February 05, 2009
Publisher Promising "Visitors" Owes "Visitors," Not "Unique Visitors"--WebMD v. RDA
By Eric Goldman
WebMD, LLC v. RDA Intern., Inc., 2009 WL 175036 (N.Y. Sup. Ct. Jan. 6, 2009)
It's been a while since I've blogged about a lawsuit between an Internet publisher and advertiser, so you may enjoy this one. RDA placed a series of advertising orders with WebMD, including one order where WebMD promised "36,000 visitors" to an RDA website. RDA eventually stiffed WebMD to the tune of $350k, which is enough outstanding cash to get WebMD into court for a collections action. Once there, RDA argued that WebMD failed to perform the contract because the contract required 36,000 unique visitors and WebMD only delivered 70-80% of this number.
Most of us in the Internet advertising business immediately scoff at RDA's argument. Everyone in our industry knows that "visitors" and "unique visitors" are two very different things, and that if the parties actually meant "unique visitors," they would have said so. The court efficiently reaches this conclusion as well, saying that the term "visitors" is unambiguous and "If defendant wished to be guaranteed “unique visitors” to the site, it should have specified such in the agreement." Even if the term were ambiguous, the court still isn't sympathetic, in part because the advertiser never complained about the invoices while the parties were still in a relationship. (And, as we know, advertisers will complain if they think the deal isn't performing to their expectations!!!)
Two practice pointers from the case. First, it's critical to precisely define the metric for computing payment in advertising contracts. Often, when I'm asked to look at Internet ad contracts, I'm sent the T&Cs but not the actual IO where the payment metric for the particular ad deal is specified. That's one of the most important aspects of an ad contract, so as a lawyer, we really need to get our hands on the IO business terms in addition to the T&Cs. Second, the opinion doesn't mention any clause in the WebMD contract that WebMD's numbers control for calculation purposes. (The clause might have been in the contract, but it wasn't referenced in the opinion). Even if the court won't enforce those clauses verbatim, they can still be extraordinarily helpful in tipping any ambiguities in favor of the publisher and against the advertiser when the parties dispute the numbers.
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