Monday, July 6, 2009

Traverse Internet Law Federal Court Report: June 2009 Hacking Lawsuits

The facts are unproven allegations of the Plaintiff and all commentary is based upon the allegations, the truthfulness and accuracy of which are likely in dispute.

FILED: 6/15/2009

If you are a business using pay-per-click advertising and don’t already understand that there is widespread click fraud occurring on a daily basis, the circumstances of this case again reiterate that there is an ongoing battle between the major search engines and click fraudsters. The bottom line is that most click fraud is not caught by the search engines and your business is likely losing money every day by a competitor clicking on one of your ads solely to run up your costs. This is the reality of pay-per-click advertising and should be factored in from a business perspective in using pay-per-click advertising. If there is a pervasive issue, and you should be reviewing your log files and other analytics to determine if such a problem might exist, then you need to do something about it.

The Plaintiff, Microsoft, is the renowned software company headquartered in Washington State. Most of the Defendants are natives of China and presently residing in Canada. The Defendants are alleged to have participated in a “pay-per-click fraud” in which they operated “click farms” and “bot nets” to repeatedly click on ads of competitors to run up the advertising cost. The Defendants are alleged to have been using click fraud to attack one specific automobile insurance advertiser and after extensive investigation, the Plaintiff alleges that all of the Defendants are carrying on an ongoing scheme to commit click fraud against targeted advertisers.

The lawsuit sets forth claims for breach of contract, breach of implied covenant of good faith, tortious interference with a business, fraudulent inducement, fraudulent misrepresentation, hacking (unauthorized access), violation of the Washington Computer Spyware Act, violation of the Washington Consumer Protection Act, civil conspiracy, and unjust enrichment. Microsoft requests an award of compensatory damages of at least $750,000.00, the entry of preliminary and permanent injunctive relief, an award of statutory damages and triple damages, a complete accounting and disgorgement of profits earned by the Defendants, and an award of Microsoft’s attorneys’ fees and costs together with interest as permitted by law. Traverse Internet Law Cross-Reference Number 1332.