Digital Envoy Sues Google Over Ad Targeting Tech

Digital Envoy filed suit against Google this week, accusing the search giant of improperly using its technology to target advertising by geography.

The suit, filed in U.S. District Court in Atlanta, accuses Google of misappropriation of trade secrets, unfair competition, and unjust enrichment. It stems from a contract Norcross, Ga.-based Digital Envoy and Mountain View, Calif.-based Google signed back in November 2000, according to the complaint. In that contract, Digital Envoy licensed Google its IP-based geo-targeting technology for “limited uses,” the plaintiff said.

Digital Envoy now accuses Google of overstepping the boundaries of the contract. It wants some of the profits Google has earned through use of that technology. Digital Envoy’s product ties IP addresses to their geographical locations, allowing advertisers to target what parts of the world, or even the United States, their ads will appear in.

“They’re essentially stealing our technology,” said Timothy Kratz, a partner at Digital Envoy’s law firm, McGuireWoods.

Google declined to comment on the suit.

Digital Envoy says the contract grants Google the right to use the geo-targeting technology on its own site, but not on others’. Google distributes its paid search listings and contextual listings through a network of Web sites, big and small, around the world.

“At the time we entered into that license we were relatively small and they were relatively small, certainly in proportion to where they are now,” said Kratz.

The suit comes as investors await Google’s highly-anticipated initial public stock offering. It also arrives as competition in the search industry heats up. Yahoo just launched its own search technology, and Microsoft working on its own answer to Google’s algorithmic search. Another factor making this an inopportune time for Google to face a lawsuit is increasing industry emphasis on local search, a field in which technology such as Digital Envoy’s is likely to be important.

Under the contract, Google paid Digital Envoy $8,000 per month to license the technology. Digital Envoy attorney Kratz says after the company contacted Google, the search player offered to increase the monthly fee to $12,000.

“Digital Envoy rejected this offer because it fell woefully short of the income enjoyed by Google and the lost income to Digital Envoy as a result of Google’s unauthorized conduct,” the complaint reads.

The suits asks a judge to award Digital Envoy an injunction against Google’s use of the technology, along with actual damages, profits, recovery of monies earned, treble damages and court costs.

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