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Microsoft Seeks to Add Additional Defendant to ?Click-Fraud? Lawsuit

By Stephanie Robinson

On December 10, 2010, Microsoft announced that it was seeking to add an additional defendant to its pending federal lawsuit against RedOrbit.com, a news and information website intended for space, science, health, and technology enthusiasts. In its lawsuit, Microsoft has alleged that RedOrbit and, now, Vertro Inc. (a web advertising network business) engaged in a scheme to generate fraudulent ?clicks? on advertisements placed on RedOrbit.com through Microsoft?s adCenter platform (now called pubCenter). For the purposes of its lawsuit, Microsoft defines ?click fraud,? essentially, as an instance where a person or computer program intentionally clicks on an ad (or otherwise generates an ad click) without having any real interest in the products or services being advertised. Microsoft has alleged that RedOrbit and Vertro committed click fraud as well as so-called ?click laundering,? which it defines as a kind of click fraud involving technical measures to mask the origin of a click and to make invalid ad clicks appear to be legitimate. Microsoft alleges that more than a quarter of all ad clicks online likely are fraudulent and that such click fraud ?hurts consumer choice and undermines the trustworthiness of the Internet as a safe place to do business ? endangering the entire ecosystem of ad-supported online websites and services.? Microsoft?s efforts to curb abuses of its advertising platform are understandable, and its case against RedOrbit and Vertro may be legitimate. However, the scope of its definition for ?click fraud? is a little breathtaking, in that it seems to include instances where an individual user might click on an ad either because he or she is mad at the advertiser or because he or she favors the publisher of the site where an ad is placed, without having any interest in or expectation of monetary gain. ?Fraud? allegations under those circumstances could implicate First Amendment concerns. It will be interesting to see whether the kinds of allegations included in Microsoft?s complaint find their way to other kinds of claims and whether state or federal policymakers make any changes to legal fraud definitions to encompass the sorts of activities potentially within the scope of Microsoft?s definition of ?click fraud.?

Full post as published by Business and Technology Law on December 27, 2010 (boomark / email).