Google Dodges Lawsuit Over Ads On Undeveloped Websites


A federal judge in California turned down a would-be class action lawsuit that sought millions of dollars in refunds for companies whose ads appeared on parked or error web pages.

In a ruling on Thursday, U.S. District Judge Edward Davila said he would not allow the class action to go forward because it was more appropriate for companies who had bought the ads to show any alleged harm on an individual basis.

The case, which was filed in 2008, said Google’s ad-selling practices were unfair and deceptive under California law. The ads in question were those which appeared on “parked domains” which are registered but undeveloped websites, and on placeholder pages that appeared instead of error messages.

The plaintiffs claimed that these sites left a negative impression and that Google (NSDQ: GOOG) had failed to inform them their ads would appear there. The search giant replied that a clicked-through ad on these sites was equally valuable and that its policies disclosed where the ads would appear.

Part of Google’s ad business is a large network on which it helps other web sites host ads.

The company has been dinged by major advertising-related class actions in the past. In 2006, it agreed to a $60 million settlement to compensate ad buyers who had been harmed when malicious third parties clicked on their ad in bad faith, a practice known as click-fraud. And in 2009, Google paid $20 million to settle a suit that alleged it over-charged for ads. The company denied it was at fault but it said it was easier to pay and move forward.

The company is also enmeshed in a series of lawsuits over whether it is legal for one company to buy another firm’s trademark for advertising purposes. So far, courts have sided with Google.

A Google spokeswoman said the company was pleased with this week’s ruling

A lawyer for the plaintiffs declined to comment.

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