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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Click Fraud - Internet Library of Law and Court Decisions - Updated January 8, 2008

06 Civ. 1923 (JGK) (S.D.N.Y., March 12, 2007)

Court allows plaintiff to proceed with ‘click-fraud’ claim against defendant, a search engine operator.  The complaint alleged that to increase its revenues from pay-per-click advertisements posted on its site by plaintiff, defendant directed defendant to engage ‘bots’ and individuals to click on plaintiff’s advertisements.  This had the effect of increasing defendant’s revenues, as plaintiff paid it on a pay-per-click basis.  The complaint alleged that defendant Findwhat also bid on pay-per-click search terms, thereby improperly increasing the price plaintiff had to bid therefore to obtain higher placement for such terms.  The Court held that such misconduct could run afoul of the implied covenant of good faith and fair dealing in the parties’ contract, and accordingly allowed plaintiff to proceed with a breach of contract claim against defendant changed its name to Miva, Inc. in June 2005.

The Court did dismiss the balance of the claims plaintiff asserted.  Its unjust enrichment claims failed because there was a valid contract governing the subject matter of plaintiff’s claim.  Plaintiff’s negligence claims failed because of the absence of any independent duty on the part of defendant to monitor the source of the ‘clicks’ plaintiff received.  Such an obligation would be governed by the terms of the parties’ contract. 

Finally, plaintiff’s fraudulent concealment claim failed because of plaintiff’s failure to plead such claim with the requisite particularity.  Plaintiff was granted leave to replead this claim, premised on defendant’s alleged duty to disclose that it was improperly causing a third party to click on plaintiff’s ads so as to increase’s revenues.  Such a claim, if properly alleged, would serve to support a civil conspiracy claim against defendant, which was the party that allegedly arranged to have a ‘bot’ click on plaintiff’s ads.

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