October 14, 2006
Google AdWords Contract Upheld--Person v. Google
By Eric Goldman
Person v. Google Inc., 2006 WL 2884444 (S.D.N.Y. Oct. 11, 2006)
Carl Person is a candidate for New York's Attorney General and an AdWords advertiser. He complains about a variety of Google's AdWords' policies, including its minimum pricing, its restrictions on buying certain keywords, the quality score component of its sorting algorithm, the allegedly misleading nature of calling the process an "auction" when Google exercises subjective judgments, and other practices. Thus, he sued Google for antitrust and other violations in the federal courts in New York City.
To become an AdWords advertiser, Person entered into an online clickthrough Google's AdWords agreement that contains a forum selection clause for Santa Clara County, CA. The court notes that forum selection clauses are presumptively valid, and after a fairly brief analysis, the court concludes that there's no reason to overturn this presumption. Thus, the court transfers the case to the federal court in San Jose, CA.
As far as I can remember, this is the first case upholding Google's AdWords contract. However, this isn't the first time that a Google online clickthrough agreement was validated; in 2004, a New York court upheld its contract for Google Groups. Novak v. Overture Servs., 309 F. Supp. 2d. 446 (E.D.N.Y. Mar. 25, 2004).
I wonder if NY voters will count this decisive loss (in a lawsuit of his own choosing) against Person when deciding if he's worthy of the role of Attorney General?
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At least so far as I can tell from your post, the court didn't address the merits of the AdWords contract -- it just enforced the forum selection clause. I'd guess there's a choice of law clause in there, too, which the California court would address and probably enforce. But it seems like the substantive issues remain unresolved.
Posted by: Tim Hadley at October 15, 2006 08:28 AM
Forum selection clauses in non-negotiated contracts are challenged more frequently than you might expect. Considering Google's reputation as an aggressive litigator, the lack of any discussion of Rule 11 sanctions is telling.
Your closing comment has an unnecessary sour tone. There is nothing wrong with taking a reasonable risk that has a great benefit, e.g., not hauling yourself to Google's home state for every mandatory appearance, and losing. There is a great difference between analyzing the law and practicing the law.
Posted by: David Jaglowski at October 16, 2006 07:54 AM
I may hold politicians to a different standard than you. If a politician advances a low-merit argument when litigating on their own behalf, I fear that sends disconcerting signals about their discretion if they are given the prosecutorial power to bring lawsuits on behalf of the state. Eric.
Posted by: Eric Goldman at October 16, 2006 08:38 AM