-a-year Internet service provider serving customers in the mid-Atlantic states and the Carolinas, said it planned to take over as lead plaintiff in the suit against Google.

"(Click Defense) started down the road and got cold feet, and we are jumping in their stead," Jay O'Dell, a sales executive at AIT, told Reuters by phone.

Darren Kaplan, an attorney at law firm Chitwood Harley Harnes, remains plaintiffs' counsel.

A hearing on the motion for class certification in the Google click fraud case has been scheduled for May of 2006, Click Defense said.

Google shares traded up 1.2 percent, or $4.93, to $409.15 in afternoon trading on Nasdaq on Thursday.