Professional Documents
Culture Documents
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CRITEO S.A.,
Plaintiff,
v.
STEEL HOUSE, INC.,
Defendant.
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v.
CRITEO S.A.,
Counter-Defendant.
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responds to the complaint and demand for jury trial of plaintiff Criteo S.A.
allegations, as follows:
Criteo, who will resort to any means, including false and egregious accusations, to
protect its dying business model. Rather than transform itself, as others in the
industry have done, Criteos suit attacks the very essence of what it fears: A new,
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advertising (Ad Tech) industry, and ultimately render Criteos business model
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obsolete.
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At the heart of Criteos claims is the inaccurate notion that the entire Ad
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Tech industry believes and operates as Criteo does. It does not. Criteo
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which advertisers must choose either Criteo or SteelHouse. But this is simply not
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evolving marketplace. The industry itself operates akin to Wall Street where the
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reallocate their money on a weekly or even daily basis. Nothing is static in the
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industry, Criteo and SteelHouse offer drastically different products and use very
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model, where customers are charged each time a consumer clicks on one of
that it claims a click rate that is unexplainably and suspiciously high, four times as
Criteo.
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define advertising, and charges customers for ads served (ads placed on the
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unlimited solution for creating and executing ad campaigns. And where Criteo
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believes that it should have complete control over its customers ad campaigns;
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about transparency, and offering its customers a creative solution, unlike Criteos
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SteelHouses advertising suite and business model are truly unique within
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the Ad Tech industry. As a result, SteelHouse succeeded upon entering the market
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since October 2009, and has taken market share from other vendors, by offering
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provides its customers with the ability to develop, create, customize, and launch ad
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transitions, and countdown timers. Criteo offers no such solution. Not only does
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SteelHouse provide a creative software solution, but it also provides its customers
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with real-time data, which show its customers how consumers are reacting to their
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ads, and allows its customers to respond to consumers while they are on the
advertisers, who recognize the competitive nature of online advertising and want
The industry agrees with SteelHouse, and more and more online marketing
vendors are moving away from a pure click-based concept. Up until recently,
Criteos superior click rate was enough to guarantee that clients would choose
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advertising, they are choosing SteelHouse over Criteo, despite Criteos apparent
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superior click rate. Troubled by its loss of market share, Criteos solution was to
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order to inflate its numbers and induce customers to choose SteelHouse over
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Criteo. These allegations are categorically false and also illogical as SteelHouses
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business model is not based on clicks, which are the obsessive focus of Criteos
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denies the remaining allegations of Paragraph 1 of the Complaint, and avers that
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and particularly denies that it has counterfeited clicks or tricked any e-tailers or
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Complaint.
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and particularly denies that it stole credit for sales, or that it artificially inflated and
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continues to artificially inflate key metrics of its performance, and therefore denies
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and particularly denies that it stole credit for sales, or that it artificially suppressed
and continues to suppress the conversation rates of Criteo and other competitors,
and the ROAS of their respective e-tail clients, and therefore denies the allegations
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and particularly denies that it manipulated or exploited metrics, or that it made any
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SteelHouse admits that Criteo approached SteelHouse and conveyed its belief that
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SteelHouse was stealing credit for clicks, and admits that SteelHouse advised
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Criteo that it had no knowledge of any attribution issue, but would investigate the
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Complaint.
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and particularly denies that it counterfeited clicks, and that Criteo has suffered any
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any of Criteos lost revenue or market share is the result of SteelHouses superior
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product offerings and customer service, which many customers have found
between two vendors. Companies compare many things when they compare
Creative Services, and Reporting and Services. SteelHouse therefore denies the
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STATEMENT OF FACTS
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address on the internet that enables computers and other devices to visit the
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address. SteelHouse also admits that e-tailers often contract with multiple
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marketing vendors at the same time. SteelHouse denies that e-trailers track clicks
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SteelHouse also denies that when tracking is used, the only method of doing so is
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to add tracking codes to a URL. SteelHouse further denies that tracking code is
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15.
Google Analytics is the largest system for tracking website visits. Google
Analytics does not have a metric that tracks clicks. Rather, Google Analytics
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and particularly denies that the dominant web analytics solution, Google Analytics,
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Coremetrics can track and measure clicks or Last-Click Attribution, and on that
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SteelHouse admits that Criteo uses Pay-Per Click, also called Cost-
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Per-Click (CPC), pricing model. SteelHouse denies that most marketing vendors
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use Pay-Per-Click. SteelHouse does not (and has not) used a Pay-Per Click or
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SteelHouse denies that the amount Criteo can charge its clients per
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click depends on its performance, but rather avers that the amount that Criteo
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charges its clients is based on the number of clicks that Criteo claims to have
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Criteos conversion rate or ROAS, and therefore denies the remaining allegations
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admits it and Criteo are competitors in the online marketing market, along with
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but avers that SteelHouse offers its customers a unique, customizable product that
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SteelHouse offers retargeting as one part of a larger set of services it offers its
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Complaint.
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such allegations.
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clicks that Criteo claims to have generated, and therefore denies the allegations of
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and particularly denies that it has engaged in any unlawful conduct, counterfeiting,
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or fraudulent behavior.
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SteelHouse admits that, in its opinion, its products and services are
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clicks between two vendors. Companies compare many things when they compare
Creative Services, and Reporting and Services, and on these bases, admits that it
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particularly denies that its claims in this email were false or misleading, or that it
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clicks between two vendors. Companies compare many things when they compare
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Creative Services, and Reporting and Services. Therefore, SteelHouse denies the
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head comparison of Criteos and SteelHouses product and services at the request
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as to what metrics were used in the head-to-head comparison, and on that basis,
more than just a comparison of clicks between two vendors. Companies compare
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SteelHouse avers that it won TOMS business because SteelHouse has numerous
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features that Criteo does not offer. SteelHouse offers custom segmentation, self-
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and as to TOMS actions with respect to Criteo, and on such basis, denies the
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Complaint.
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comparison, what metrics were used in the comparison, and the results of the
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comparison, and, on that basis, denies the allegations. SteelHouse denies the
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such allegations.
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clicks between two vendors. Companies compare many things when they compare
Creative Services, and Reporting and Services. SteelHouse also denies that its
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such allegations.
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as to whether Criteo used Web traffic analysis software and what it learned from
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that software, and, on that basis, denies such allegations. SteelHouse denies the
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also denies that analytics tools track clicks; rather such tools track site visits.
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SteelHouses code ensures that visits are properly recorded using open Application
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also denies that analytics tools track clicks; rather such tools track site visits.
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Criteo lost clients, and on that basis, denies the remaining allegations of Paragraph
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and particularly denies that it engaged in any acts of counterfeiting, and therefore
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Criteos Chief Revenue Officer (Criteos CRO), and that Criteos CRO alerted
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such allegations.
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Criteos New York office, and that Criteos CRO and SteelHouses Chief
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admits that a member of Criteos Business Intelligence team attended the meeting
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by phone. SteelHouse admits that its CEO did not attend. SteelHouse further
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admits that Criteo explained that it believed SteelHouse was misattributing clicks,
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and that SteelHouse told Criteo that it would investigate the situation. SteelHouse
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48.
denies the log files show counterfeit clicks. SteelHouse further admits that it
informed Criteo that it was investigating the issue. SteelHouse denies all
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Marketing Officer that Criteo was planning to notify its clients about the
information that Criteo had shared with SteelHouse. SteelHouse admits that it
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tracking pixel was conflicting with Criteos tracking pixel, that it only affected a
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and that SteelHouse worked to correct the issue. SteelHouse denies all remaining
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Minimizer Tool was the source of any data discrepancy. SteelHouse denies
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conference call on May 12, 2016. SteelHouse admits that it told Criteo that a
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change to its code went live on May 5, 2015. SteelHouse denies all remaining
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client, and as to whether SteelHouse allegedly beat Criteo in the comparison, and,
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SteelHouse admits that it received a letter from Criteo dated May 23,
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between two vendors. Companies compare many things when they compare
Creative Services, and Reporting and Services. SteelHouse therefore denies the
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vendors. Companies compare many things when they compare products in head-
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Services, and Reporting and Services. SteelHouse otherwise lacks knowledge and
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vendors. Companies compare many things when they compare products in head-
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customers made business and purchasing decisions, and, on that basis, denies such
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Complaint.
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that its principal place of business is in California, and that it has advertised and
sold products and services to e-tail clients through the United States. SteelHouse
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(Fraud)
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denies that it counterfeited clicks, and therefore denies the allegations of Paragraph
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when they compare products in head-to-head competitions. Click count is just one
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such allegations.
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advertising budget with Criteo, or why potential clients decided not to sign on with
Criteo, and, on that basis, denies such allegations. SteelHouse denies all remaining
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clicks, or made false or misleading statements, and therefore denies the associated
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the Complaint are conclusions of law to which no response is necessary, but to the
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based not on click counts, but on a combination of the products and services that
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when they compare products in head-to-head competitions. Click count is just one
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the Complaint.
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clicks between two vendors. Companies compare many things when they compare
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counterfeited clicks, and particularly denies that its representations about its
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products and services were false, and therefore denies the allegations of Paragraph
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89 of the Complaint.
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extent it is deemed an allegation of fact, SteelHouse denies that its statements were
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(Trade Libel)
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products and services. This representation was based not on click counts, but on a
vendors. Companies compare many things when they compare products in head-
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Services, and Reporting and Services. SteelHouse therefore denies the remaining
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97.
and particularly denies devising any scheme or artifice to defraud or making any
false representations, and therefore denies the allegations of Paragraph 101 of the
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Complaint.
102. SteelHouse admits that it uses the wires of the United States in
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states and various nations outside the United States. SteelHouse denies engaging
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clicks, and therefore denies all remaining allegations of Paragraph 102 of the
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Complaint.
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and particularly denies that it counterfeited clicks, and therefore denies the
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inflated its performance metrics. SteelHouse asserts that the remaining allegations
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are a conclusion of law to which no response is necessary, but to the extent they
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SteelHouse denies engaging in any fraudulent conduct, and therefore denies the
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misleading statements, and therefore denies the allegations of Paragraph 106 of the
Complaint.
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114. These paragraphs set forth the statement of relief requested by Criteo
of the requested relief and denies any allegations. SteelHouse respectfully requests
that Criteo take nothing from the Complaint, that SteelHouse be awarded
reasonable attorneys fees and expenses, and that SteelHouse be awarded any other
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additional affirmative defenses to the claims alleged by Criteo that are currently
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Answer to allege additional affirmative defenses in the event that its discovery of
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affirmative defenses, SteelHouse does not admit that it bears the burden of proving
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these affirmative defenses. Criteo bears the burden of proving all of the elements
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117. Upon information and belief, Criteos claims are barred by one or
more of the following doctrines: waiver, estopped, and laches.
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(Unclean Hands)
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118. Upon information and belief, Criteos claims are barred, in whole or
in part, by the doctrine of unclean hands.
(Justification)
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(Privilege of Competition)
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(Intervening Causes)
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121. Criteos claims are barred, in whole or in part, because the damages
claimed by Criteo were caused by or made worse by intervening causes.
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(Lack of Standing)
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122. Criteos claims are barred, in whole or in part, because Criteo lacks
standing to bring forth its claims.
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(Lack of Causation)
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123. Criteos claims are barred, in whole or in part, because SteelHouse did
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Criteo.
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(Speculative Damages)
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124. Criteos claims are barred, in whole or in part, because any damages
claimed by Criteo are speculative.
TENTH AFFIRMATIVE DEFENSE
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126. Criteos claims are barred, in whole or in part, because Criteo has
failed to join an indispensable party.
(Truth)
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A.
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B.
That the Court find that SteelHouse is entitled to recover its costs of
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by law; and
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That SteelHouse be awarded such other and further relief that the
Court may deem just and proper.
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COUNTERCLAIMS
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advertising market.
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ad campaigns. Criteos philosophy is that its customer should hand over complete
reign to Criteo (along with a large budget), and Criteo will produce results. Criteo
promises customers the most clicks per ad in the industry. To that end, Criteo
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miraculously claims its click rate is somehow four times as high as the rest of the
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industry.
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relatively recently, and has taken the industry by storm. SteelHouse offers its
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superior products and services and its customers greater choice and flexibility,
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gamesmanship and unlawful tactics. In doing so, Criteo hopes to protect the secret
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to its past success: Artificially high and manufactured click count numbers.
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Click (CPC) model, it has every incentive to drive up its click numbers. Criteo
does this by masking the source of its attributions and fraudulently manufacturing
click numbers.
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and unfair competition. Criteos click rate numbers are astronomically and
artificially high. By falsely inflating its click count numbers, Criteo has deceived
its own customers, and diverted actual and potential customers from SteelHouse by
promising inflated click rates. Criteo has compounded that behavior by making
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customers, prior to the filing of any lawsuit. These false allegations have not only
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industry, but have also resulted in loss of actual and potential clients, and loss of
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revenue.
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innovative newcomer that does not charge e-tailers based on clicks, Criteo can
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maintain a business model that rewards Criteo for its false and misleading behavior
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and distract unwanted attention from Criteos own conduct. It also creates a
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barrier to entry that helps ensure Criteos continued industry dominance. Criteos
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false and misleading actions and statements have caused SteelHouseand the Ad
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actual, punitive, treble, and compensatory damages, and attorneys fees, as well as
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attributing clicks with no attributable source; (ii) falsely attributing clicks that
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occur after a consumer has purchased a product from a website and engaging in
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inflate its click count numbers; and (iv) disparaging SteelHouse, its officers,
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agents, servants, employees, attorneys, and any other persons who are acting in
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6.
THE PARTIES
under the laws of the French Republic, with its principal place of business in Paris,
France.
II.
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U.S.C. 1331 and 1367 because this Court has jurisdiction over the
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counterclaims that arise under federal law, and supplemental jurisdiction over
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9.
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foreign state, and the matter in controversy exceeds the sum of $75,000, exclusive
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III.
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FACTUAL BACKGROUND
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Tech industry and earns ten times the revenue as SteelHouse. Criteos model is
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Criteos customers do not control the visual creative in the ads, nor the targeting.
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Criteos customers provide Criteo with a large budget and receive very little in
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return. Criteo shares little information with its customers, and promises
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12.
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Times) and data is sent from the consumer to the publisher and back to the
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impression loads in a users web browser, information about the page and the user
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auctions are occurring in parallel. The winners ad is then loaded into the webpage
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Despite the fact that ad space in the exchanges are priced in terms of
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Criteo uses a CPC pricing model. In the exchanges, Ad Tech firms bid on ad space
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to pay-per-click. For example, a Criteo client may set the CPC at 50 cents. But
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Criteo alone determines what it will bid in exchanges, and bids $2.00 per thousand
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impressions. If the client is unhappy with the number of clicks and decides to
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increase the CPC from 50 cents to $1.00, Criteo could continue to bid on the
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exchange at $2.00 per thousand impressions, but now gets 50 cents more per click,
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increasing its profits while not actually increasing customer performance. This
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model deceives customers. Criteos customers believe that an increased CPC bid
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will yield better performance. But in reality, the increased CPC bid does not result
in any additional traffic to the advertiser, because the exchanges occur on a CPM
basis.
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clicks, which refers to when a consumer clicks on an online ad. Criteos revenue
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revenue, Criteo regularly injects adware into users personal computers, serves ad
impressions through the adware, and buys inventory from non-reputable sources.
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Such practices have damaged SteelHouse, other advertisers, and the Ad Tech
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counts. Criteos insatiable appetite for clicks is proven in its advertisements of its
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numbers: Criteo claims it has the highest click rate in the industry, somehow
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outperforming its competitors by more than 400 percent, including industry giants
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Google, Facebook, and others. No company has ever come close to the number of
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As early as 2012, Criteo started proclaiming its click rates are the
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highest in the industry, claiming it achieve[s] ten times higher click through rates
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than the market average, having achieved around .06 percent and rising. In 2014,
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through rate is on average 3 or 4 times higher than the typical click through rate
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you would see in the internet. In 2015, Criteo also claimed that its click through
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rate is seven times the industry average. Criteos website currently claims that
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marketers using our platform have seen . . . average click-through rates of over
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25%. Criteo even proclaims that by using their services clients have seen up to
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source. None. Put simply, more than half of the claimed clicks do not originate
from any known website or publisher. This means that the source of origin for the
Criteo is falsely enhancing its click count. For e-tail clients singularly focused on
click counts, Criteos fraudulent behavior makes it impossible for any other
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SteelHouse has examined web logs for customers it shares with Criteo
to analyze the source of Criteos clicks. In June 2016, SteelHouse examined web
logs and tracking pixels for three of these overlapping customers (Customer A,
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Advertising systems generally stop serving consumer ads once the consumer has
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particular website, during a period of time that most other e-tailers stop serving an
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ad. By fraudulently generating clicks, Criteo is able to advertise more than four
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times the click rate as everyone else in the industry, including industry giants like
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clusters of clickswhere multiple clicks are being attributed to Criteo from the
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same site in rapid succession. 16% of Criteos clicks are from users clicking the
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same advertisement within a 30-minute period. This is eight times the industry
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standard. Criteo charges its clients for all of these clicks, further inflating its click
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U.S. Senate, where in a letter to the Federal Trade Commission two U.S. Senators
bases its CPC model upondue to the rampant problem involving fake clicks
generated by computers and bots (a software application that runs automated tasks,
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Since Criteo does not reveal its methodology to its customers, Criteo
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clicks has damaged SteelHouse and prohibited SteelHouse from being able to
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regarding its high click count have deceived, or are intended to deceive, actual and
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potential customers of Criteo and divert actual and potential customers from
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SteelHouse.
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30.
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Criteo has generated a malicious and false attack against SteelHouse in an effort to
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discredit SteelHouse, its business model, and ultimately win back customers.
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Criteo has falsely claimed to current and potential SteelHouse customers that
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SteelHouse was purposely and maliciously altering its click-count numbers, and
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metrics. Criteo sent emails to actual and potential clients of both Criteo and
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For instance, on May 9, 2016, prior to sending a cease and desist letter
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or filing a lawsuit, and knowing that SteelHouse was working to resolve any issues
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relating to attribution with Criteo, John Shea, a member of Criteos salesforce sent
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32.
a SteelHouse customer, even though that client was not currently using Criteos
services. In fact, that client had not worked with Criteo for over six months. This
SteelHouse of fraud. Indeed, David Nutt sent this client several emails in a matter
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inflated click and post-click volumes. Between May 10 and May 13, David Nutt
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business practices.
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the initiate of any lawsuit, accusing SteelHouse of fraud and deceptive business
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practices.
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Criteo knew that its statements were false and/or misleading. In fact,
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Criteo knew that the alleged fraudulent behavior it accused SteelHouse of doing
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was unintentional, not fraudulent, and was based on different attribution methods
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(methods of identifying the actions of online customers that contribute to sales, and
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assigning values to those actions). Criteo knew that SteelHouse was collaborating
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with Criteo to address the alleged issue. Criteo and SteelHouse discussed releasing
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a statement regarding the issue, and SteelHouse made edits to that statement. But
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Criteo never informed SteelHouse, which clients were going to receive this email
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nor did Criteo tell SteelHouse that it was going to target SteelHouse clients that
36.
SteelHouse damages. Criteo knew or should have known that actual and potential
Criteos false and/or misleading statements, SteelHouse lost actual and potential
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37.
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customers have left SteelHouse and informed SteelHouse that it was directly a
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follows.
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FIRST COUNTERCLAIM
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38.
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Counterclaims, Criteo has violated Section 43(a) of the Lanham Act, which
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40.
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advertising about the nature, quality and characteristics of Criteos products and
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services, including that Criteo generates more than four times the number of clicks
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least half of Criteos clicks have no attributable source. At least 8 percent of its
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clicks are generated after a consumer has already purchased a product from a
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website, and 16% of clicks occur in click clusters. The inclusion of clicks without
and that occur in click clusters, artificially inflate Criteos click count, which
Criteo then uses to induce customers to use its products and services.
42.
deceived, or are intended to deceive, actual and potential customers of Criteo and
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43.
purchasing decisions of e-tailers, because Criteo advertises four times the click rate
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as any other company, which influences the purchasing decisions of e-tailers that
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commerce because its products and services are advertised and sold across state
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lines through the internet. Criteo advertised and sold its products and services to e-
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a result of Criteos false and misleading statements, SteelHouse has lost business.
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industry as a whole has been injured, and Criteo has lessened the good will
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SECOND COUNTERCLAIM
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46.
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LOS ANGELES
advertising about the nature, quality and characteristics of Criteos products and
services, including that Criteo generates more than four times the number of clicks
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reasonable care, that the above-reference statements were false and/or misleading
percent of its clicks are generated after a consumer has already purchased a product
from a website, and 16% of clicks occur in click clusters. The inclusion of clicks
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product, and that occur in click clusters, artificially inflate Criteos click count,
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which Criteo then uses to induce customers to use its products and services.
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50.
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deceived, or are intended to deceive, actual and potential customers of Criteo and
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51.
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purchasing decisions of e-tailers because it advertises four times the click rate as
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any other company, which influences the purchasing decisions of e-tailers that are
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52.
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activities in State of California and has its U.S. headquarters in the State of
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advertisements in California.
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a result of Criteos false and misleading statements, SteelHouse has lost business.
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industry as a whole has been injured, and Criteo has lessened the good will
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THIRD COUNTERCLAIM
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54.
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the meaning of California Business & Professions Code 17200 et seq. (UCL).
Criteos acts and practices constitute unlawful, unfair and/or fraudulent business
acts or practices within the meaning of the UCL, including, but not limited to,
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source, and claiming clicks after a consumer has purchased a product from a
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website.
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56.
Criteos acts and practices are unlawful because they violate section
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43(a) of the Lanham Act, 15 U.S.C. 1125(a), California Business & Professions
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Code 17500 et seq., and constitute intentional interference with contract and
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and below.
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57.
Criteos acts and practices were fraudulent within the meaning of the
UCL because they were designed to deceive and defraud SteelHouse and e-tailers.
58.
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care, that its methods of falsely counting clicks with no attributable source, and
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counting clicks after consumers made purchases from a website challenged herein
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59.
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Criteos unlawful acts and practices, and has been irreparably harmed and will
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FOURTH COUNTERCLAIM
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60.
61.
62.
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advertising about the nature, quality and characteristics of Criteos products and
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services, including that Criteo generates more than four times the number of clicks
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than its competitors. Criteo has done this by artificially inflating its click count
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numbers, including by falsely claiming clicks that have no attributable source, and
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falsely claiming clicks that occur after a consumer has purchased a product.
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64.
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65.
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lose clients, and by extension, revenue. SteelHouses damages include all lost
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FIFTH COUNTERCLAIM
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67.
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numerous e-tailers that probably would have continued to result in future economic
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benefit to SteelHouse.
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69.
70.
advertising about the nature, quality, and characteristics of Criteos products and
services, including that Criteo generates more than four times the number of clicks
than its competitors. Criteo has done this by artificially inflating its click count
numbers, including by falsely claiming clicks that have no attributable source, and
falsely claiming clicks that occur after a consumer has purchased a product.
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9
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71.
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false and misleading statements accusing SteelHouse of fraud, Criteo has induced
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advertising budget with SteelHouse, and potential clients were dissuaded from
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misleading advertising within the meaning of Section 43(a) of the Lanham Act, 15
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sections 17200 et seq. and 17500 et seq., as set forth above. SteelHouse has
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suffered actual harm from Criteos wrongful conduct in the amount of lost revenue
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restraining Criteo, its officers, agents, servants, employees, attorneys, and other
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persons who are acting in concert or participation with them during the pendency
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LOS ANGELES
(i)
(ii)
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(iii)
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(iv)
(b)
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(c)
For such other relief as the Court may deem just and proper.
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SteelHouse hereby demands a jury trial on all claims and issues triable to a jury.
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