1 LATHAM & WATKINS LLP Daniel Scott Schecter (Bar No ...€¦ · Defendant Steel House, Inc....

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ATTORNEYS AT LAW

LOS ANGELES

Case Number: 2:16-cv-04207 SVW (MRWx)

LATHAM & WATKINS LLPDaniel Scott Schecter (Bar No. 171472) [email protected] Marvin S. Putnam (Bar No. 212839)

[email protected] Laura R. Washington (Bar No. 266775) [email protected]

10250 Constellation Boulevard, Suite 1100 Los Angeles, California 90067 Telephone: +1.424.653.5500 Facsimile: +1.424.653.5501 Attorneys for Defendant and Counter-Claimant Steel House, Inc.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CRITEO S.A., Plaintiff, v. STEEL HOUSE, INC., Defendant.

CASE NO. 2:16-CV-04207 SVW (MRWx) ANSWER AND COUNTERCLAIMS OF DEFENDANT STEEL HOUSE, INC. TO CRITEO S.A.’S COMPLAINT AND DEMAND FOR JURY TRIAL Hon. Stephen V. Wilson Action Filed: June 13, 2016 Trial Date: Not Yet Determined

STEEL HOUSE, INC., Counter-Claimant, v. CRITEO S.A., Counter-Defendant.

Case 2:16-cv-04207-SVW-MRW Document 21 Filed 07/26/16 of 44 Page ID #:364

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Defendant Steel House, Inc. (“SteelHouse”), by its attorneys, hereby

responds to the complaint and demand for jury trial of plaintiff Criteo S.A.

(“Criteo”), upon information and belief based on a reasonable investigation of the

allegations, as follows:

ANSWER TO THE COMPLAINT

This suit is the product of an entrenched, first generation industry giant,

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, Criteo’s suit attacks the very essence of what it fears: A new,

innovative, competitor, SteelHouse, which seeks to revolutionize the online

advertising (“Ad Tech”) industry, and ultimately render Criteo’s business model

obsolete.

At the heart of Criteo’s claims is the inaccurate notion that the entire Ad

Tech industry believes and operates as Criteo does. It does not. Criteo

disingenuously paints a picture of an industry obsessed, as it is, with clicks, in

which advertisers must choose either Criteo or SteelHouse. But this is simply not

how the Ad Tech industry works.

Online marketing vendors are constantly adapting to keep up with a rapidly

evolving marketplace. The industry itself operates akin to Wall Street – where the

customer spreads its money around to a “portfolio” of multiple marketing vendors

in the hopes of maximizing its return. Many online advertisers (e-tailers)

reallocate their money on a weekly or even daily basis. Nothing is static in the

industry, and daily opportunities to serve advertisements to consumers on websites

numbers in the billions.

Although Criteo and SteelHouse compete for customers in the Ad Tech

industry, Criteo and SteelHouse offer drastically different products and use very

different pricing models. Criteo offers a standard, non-customizable solution and

competes by promising companies the most “clicks,” which merely refers to a


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consumer clicking on Criteo’s ads. Criteo prices its products on a “pay-per-click”

model, where customers are charged each time a consumer clicks on one of

Criteo’s ads. Indeed, Criteo’s model is so intensely focused on delivering clicks,

that it claims a click rate that is unexplainably and suspiciously high, four times as

high as the rest of the Ad Tech industry. Criteo believes in a “one-size-fits-all”

approach —where advertisers relinquish complete control of their ad campaigns to

Criteo.

By contrast, SteelHouse’s business model is the antithesis of Criteo’s.

Where Criteo charges per click, SteelHouse believes that clicks do not singularly

define advertising, and charges customers for ads served (ads placed on the

websites), not ads clicked. While Criteo offers a standard, one-size-fits-all

advertising approach, SteelHouse offers its customers an end-to-end, customizable,

unlimited solution for creating and executing ad campaigns. And where Criteo

believes that it should have complete control over its customers’ ad campaigns;

SteelHouse gives total control to the customer. SteelHouse’s business model is

about transparency, and offering its customers a creative solution, unlike Criteo’s

“black box” operation.

SteelHouse’s advertising suite and business model are truly unique within

the Ad Tech industry. As a result, SteelHouse succeeded upon entering the market

since October 2009, and has taken market share from other vendors, by offering

customizable, customer-focused products and services. For instance, SteelHouse

provides its customers with the ability to develop, create, customize, and launch ad

campaigns. With SteelHouse, a customer can create an advertisement from scratch

or choose from hundreds of professionally designed creative advertisements to

customize. These advertisements may include streaming video, animated scene

transitions, and countdown timers. Criteo offers no such solution. Not only does

SteelHouse provide a creative software solution, but it also provides its customers

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

advertiser’s website. These products and services are highly appealing to

advertisers, who recognize the competitive nature of online advertising and want

their ads to stand out to consumers.

The industry agrees with SteelHouse, and more and more online marketing

vendors are moving away from a pure click-based concept. Up until recently,

Criteo’s superior click rate was enough to guarantee that clients would choose

Criteo over its competitors. But no longer.

As more and more customers want a unique, tailored approach to online

advertising, they are choosing SteelHouse over Criteo, despite Criteo’s apparent

superior click rate. Troubled by its loss of market share, Criteo’s solution was to

accuse SteelHouse of maliciously, intentionally, and fraudulently stealing clicks in

order to inflate its numbers and induce customers to choose SteelHouse over

Criteo. These allegations are categorically false and also illogical as SteelHouse’s

business model is not based on clicks, which are the obsessive focus of Criteo’s

business model and litigation strategy.

NATURE OF THE ACTION

1. SteelHouse admits that it is an online marketing vendor. SteelHouse

denies the remaining allegations of Paragraph 1 of the Complaint, and avers that

SteelHouse’s success is attributable to its unique, customer-specific approach to

advertising, as opposed to Criteo’s standard, one-size-fits-all approach.

2. SteelHouse denies engaging in any unlawful or misleading conduct,

and particularly denies that it has counterfeited clicks or tricked any e-tailers or

other customers, and therefore denies the allegations of Paragraph 2 of the

Complaint.


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

the allegations of Paragraph 3 of the Complaint.


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

of Paragraph 4 of the Complaint.


and particularly denies that it manipulated or exploited metrics, or that it made any

false advertisements. Specifically, SteelHouse denies that a head-to-head

comparison is a comparison of clicks between two vendors. Companies compare

many things when they compare products in head-to-head competitions. Click

count is just one factor. SteelHouse regularly outperforms Criteo in Segmentation,

Campaign Management, Creative, Creative Services, and Reporting and Services.

SteelHouse therefore denies the allegations of Paragraph 5 of the Complaint.


and particularly denies that it counterfeited clicks or continues to counterfeit clicks.

SteelHouse admits that Criteo approached SteelHouse and conveyed its belief that

SteelHouse was “stealing” credit for clicks, and admits that SteelHouse advised

Criteo that it had no knowledge of any attribution issue, but would investigate the

alleged issue. SteelHouse further admits it subsequently informed Criteo it was

working on a code to resolve any perceived issues identified by Criteo. Except as

expressly admitted, SteelHouse denies all allegations of Paragraph 6 of the

Complaint.


and particularly denies that it counterfeited clicks, and that Criteo has suffered any

harm as a result of SteelHouse’s conduct. To the contrary, SteelHouse avers that

any of Criteo’s lost revenue or market share is the result of SteelHouse’s superior


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product offerings and customer service, which many customers have found

preferable over Criteo’s standardized, rigid approach to online advertising.

SteelHouse also denies that a head-to-head comparison is a comparison of clicks

between two vendors. Companies compare many things when they compare

products in head-to-head competitions. Click count is just one factor. SteelHouse

regularly outperforms Criteo in Segmentation, Campaign Management, Creative,

Creative Services, and Reporting and Services. SteelHouse therefore denies the

allegations of Paragraph 7 of the complaint.

PARTIES

8. SteelHouse lacks knowledge or information sufficient to form a belief

regarding the allegations of Paragraph 8 of the Complaint.

9. SteelHouse admits the allegations of Paragraph 9 of the Complaint.

JURISDICTION AND VENUE




STATEMENT OF FACTS

Performance-Based Online Marketing


regarding the allegations of Paragraph 13 of the Complaint, and, on that basis,

denies such allegations.

14. SteelHouse admits that a Uniform Resource Locator (“URL”) is an

address on the internet that enables computers and other devices to visit the

address. SteelHouse also admits that e-tailers often contract with multiple

marketing vendors at the same time. SteelHouse denies that e-trailers track clicks

on all campaigns, as the majority of campaigns have no tracking method.

SteelHouse also denies that when tracking is used, the only method of doing so is

to add tracking codes to a URL. SteelHouse further denies that “tracking code” is


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a common Ad Tech industry term. On these bases, SteelHouse denies the

remaining allegations of Paragraph 14 of the Complaint.

15. SteelHouse admits that e-tailers use various attribution models.

SteelHouse denies that credit is allocated to marketing vendors based on clicks.

Google Analytics is the largest system for tracking website visits. Google

Analytics does not have a metric that tracks clicks. Rather, Google Analytics

tracks visits. On this basis, SteelHouse denies the remaining allegations of

Paragraph 15 of the Complaint.

16. SteelHouse denies the allegations of Paragraph 16 of the Complaint,

and particularly denies that the dominant web analytics solution, Google Analytics,

uses Last-Click Attribution or tracks clicks.

17. SteelHouse denies that Google Analytics, Adobe Analytics, and IBM

Coremetrics can track and measure clicks or Last-Click Attribution, and on that

basis, SteelHouse denies the allegations of Paragraph 17 of the Complaint.

Retargeting


regarding the allegations in Paragraph 18 of the complaint, and, on that basis,

denies the allegations.

19. SteelHouse admits that Criteo uses Pay-Per Click, also called Cost-

Per-Click (CPC), pricing model. SteelHouse denies that most marketing vendors

use Pay-Per-Click. SteelHouse does not (and has not) used a Pay-Per Click or

Cost-Per-Click pricing model. SteelHouse lacks knowledge or information

sufficient to form a belief as to the remaining allegations of Paragraph 19 of the

Complaint, and, on that basis, denies such allegations.

20. SteelHouse denies that the amount Criteo can charge its clients per

click depends on its performance, but rather avers that the amount that Criteo

charges its clients is based on the number of clicks that Criteo claims to have

generated. Because SteelHouse uses a different pricing model from Criteo,


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SteelHouse lacks knowledge or information sufficient to form a belief as to

Criteo’s conversion rate or ROAS, and therefore denies the remaining allegations

of Paragraph 20 of the Complaint.

Criteo And SteelHouse Are Direct Competitors

21. SteelHouse admits that the market for performance-based online

marketing is highly competitive, complex, and fragmented. SteelHouse further

admits it and Criteo are competitors in the online marketing market, along with

more than 50 other online marketing vendors, identifiable on a list called

LumaScape. However, SteelHouse avers that SteelHouse offers its customers a

unique, customizable product that is dramatically different from Criteo’s standard,

one-size-fits-all model. SteelHouse lacks knowledge or information sufficient to

form a belief as to the remaining allegations of Paragraph 21 of the Complaint,

and, on that basis, denies such allegations.

22. SteelHouse admits that it and Criteo compete for retargeting business,

but avers that SteelHouse offers its customers a unique, customizable product that

is dramatically different from Criteo’s standard, one-size-fits-all model.

SteelHouse offers retargeting as one part of a larger set of services it offers its

customers. SteelHouse denies the remaining allegations of Paragraph 22 of the

Complaint.


as to the allegations of Paragraph 23 of the Complaint, and, on that basis, denies

such allegations.

24. SteelHouse avers Criteo charges its clients based on the number of

clicks that Criteo claims to have generated, and therefore denies the allegations of



and particularly denies that it has engaged in any unlawful conduct, counterfeiting,

or fraudulent behavior.


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26. SteelHouse admits that, in its opinion, its products and services are

superior to its competitors. SteelHouse denies all remaining allegations of


27. SteelHouse denies that a head-to-head comparison is a comparison of

clicks between two vendors. Companies compare many things when they compare



Creative Services, and Reporting and Services, and on these bases, admits that it

has beaten Criteo in head-to-head comparisons on these factors, among others.

SteelHouse otherwise denies the allegation of Paragraph 27 of the Complaint, and

particularly denies that its claims in this email were false or misleading, or that it

advertised head-to-head competitions as part of its regular business advertisements.


and particularly denies that SteelHouse counterfeited clicks or cheated in head-to-

head comparisons. A head-to-head comparison is more than just a comparison of




Creative Services, and Reporting and Services. Therefore, SteelHouse denies the

allegations of Paragraph 28 of the Complaint.

29. SteelHouse denies engaging in any unlawful or misleading conduct

and particularly denies that it has advertised head-to-head competitions as part of

its regular business advertisements. SteelHouse admits that Zappos is a customer

of SteelHouse. SteelHouse lacks knowledge or information sufficient to form a

belief as to the remaining allegations of Paragraph 29 of the Complaint, and, on

that basis, denies such allegations.

Criteo Uncovers SteelHouse’s Unlawful Scheme


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30. SteelHouse admits that in late spring or early summer 2015, a head-to-

head comparison of Criteo’s and SteelHouse’s product and services at the request

of TOMS Shoes (“TOMS”). SteelHouse denies the remaining allegations of



as to what metrics were used in the head-to-head comparison, and on that basis,

denies that it “won” any head-to-head comparison. A head-to-head comparison is

more than just a comparison of clicks between two vendors. Companies compare




SteelHouse avers that it “won” TOMS’ business because SteelHouse has numerous

features that Criteo does not offer. SteelHouse offers custom segmentation, self-

service campaign management, and—Creative—which allows customers to

develop, create, customize, and launch ad campaigns. SteelHouse lacks

knowledge or information sufficient to form a belief as to what TOMS believed,

and as to TOMS’ actions with respect to Criteo, and on such basis, denies the

allegations. SteelHouse denies all remaining allegations of Paragraph 31 of the

Complaint.

32. SteelHouse admits that TOMS participated in a second head-to-head

comparison. SteelHouse lacks knowledge or information sufficient to form a

belief as to whether Criteo convinced TOMS to run a second head-to-head

comparison, what metrics were used in the comparison, and the results of the

comparison, and, on that basis, denies the allegations. SteelHouse denies the




such allegations.


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Creative Services, and Reporting and Services. SteelHouse also denies that its

clicks were fraudulent. SteelHouse lacks knowledge or information sufficient to

form a belief as to the remaining allegations of Paragraph 34 of the Complaint,

and, on that basis, denies such allegations.

35. SteelHouse admits that TOMS ended its services with SteelHouse.

SteelHouse lacks knowledge or information sufficient to form a belief as to the

remaining allegations of Paragraph 35 of the Complaint, and, on that basis, denies

such allegations.


as to whether Criteo used Web traffic analysis software and what it learned from

that software, and, on that basis, denies such allegations. SteelHouse denies the



and particularly denies that it engaged in any acts of counterfeiting. SteelHouse

also denies that analytics tools track clicks; rather such tools track site visits.

SteelHouse’s code ensures that visits are properly recorded using open Application

Programming Interfaces “APIs” supplied by analytics companies.


and particularly denies that it engaged in any acts of counterfeiting. SteelHouse

also denies that analytics tools track clicks; rather such tools track site visits.

39. SteelHouse denies that it counterfeited clicks. SteelHouse lacks

knowledge or information sufficient to form a belief as to the remaining allegations

of Paragraph 39 of the Complaint, and, on that basis, denies such allegations.


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40. SteelHouse denies the allegations in Paragraph 40 of the Complaint,

and particularly denies that it counterfeited any clicks.

41. SteelHouse denies that it engaged in fraud or counterfeited clicks.

SteelHouse lacks knowledge or information sufficient to form a belief as to why

Criteo lost clients, and on that basis, denies the remaining allegations of Paragraph

41 of the Complaint.


and particularly denies that it engaged in any acts of counterfeiting, and therefore

denies the allegations of Paragraph 42 of the Complaint,

SteelHouse Attempted To Hide Its Fraud When Confronted By Criteo

43. SteelHouse admits that it received an email on April 6, 2016, from

Criteo’s Chief Revenue Officer (“Criteo’s CRO”), and that Criteo’s CRO alerted

SteelHouse to a potential issue with attribution. SteelHouse denies the remaining




such allegations.


46. SteelHouse admits that a meeting took place on April 12, 2016, at

Criteo’s New York office, and that Criteo’s CRO and SteelHouse’s Chief

Marketing Officer and Chief Monetization Officer were present. SteelHouse

admits that a member of Criteo’s Business Intelligence team attended the meeting

by phone. SteelHouse admits that its CEO did not attend. SteelHouse further

admits that Criteo explained that it believed SteelHouse was misattributing clicks,

and that SteelHouse told Criteo that it would investigate the situation. SteelHouse

denies all remaining allegations of Paragraph 46 of the Complaint.



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48. SteelHouse admits that it received log files from Criteo. SteelHouse

denies the log files show counterfeit clicks. SteelHouse further admits that it

informed Criteo that it was investigating the issue. SteelHouse denies all




51. SteelHouse admits that Criteo’s CRO told SteelHouse’s Chief

Marketing Officer that Criteo was planning to notify its clients about the

information that Criteo had shared with SteelHouse. SteelHouse admits that it

provided comments to the statement. SteelHouse lacks knowledge or information


Complaint, and, on that basis denies such allegations.

52. SteelHouse denies the of Paragraph 52 of the Complaint.

53. SteelHouse admits that it contacted its customers to explain that its

tracking pixel was conflicting with Criteo’s tracking pixel, that it only affected a

small number of Criteo’s click-based conversions and a small number of e-tailers,

and that SteelHouse worked to correct the issue. SteelHouse denies all remaining


54. SteelHouse denies the allegations of Paragraph 54 of the Complaint.

55. SteelHouse admits that it told some e-tailers that its “Discrepancy

Minimizer Tool” was the source of any data discrepancy. SteelHouse denies

engaging in any unlawful or misleading conduct, and particularly denies that it

engaged in any acts of counterfeiting, and therefore denies all remaining


56. SteelHouse admits that Criteo and SteelHouse executives conducted a

conference call on May 12, 2016. SteelHouse admits that it told Criteo that a

change to its code went live on May 5, 2015. SteelHouse denies all remaining


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allegations of Paragraph 56 of the Complaint, and particularly denies that it

engaged in fraud or counterfeited clicks.


as to whether Criteo performed another head-to-head comparison with another

client, and as to whether SteelHouse allegedly beat Criteo in the comparison, and,

on that basis, denies such allegations. SteelHouse denies that a head-to-head

comparison is a comparison of clicks between two vendors. Companies compare




SteelHouse denies engaging in any unlawful or misleading conduct, and

particularly denies that it engaged in any acts of counterfeiting, and therefore

denies the remaining allegations of Paragraph 57 of the Complaint.

58. SteelHouse admits that it received a letter from Criteo dated May 23,

2016. SteelHouse denies engaging in any unlawful or misleading conduct, and


denies the remaining allegations of Paragraph 58 of the Complaint.

59. SteelHouse admits that Criteo filed this Complaint after June 9,

2016. SteelHouse denies engaging in any unlawful or misleading conduct, and


denies the remaining allegations of Paragraph 59 of the Complaint. FIRST CLAIM FOR RELIEF

(Violations of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) (False and/or Misleading Advertising))

60. SteelHouse hereby incorporates by references its responses set forth in

Paragraphs 1-59 above.


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61. SteelHouse asserts that this allegation is a conclusion of law to which

no response is necessary, but to the extent it is deemed an allegation of fact,

SteelHouse denies the allegations of Paragraph 61 of the Complaint.

62. SteelHouse denies that it made false and misleading statements, and

particularly denies that a head-to-head comparison is a comparison of clicks

between two vendors. Companies compare many things when they compare



Creative Services, and Reporting and Services. SteelHouse therefore denies the


63. SteelHouse denies that it made any false statements. SteelHouse also

denies that a head-to-head comparison is a comparison of clicks between two

vendors. Companies compare many things when they compare products in head-

to-head competitions. Click count is just one factor. SteelHouse regularly

outperforms Criteo in Segmentation, Campaign Management, Creative, Creative

Services, and Reporting and Services. SteelHouse otherwise lacks knowledge and

information sufficient to form a belief regarding whether SteelHouse outperformed

Criteo in head-to-head comparisons, and, on that basis, denies the allegations.

SteelHouse denies all remaining allegations of Paragraph 63 of the Complaint.

64. SteelHouse denies that it made any false statements. SteelHouse





Services, and Reporting and Services. SteelHouse otherwise lacks knowledge or

information sufficient to form a belief as to why existing and potential Criteo

customers made business and purchasing decisions, and, on that basis, denies such


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allegations. SteelHouse denies all remaining allegations of Paragraph 64 of the

Complaint.

65. SteelHouse denies that it engaged in deception, and therefore denies

the allegations of Paragraph 65 of the Complaint.

66. SteelHouse denies that it made false statements. SteelHouse admits

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

denies all remaining allegations of Paragraph 66 of the Complaint.

67. SteelHouse denies that it has made false statements, and therefore

denies the allegations of Paragraph 67 of the Complaint.

SECOND CLAIM FOR RELIEF

(Fraud)

68. SteelHouse hereby incorporates by reference each of its responses set

forth in Paragraphs 1-67 above.

69. SteelHouse denies that it made any misrepresentations. SteelHouse

further denies that it counterfeited or continues to counterfeit clicks, and therefore


70. SteelHouse denies that it made false statements. SteelHouse further

denies that it counterfeited clicks. SteelHouse lacks knowledge or information


Complaint, and, on that basis, denies such allegations.

71. SteelHouse denies that it made false statements. SteelHouse further

denies that it counterfeited clicks, and therefore denies the allegations of Paragraph


72. SteelHouse denies that it counterfeited clicks. SteelHouse lacks




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73. SteelHouse denies that made any false or misleading statements, or

that it counterfeited clicks. SteelHouse denies that a head-to-head comparison is a

comparison of clicks between two vendors. Companies compare many things

when they compare products in head-to-head competitions. Click count is just one

factor. SteelHouse regularly outperforms Criteo in Segmentation, Campaign

Management, Creative, Creative Services, and Reporting and Services.

SteelHouse therefore denies the allegations of Paragraph 73 of the Complaint.

74. SteelHouse denies that it was counterfeiting clicks. SteelHouse lacks



75. SteelHouse asserts that whether a representation is material is a

conclusion of law to which no response is necessary, but to the extent it is deemed

an allegation of fact, SteelHouse denies it made any misrepresentations, and

therefore denies the allegations of Paragraph 75 of the Complaint.

76. SteelHouse denies that it made misrepresentations, and therefore


77. SteelHouse denies that it engaged in fraud, and therefore denies the


THIRD CLAIM FOR RELIEF

(Intentional Interference With Prospective Economic Advantage)

78. SteelHouse hereby incorporates by references its responses set forth in




such allegations.

80. SteelHouse admits that it knew TOMS worked with other marketing

vendors, including Criteo. SteelHouse lacks knowledge or information sufficient


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to form a belief as to remaining allegations of Paragraph 80 of the Complaint, and,

on that basis, denies such allegations.

81. SteelHouse denies that it counterfeited clicks or stole attribution.

SteelHouse lacks knowledge or information sufficient to form a belief as to why

any of Criteo’s clients stopped contracting with Criteo or decreased their

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


82. SteelHouse denies that it engaged in wrongful acts, counterfeited

clicks, or made false or misleading statements, and therefore denies the associated

allegations. SteelHouse asserts that the remaining allegations in Paragraph 82 of

the Complaint are conclusions of law to which no response is necessary, but to the

extent it is deemed an allegation of fact, SteelHouse denies the allegations.

83. SteelHouse denies that it engaged in wrongful conduct, and therefore




FOURTH CLAIM FOR RELIEF

(Libel – California Civil Code § 45)

86. SteelHouse hereby incorporates by reference its responses set forth in


87. SteelHouse admits that it represented that its products and services

consistently outperformed Criteo’s products and services. This representation was

based not on click counts, but on a combination of the products and services that

SteelHouse offers. SteelHouse denies that a head-to-head comparison is a

comparison of clicks between two vendors. Companies compare many things

when they compare products in head-to-head competitions. Click count is just one

factor. SteelHouse regularly outperforms Criteo in Segmentation, Campaign


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Management, Creative, Creative Services, and Reporting and Services.

SteelHouse further denies that it has advertised head-to-head competitions as part

of its regular business advertisements. SteelHouse therefore denies that its

representations were false, and denies all remaining allegations of Paragraph 87 of

the Complaint.

88. SteelHouse denies that its representations to clients and potential

clients were false. SteelHouse lacks knowledge or information sufficient to form a

belief as to the remaining allegations of Paragraph 88 of the Complaint, and, on

that basis, denies such allegations.





Creative Services, and Reporting and Services. SteelHouse denies that it

counterfeited clicks, and particularly denies that its representations about its

products and services were false, and therefore denies the allegations of Paragraph


90. SteelHouse asserts that the allegations of Paragraph 90 of the

Complaint assert a conclusion of law to which no response is necessary, but to the

extent it is deemed an allegation of fact, SteelHouse denies that its statements were

libelous, and therefore denies the allegations of Paragraph 90 of the Complaint.

91. SteelHouse denies that its statements were libelous, and therefore


FIFTH CLAIM FOR RELIEF

(Trade Libel)




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93. SteelHouse denies that it made false or libelous statements, and

therefore denies the allegations of Paragraph 93.

94. SteelHouse denies that it counterfeited clicks. SteelHouse admits that

it represented that its products and services consistently outperformed Criteo’s

products and services. This representation was based not on click counts, but on a

combination of the products and services that SteelHouse offers. SteelHouse





Services, and Reporting and Services. SteelHouse therefore denies the remaining

allegations of Paragraph 94.

95. SteelHouse denies that it made libelous statements, and therefore


96. SteelHouse denies that it made libelous statements, and therefore

denies the allegations of Paragraph 96 of the Complaint. SIXTH CLAIM FOR RELIEF

(Violation of California Business & Professions Code § 17200 et seq. (Unfair Competition Law))





SteelHouse denies engaging in any unlawful or fraudulent conduct, and

particularly denies that it counterfeited clicks, and therefore denies the allegations

of Paragraph 98.




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SteelHouse denies engaging in any unlawful or wrongful conduct, and therefore




SteelHouse denies engaging in any unlawful or wrongful conduct, and therefore



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

Complaint.

102. SteelHouse admits that it uses the wires of the United States in

interstate commerce. SteelHouse also admits that it targets e-tailers in multiple

states and various nations outside the United States. SteelHouse denies engaging

in any unlawful or misleading conduct, and particularly denies that it counterfeited

clicks, and therefore denies all remaining allegations of Paragraph 102 of the

Complaint.


and particularly denies that it counterfeited clicks, and therefore denies the


104. SteelHouse denies that it fraudulently stole attribution for sales or

inflated its performance metrics. SteelHouse asserts that the remaining allegations

are a conclusion of law to which no response is necessary, but to the extent they

are deemed allegations of fact, SteelHouse denies the remaining allegations of




SteelHouse denies engaging in any fraudulent conduct, and therefore denies the



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106. SteelHouse denies that it counterfeited clicks or that it made false or

misleading statements, and therefore denies the allegations of Paragraph 106 of the

Complaint.

107. SteelHouse denies the allegations of Paragraph 107 of the Complaint. SEVENTH CLAIM FOR RELIEF

(Violations of California Business & Professions Code § 17500 et seq. (False Advertising Law))


Paragraphs 1-107 of the Complaint.



SteelHouse denies engaging in any unlawful or misleading conduct, and

particularly denies it counterfeited clicks or made false or misleading statements,

and therefore denies the allegations of Paragraph 109 of the Complaint.

110. SteelHouse denies that it made false or misleading statements and


111. SteelHouse admits that Criteo has engaged in false and/or misleading

actions such that the intended recipients were likely to be deceived, including

Criteo’s clients and potential clients, and SteelHouse’s clients and potential clients.

In the event that this allegation is a typographical error and is intended to refer to

SteelHouse’s actions, SteelHouse denies that its actions were in violation of

Section 17500 and were false and/or misleading in material respects such that the

intended recipients were likely to be deceived, including Criteo, Criteo’s clients

and potential clients, and SteelHouse’s clients and potential clients.

112. SteelHouse admits that its principal place of business is in California.

SteelHouse denies that it made or disseminated untrue or misleading

advertisements, and therefore denies the remaining allegations of Paragraph 112 of

the Complaint.


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113. SteelHouse denies engaging in any unlawful or wrongful conduct, and


REQUEST FOR RELIEF

114. These paragraphs set forth the statement of relief requested by Criteo

to which no response is required. SteelHouse denies that Criteo is entitled to any

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

relief as justice so requires and as the Court sees fits.

AFFIRMATIVE DEFENSES

115. SteelHouse asserts the following affirmative defenses. There may be

additional affirmative defenses to the claims alleged by Criteo that are currently

unknown by SteelHouse. Therefore, SteelHouse reserves the right to amend its

Answer to allege additional affirmative defenses in the event that its discovery of

additional information indicates that they are appropriate. By asserting these

affirmative defenses, SteelHouse does not admit that it bears the burden of proving

these affirmative defenses. Criteo bears the burden of proving all of the elements

to support its claims.

FIRST AFFIRMATIVE DEFENSE

(Failure to State a Claim Upon Which Relief Can Be Granted)

116. Upon information and belief, Criteo’s claims are barred, in whole or

in part, because it has failed to state a claim for which relief can be granted.

SECOND AFFIRMATIVE DEFENSE

(Waiver, Estoppel, or Laches)

117. Upon information and belief, Criteo’s claims are barred by one or

more of the following doctrines: waiver, estopped, and laches.

THIRD AFFIRMATIVE DEFENSE

(Unclean Hands)


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118. Upon information and belief, Criteo’s claims are barred, in whole or

in part, by the doctrine of unclean hands.

FOURTH AFFIRMATIVE DEFENSE

(Justification)

119. Criteo’s claims are barred, in whole or in part, because SteelHouse

was engaged in lawful conduct.

FIFTH AFFIRMATIVE DEFENSE

(Privilege of Competition)


actions are protected by the privilege of competition.

SIXTH AFFIRMATIVE DEFENSE

(Intervening Causes)

121. Criteo’s claims are barred, in whole or in part, because the damages

claimed by Criteo were caused by or made worse by intervening causes.

SEVENTH AFFIRMATIVE DEFENSE

(Lack of Standing)

122. Criteo’s claims are barred, in whole or in part, because Criteo lacks

standing to bring forth its claims.

EIGHTH AFFIRMATIVE DEFENSE

(Lack of Causation)

123. Criteo’s claims are barred, in whole or in part, because SteelHouse did

not directly or proximately cause or contribute to any injury or damage alleged by

Criteo.

NINTH AFFIRMATIVE DEFENSE

(Speculative Damages)

124. Criteo’s claims are barred, in whole or in part, because any damages

claimed by Criteo are speculative.

TENTH AFFIRMATIVE DEFENSE


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(No Punitive Damages)

125. Criteo’s claims are barred, in whole or in part, because punitive

damages are not available.

ELEVENTH AFFIRMATIVE DEFENSE

(Failure to Join Indispensable Party)

126. Criteo’s claims are barred, in whole or in part, because Criteo has

failed to join an indispensable party.

TWELFTH AFFIRMATIVE DEFENSE

(Truth)


has made truthful statements about its performance.

PRAYER FOR RELIEF ON PLAINTIFF’S CLAIMS

SteelHouse respectfully demands judgment as follows:

A. For an order dismissing with prejudice all claims against SteelHouse

and denying all relief requested by Criteo;

B. That the Court find that SteelHouse is entitled to recover its costs of

defending suit, expenses, and reasonable attorneys’ fees, as permitted

by law; and

C. That SteelHouse be awarded such other and further relief that the

Court may deem just and proper.


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COUNTERCLAIMS

SteelHouse asserts the following counterclaims as a result of Criteo’s

unlawful conduct, aimed at stifling SteelHouse’s competition in the online

advertising market.

1. Criteo, a long-time player in the advertising technology (“Ad Tech”)

industry, offers online advertisers (e-tailers) a generic, non-customizable option for

ad campaigns. Criteo’s 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

miraculously claims its click rate is somehow four times as high as the rest of the

industry.

2. SteelHouse, an innovative company, entered the Ad Tech industry

relatively recently, and has taken the industry by storm. SteelHouse offers its

customers a best-in-class suite of marketing applications, including segmentation,

creative, campaign management, and reporting. This end-to-end suite—unlike

anything in the industry—provides a customizable, tailored approach to ad

campaigns. In contrast to Criteo, which completely controls its customers’ ad

campaigns, SteelHouse allows each customer the ability to create unique,

customizable ads tailored to its individual clients. SteelHouse’s innovative model

has succeeded in attracting customers and gaining market share. By offering

superior products and services and its customers greater choice and flexibility,

SteelHouse has succeeded in attracting customers from Criteo, despite Criteo’s

claimed market-leading click rate numbers.

3. In an effort to win back customers, injure SteelHouse, and blunt

SteelHouse’s successful and lawful competition, Criteo has resorted to

gamesmanship and unlawful tactics. In doing so, Criteo hopes to protect the secret

to its past success: Artificially high and manufactured click count numbers.

Because Criteo charges its customers on a Pay-Per-Click (“PCP”) or Cost-Per-


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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.

4. Criteo has engaged in unlawful conduct, particularly false advertising

and unfair competition. Criteo’s 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

false, misleading, and malicious statements about SteelHouse, directly to its

customers, prior to the filing of any lawsuit. These false allegations have not only

caused SteelHouse substantial harm by damaging its reputation in the Ad Tech

industry, but have also resulted in loss of actual and potential clients, and loss of

revenue.

5. Criteo’s playbook is transparent. If it can discredit SteelHouse, an

innovative newcomer that does not charge e-tailers based on clicks, Criteo can

maintain a business model that rewards Criteo for its false and misleading behavior

and distract unwanted attention from Criteo’s own conduct. It also creates a

barrier to entry that helps ensure Criteo’s continued industry dominance. Criteo’s

false and misleading actions and statements have caused SteelHouse—and the Ad

Tech industry as a whole—substantial and irreparable injury. SteelHouse seeks

actual, punitive, treble, and compensatory damages, and attorneys’ fees, as well as

preliminary and permanent injunctions prohibiting Criteo from: (i) falsely

attributing clicks with no attributable source; (ii) falsely attributing clicks that

occur after a consumer has purchased a product from a website and engaging in

“cluster click counting”; (iii) engaging in other conduct designed to artificially

inflate its click count numbers; and (iv) disparaging SteelHouse, its officers,

agents, servants, employees, attorneys, and any other persons who are acting in

concert or participation with them, it services, or its products to actual and


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potential clients, consumers, or competitors.

I. THE PARTIES

6. Counterclaimant SteelHouse is incorporated under the laws of

Delaware with its principal place of business in California.

7. Plaintiff Criteo has alleged that it is incorporated as a société anonyme

under the laws of the French Republic, with its principal place of business in Paris,

France.

II. JURISDICTION AND VENUE

8. This Court has jurisdiction over these counterclaims pursuant to 28

U.S.C. §§ 1331 and 1367 because this Court has jurisdiction over the

counterclaims that arise under federal law, and supplemental jurisdiction over

claims that arise under the same facts.

9. This Court also has jurisdiction over these counterclaims pursuant to

28 U.S.C. § 1332 because there is complete diversity of citizenship of the parties.

SteelHouse is a citizen of Delaware and California and Criteo is a citizen of a

foreign state, and the matter in controversy exceeds the sum of $75,000, exclusive

of interests and costs.

10. Venue is proper in this District under 28 U.S.C. § 1391(b).

III. FACTUAL BACKGROUND

11. Criteo is a multi-national, publicly traded, long-time player in the Ad

Tech industry and earns ten times the revenue as SteelHouse. Criteo’s model is

built on advertisers relinquishing control of their advertising campaigns to Criteo.

Criteo’s customers do not control the visual creative in the ads, nor the targeting.

Criteo’s customers provide Criteo with a large budget and receive very little in

return. Criteo shares little information with its customers, and promises

performance without customer insight or control. Unlike SteelHouse, Criteo is a

black box and takes a one-size-fits-all approach to Ad Tech.

12. The Ad Tech industry is an evolving industry. Online marketing


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vendors are constantly adapting to keep up with a rapidly evolving marketplace.

Generally, the Ad Tech industry works through billions of interactions daily

between a consumer, publisher’s website, exchanges, DSP (Demand Side

Platform), DMP (Data Management Platform), advertisers, and web analytics

providers like Google Analytics™—all of which take place within milliseconds.

13. First, a consumer goes to a publisher’s website (e.g., New York

Times) and data is sent from the consumer to the publisher and back to the

consumer’s browser. Then, if a publisher is selling ad space on the website, it will

notify exchanges, and the exchanges will make requests to bid. As an ad

impression loads in a user’s web browser, information about the page and the user

is passed to an ad exchange, which auctions it off to the advertisers. Millions of

auctions are occurring in parallel. The winner’s ad is then loaded into the webpage

nearly instantly in an attempt to get the consumer to ultimately visit the

advertiser’s website. The whole process takes just milliseconds to complete.

14. Despite the fact that ad space in the exchanges are priced in terms of

Cost-Per-Thousand-Impressions (“CPM”), the price for 1,000 ad impressions,

Criteo uses a CPC pricing model. In the exchanges, Ad Tech firms bid on ad space

on the publisher’s website through auctions. The price of those impressions is

often determined through real-time bidding and takes place in milliseconds as a

user’s computer loads a webpage.

15. Criteo, however, allows its clients to set a price at which it is willing

to pay-per-click. For example, a Criteo client may set the CPC at 50 cents. But

Criteo alone determines what it will bid in exchanges, and bids $2.00 per thousand

impressions. If the client is unhappy with the number of clicks and decides to

increase the CPC from 50 cents to $1.00, Criteo could continue to bid on the

exchange at $2.00 per thousand impressions, but now gets 50 cents more per click,

increasing its profits while not actually increasing customer performance. This

model deceives customers. Criteo’s 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.

16. Criteo’s business model is based on promising e-tailers the most

“clicks,” which refers to when a consumer clicks on an online ad. Criteo’s revenue

is entirely dependent on clicks.

17. In an effort to drive up its click numbers and generate increased

revenue, Criteo regularly injects adware into users’ personal computers, serves ad

impressions through the adware, and buys inventory from non-reputable sources.

Such practices have damaged SteelHouse, other advertisers, and the Ad Tech

industry as a whole by making online marketing vendors less trustworthy to their

customers and consumers as a whole.

18. Criteo, however, gains significant advantage by controlling click

counts. Criteo’s insatiable appetite for clicks is proven in its advertisements of its

numbers: Criteo claims it has the highest click rate in the industry, somehow

outperforming its competitors by more than 400 percent, including industry giants

Google, Facebook, and others. No company has ever come close to the number of

clicks that Criteo self-reports. See Figure 1.


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19. As early as 2012, Criteo started proclaiming its click rates are the

highest in the industry, claiming it “achieve[s] ten times higher click through rates

than the market average, having achieved around .06 percent and rising.” In 2014,

at the Nicolaus Technology, Internet, & Media Conference, Criteo’s Executive

Chairman and Co-founder, Jean-Baptiste Rudelle, touted that Criteo’s click

through rate is on average “3 or 4 times higher than the typical click through rate

you would see in the internet.” In 2015, Criteo also claimed that its click through

rate is seven times the industry average. Criteo’s website currently claims that

“marketers using our platform have seen . . . average click-through rates of over

25%.” Criteo even proclaims that by using their services clients have seen up to

203% increase in click through rates.

20. But more than half (52%) of Criteo’s clicks have no attributable


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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

click is listed as “unknown.” By counting clicks that have no attributable source,

Criteo is falsely enhancing its click count. For e-tail clients singularly focused on

click counts, Criteo’s fraudulent behavior makes it impossible for any other

marketing vendor to compete for the business of these e-tailers.

21. SteelHouse has examined web logs for customers it shares with Criteo

to analyze the source of Criteo’s clicks. In June 2016, SteelHouse examined web

logs and tracking pixels for three of these overlapping customers (Customer A,

Customer B and Customer C) to determine the source of Criteo’s clicks.

22. SteelHouse determined that 40% of Criteo’s clicks for Customer A

had no attributable source. See Figure 2.


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23. SteelHouse determined that 61.36% of Criteo’s clicks for Customer B


24. SteelHouse determined that 48.69% of Criteo’s clicks for Customer C



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25. Criteo also generates fake clicks after consumers purchase a product.

Advertising systems generally stop serving consumer ads once the consumer has

made a purchase from a particular website. Criteo, however, does not. Up to 8

percent of Criteo’s clicks occur after a consumer has made a purchase on a

particular website, during a period of time that most other e-tailers stop serving an

ad. By fraudulently generating clicks, Criteo is able to advertise more than four

times the click rate as everyone else in the industry, including industry giants like

Facebook and Google.

26. In addition to the timing of these clicks, these clicks often appear as

“clusters” of clicks—where multiple clicks are being attributed to Criteo from the

same site in rapid succession. 16% of Criteo’s clicks are from users clicking the

same advertisement within a 30-minute period. This is eight times the industry

standard. Criteo charges its clients for all of these clicks, further inflating its click

count and revenue.


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27. Such invasive practices have raised concern as far-reaching as the

U.S. Senate, where in a letter to the Federal Trade Commission two U.S. Senators

recently questioned ongoing reliance on last-click attribution—the method Criteo

bases its CPC model upon—due to the rampant problem involving fake clicks

generated by computers and bots (a software application that runs automated tasks,

such as repetitively clicking ads), which artificially inflate click rates.

28. Since Criteo does not reveal its methodology to its customers, Criteo

is able to manipulate the numbers it reports, thereby generating more revenue

based on false or fraudulent clicks. Criteo’s fraudulent behavior in counterfeiting

clicks has damaged SteelHouse and prohibited SteelHouse from being able to

compete fairly for e-tail clients focused on click rates.

29. By falsely inflating its click count numbers, Criteo’s statements

regarding its high click count have deceived, or are intended to deceive, actual and

potential customers of Criteo and divert actual and potential customers from

SteelHouse.

30. Nonetheless, some customers still chose SteelHouse over Criteo. In

an effort to explain customers’ rationale for choosing SteelHouse over Criteo,

Criteo has generated a malicious and false attack against SteelHouse in an effort to

discredit SteelHouse, its business model, and ultimately win back customers.

Criteo has falsely claimed to current and potential SteelHouse customers that

SteelHouse was purposely and maliciously altering its click-count numbers, and

stealing attributions to demonstrate that it outperformed Criteo in a variety of

metrics. Criteo sent emails to actual and potential clients of both Criteo and

SteelHouse, and made oral representations to SteelHouse’s current and potential

clients that SteelHouse was intentionally stealing attributions to deceive customers.

31. For instance, on May 9, 2016, prior to sending a cease and desist letter

or filing a lawsuit, and knowing that SteelHouse was working to resolve any issues

relating to attribution with Criteo, John Shea, a member of Criteo’s salesforce sent


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emails to SteelHouse customers. John Shea sent emails to a number of SteelHouse

customers, which referenced “inflated SteelHouse performance levels,” and

mislead a number of SteelHouse customers into believing that SteelHouse was

somehow inflating its metrics relating to performance.

32. On May 10, 2016, Dave Nutt, an employee of Criteo, sent an email to

a SteelHouse customer, even though that client was not currently using Criteo’s

services. In fact, that client had not worked with Criteo for over six months. This

client also reached out to SteelHouse regarding Criteo’s persistence in accusing

SteelHouse of fraud. Indeed, David Nutt sent this client several emails in a matter

of days and described SteelHouse’s conduct as “hairy” and accused SteelHouse of

“inflated click and post-click” volumes. Between May 10 and May 13, David Nutt

similarly pursued several SteelHouse clients.

33. On May 12, 2016, Shaun Seaman, another member of Criteo’s

salesforce, engaged in identical tactics, sent a number of similar emails to

SteelHouse’s clients, resulting in SteelHouse’s clients questioning SteelHouse’s

business practices.

34. Criteo’s attack on SteelHouse also included a number of oral

conversations that Criteo representatives had with SteelHouse customers, prior to

the initiate of any lawsuit, accusing SteelHouse of fraud and deceptive business

practices.

35. Criteo knew that its statements were false and/or misleading. In fact,

Criteo knew that the alleged fraudulent behavior it accused SteelHouse of doing

was unintentional, not fraudulent, and was based on different attribution methods

(methods of identifying the actions of online customers that contribute to sales, and

assigning values to those actions). Criteo knew that SteelHouse was collaborating

with Criteo to address the alleged issue. Criteo and SteelHouse discussed releasing

a statement regarding the issue, and SteelHouse made edits to that statement. But

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

were not even working with Criteo.

36. Criteo’s false and/or misleading statements about SteelHouse’s

business practices damaged the commercial reputation of SteelHouse, causing

SteelHouse damages. Criteo knew or should have known that actual and potential

customers would act in reliance on these statements in deciding whether to hire

SteelHouse or continue using SteelHouse’s products and services. As a result of

Criteo’s false and/or misleading statements, SteelHouse lost actual and potential

clients, costing SteelHouse lost revenue.

37. Criteo’s actions have damaged SteelHouse. Indeed, over twenty-five

customers have left SteelHouse and informed SteelHouse that it was directly a

result of Criteo’s accusations about SteelHouse’s conduct. This Counterclaim

follows.

FIRST COUNTERCLAIM

Violations of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), (False and/or Misleading Advertising)

38. SteelHouse hereby incorporates by reference its allegations contained

in Paragraphs 1 through 36 of these Counterclaims, as if fully set forth herein.

39. For the reasons alleged in Paragraphs 1 through 36 of these

Counterclaims, Criteo has violated Section 43(a) of the Lanham Act, which

prohibits false and misleading advertising.

40. Criteo has made false and misleading statements in commercial

advertising about the nature, quality and characteristics of Criteo’s products and

services, including that Criteo generates more than four times the number of clicks

than its competitors.

41. The above-referenced statements were false or misleading, because at

least half of Criteo’s clicks have no attributable source. At least 8 percent of its

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

a attributable source, generated after a consumer has already purchased a product,

and that occur in click clusters, artificially inflate Criteo’s click count, which

Criteo then uses to induce customers to use its products and services.

42. By falsely inflating its click count numbers, Criteo’s statements have

deceived, or are intended to deceive, actual and potential customers of Criteo and

divert actual and potential customers from SteelHouse.

43. Criteo’s deception was material to and likely to influence the

purchasing decisions of e-tailers, because Criteo advertises four times the click rate

as any other company, which influences the purchasing decisions of e-tailers that

are focused on click rates.

44. Criteo caused its false and misleading statements to enter interstate

commerce because its products and services are advertised and sold across state

lines through the internet. Criteo advertised and sold its products and services to e-

tail clients throughout the United States.

45. Criteo’s false and misleading statements have injured SteelHouse. As

a result of Criteo’s false and misleading statements, SteelHouse has lost business.

As a further result of Criteo’s false and misleading statements, the advertising

industry as a whole has been injured, and Criteo has lessened the good will

associated with SteelHouse’s products.

SECOND COUNTERCLAIM

Violation of California Business & Professions Code § 17500 et seq. (False Advertising)



47. Criteo committed acts of false and misleading advertising within the

meaning of California Business & Professions Code § 17500 et. seq..



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than its competitors.

49. Criteo knew, or should have known, through the exercise of

reasonable care, that the above-reference statements were false and/or misleading

because at least half of Criteo’s clicks have no attributable source. At least 8

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

without a attributable source, generated after a consumer has already purchased a

product, and that occur in click clusters, artificially inflate Criteo’s click count,

which Criteo then uses to induce customers to use its products and services.

50. By falsely inflating its click count numbers, Criteo’s statements have

deceived, or are intended to deceive, actual and potential customers of Criteo and

divert actual and potential customers from SteelHouse.

51. Criteo’s deception was material to and likely to influence the

purchasing decisions of e-tailers because it advertises four times the click rate as

any other company, which influences the purchasing decisions of e-tailers that are

focused on click rates.

52. On information and belief, Criteo engages in the unlawful business

activities in State of California and has its U.S. headquarters in the State of

California. Accordingly, Criteo made or disseminated these false and misleading

advertisements in California.

53. Criteo’s false and misleading statements have injured SteelHouse. As

a result of Criteo’s false and misleading statements, SteelHouse has lost business.

As a further result of Criteo’s false and misleading statements, the advertising

industry as a whole has been injured, and Criteo has lessened the good will

associated with SteelHouse’s products.


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THIRD COUNTERCLAIM

Violation of California Business & Professions Code § 17200 et seq. (Unfair Competition Law)



55. Criteo has committed one or more acts of unfair competition within

the meaning of California Business & Professions Code § 17200 et seq. (“UCL”).

Criteo’s acts and practices constitute unlawful, unfair and/or fraudulent business

acts or practices within the meaning of the UCL, including, but not limited to,

falsely reporting the number of clicks by claiming clicks with no attributable

source, and claiming clicks after a consumer has purchased a product from a

website.

56. Criteo’s acts and practices are unlawful because they violate section

43(a) of the Lanham Act, 15 U.S.C. § 1125(a), California Business & Professions

Code § 17500 et seq., and constitute intentional interference with contract and

intentional interference with prospective economic advantage as set forth above

and below.

57. Criteo’s acts and practices were fraudulent within the meaning of the

UCL because they were designed to deceive and defraud SteelHouse and e-tailers.

58. Criteo knew, or should have known through the exercise of reasonable

care, that its methods of falsely counting clicks with no attributable source, and

counting clicks after consumers made purchases from a website challenged herein

were false and/or misleading.

59. SteelHouse has suffered injury in fact and lost money as a result of

Criteo’s unlawful acts and practices, and has been irreparably harmed and will

continue to suffer irreparable harm by reasons of these violations.


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FOURTH COUNTERCLAIM

Intentional Interference with Contract



61. SteelHouse has maintained contracts with its e-tail clients.

62. Criteo knew that SteelHouse had contracts—called Insertion Orders—

with its e-tail clients.




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.

64. Criteo has also intentionally made false and misleading statements

about SteelHouse’s attribution method to SteelHouse’s e-tail clients, and wrongly

accused SteelHouse of fraud.

65. As a result of Criteo’s false and misleading statements, SteelHouse

lost actual customers with whom it had contractual relationships.

66. Criteo’s actions have damaged SteelHouse by causing SteelHouse to

lose clients, and by extension, revenue. SteelHouse’s damages include all lost

profits, expenses and prospective profits, in an amount to be determined at trial.

FIFTH COUNTERCLAIM

Intentional Interference with Prospective Economic Advantage



68. SteelHouse has maintained continuing economic relationships with

numerous e-tailers that probably would have continued to result in future economic

benefit to SteelHouse.


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69. Criteo knew that SteelHouse had relationships with these e-tailers.


advertising about the nature, quality, and characteristics of Criteo’s products and


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.

71. Criteo has also intentionally made false and misleading statements

about SteelHouse’s attribution method to SteelHouse’s e-tail clients, and wrongly

accused SteelHouse of fraud.

72. As a result of Criteo’s false and misleading click count numbers, and

false and misleading statements accusing SteelHouse of fraud, Criteo has induced

actual clients to either stop contracting with SteelHouse or decrease their

advertising budget with SteelHouse, and potential clients were dissuaded from

retaining SteelHouse. Criteo’s conduct and statements constitute false and

misleading advertising within the meaning of Section 43(a) of the Lanham Act, 15

U.S.C. § 1125(a), as well as violations of California Business & Professions Code

sections 17200 et seq. and 17500 et seq., as set forth above. SteelHouse has

suffered actual harm from Criteo’s wrongful conduct in the amount of lost revenue

and potential revenue, in an amount to be determined at trial.

PRAYER FOR RELIEF

WHEREFORE, Counterclaimant hereby prays for judgment in its favor as

follows:

(a) A preliminary injunction and permanent injunction enjoining and

restraining Criteo, its officers, agents, servants, employees, attorneys, and other

persons who are acting in concert or participation with them during the pendency

of this action and thereafter perpetually from:

(i) falsely attributing clicks with no attributable source;


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(ii) falsely attributing clicks that occur after a consumer has purchased a

product from a website and engaging in “cluster click counting”;

(iii) engaging in other conduct designed to artificially inflate its click

count numbers; and

(iv) disparaging SteelHouse, its officers, agents, servants, employees,

attorneys, and any other persons who are acting in concert or

participation with them, it services, or its products to actual and

potential clients, consumers, or competitors;

(b) For monetary relief including, but not limited to, actual,

compensatory, treble, and punitive damages, and restitution, as permitted by law,

in amounts to be determined at trial;

(c) For an award to SteelHouse for costs, expenses, and reasonable

attorneys’ fees, as permitted by law; and

(d) For such other relief as the Court may deem just and proper.

Dated: July 25, 2016 LATHAM & WATKINS LLP Daniel Scott Schecter Marvin S. Putnam Laura R. Washington By /s/Daniel S. Schecter_________

Daniel Scott Schecter Attorneys for Defendant and Counter-Claimant Steel House, Inc.


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DEMAND FOR JURY TRIAL

SteelHouse hereby demands a jury trial on all claims and issues triable to a jury.

Dated: July 25, 2016 LATHAM & WATKINS LLP Daniel Scott Schecter Marvin S. Putnam Laura R. Washington By /s/Daniel S. Schecter_________

Daniel Scott Schecter Attorneys for Defendant and Counter-Claimant Steel House, Inc.


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