In recent weeks Google won convincingly in the pay-per-click case of Lawrence Feldman v. Google, Inc. [PDF], 2007 WL 966011 (E.D. Pa. March 29, 2007). Google won against Lawrence Feldman, who was the plaintiff. Mr Feldman is also a lawyer.
As lawyers who draft business contracts, we found this AdWords case worth studying. It helps answer this question under US law- when does an online transaction produce or amount to an enforceable or legally binding contract?
It is a neat example of a case that addresses the linked questions of the status of online contracts and online advertising agreements.
- In the case Mr Feldman lost his motion for a summary judgement against Google. The clearly written and researched decision of Justice Giles supports the AdWords Agreement and its online "clickwrap" contract signing up procedure.
- Justice Giles specifically notes that the AdWords Agreement was in "readable 12-point font". It was used by Mr Feldman to "purchase" keywords for drugs such as "Vioxx", "Bextra" and "Celebrex".
- Mr Feldman, whose firm is Lawrence E. Feldman & Associates, used Google's usual online AdWords procedure. Mr Feldman claimed he did not read the online contract but he did click a box which referred to a contract.
- He complained that he paid US$100,000 under the AdWords Agreement and this included payment for what he said were fraudulent clicks. He claimed that 20% to 30% of all clicks for which he was charged were fraudulent. He also claimed, though it seems without much evidence, that Google had the capacity to do a better job to prevent the click fraud.
- Importantly, Google's signing up procedure required an affirmative action, (ie clicking a box next to the message "Yes, I agree to the above terms and conditions."), without which no AdWords account could be activated.
- The court upheld the AdWords Agreement as a "valid express contract" and its jurisdiction, choice of law or forum selection clause. The plaintiff had argued that there was merely an implied contract and no "assent to the terms of the agreement and [that] therefore there was no “meeting of the minds." Justice Giles completely rejected this.
- As to the claim that the contract had a fault in that it contained no fixed price for advertising, the court said: "The AdWords Agreement does not include a specific price term, but describes with sufficient definiteness a practicable process by which price is determined."
This month Google published updates on what it is doing to reduce click fraud.
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