When a Click Is More Than Just a Click

Dean Gresham began handing out “attorney-at-law” business cards when he was 8 years old. Growing up with big plans in a little town, he drew inspiration from his uncle, a prominent maritime attorney in New York City.

“It was small-town Texas,” Gresham says of his hometown of Jasper. “I always wanted to move to the city and do something important.”

Three decades later, Gresham, of counsel at Payne Mitchell Law Group in Dallas, is no longer typing his own cards. At age 37, he has already faced off against corporate giants such as Google over “click-fraud” issues—in the Google case, he, along with three other attorneys, engineered a $90 million settlement in 2006. Gresham is now going toe-to-toe with Toyota and GoDaddy.com.

The Google case was the first national class action filed for click fraud and Gresham has spent more hours studying the action than he cares to tally. There are two types of click fraud, he notes. In advertiser click fraud, a company intentionally clicks on its competitor’s ad in order to deplete that competitor’s daily advertising budget for its per-click fee, which is paid to Google. When the budget is drained, the competitor drops from the top spot in the search engine.

“Sometimes [a company’s competitor] pays someone in India 20 rupees a day to click all day on your ad,” Gresham says.

The other type of click fraud involves partner networks with websites that are portals for Google. When someone using one of these websites types in a keyword search then clicks on a sponsored link, the per-click fee paid by that advertiser is shared by Google and the partner.

Gresham got involved with the case after the owners of Lane’s Gifts & Collectibles, a gift shop in Texarkana, Ark., became suspicious about clicks on their website. “They were noticing all these strange hits from China and Korea at 4 o’clock in the morning, but they were just clicks,” Gresham says. “People weren’t really browsing their website or buying their items. … They were just clicking for whatever reason.”

Gresham and his team, which included attorneys Stephen Malouf, Joel Fineberg and John C. Goodson, went to work.

“We did a lot of research about how this works, and the algorithms that were used, and why someone would do this, and how you’re going to prove intent on a classwide basis,” Gresham says.

There was no shortage of advertisers wanting in on the case. “At the time we filed the lawsuit, we set up a website called Lostclicks.com, and it went off the charts with class members wanting to join,” he says.

The team made a strategic decision to sue Google and Yahoo together (though the Yahoo portion eventually was split off) because of Arkansas’ unusually liberal discovery rules. “We were able to get documents from Google and from Yahoo about their certain algorithms—we call it their ‘secret sauce,’” says Gresham. “We also got an order from the court in Miller County, Arkansas, saying not only did Google have to produce its secret sauce to us—the plaintiff’s lawyers—but it also had to share its secret sauce with Yahoo. So strategically, that created this leverage where Google basically said, ‘Look guys, before we tell Yahoo what’s in our secret sauce, we want to try to resolve this.’”

Upshot of the case? First, Google gave its advertisers $60 million worth of free advertising, divvied up in accordance with how much they had spent in the past.

“But most importantly, I think, for the entire pay-per-click industry and for the whole search-engine industry,” says Gresham, “was a transparency component. As part of the settlement, we said as class counsel: Google, we can’t just take your word for it. It’s nice that you want to give $60 million worth of free advertising credits to the class members, but that doesn’t make us believe that you’re going to fix this problem. Google said: We’re serious about this; our credibility is at issue.” Google agreed to let an Internet expert access all its documents and algorithms, interview its employees, observe how Google’s click-fraud detection system worked, and offer advice. The expert issued a report, which Google made public.

“Its conclusion was that, through the lawsuit, Google had enhanced its click-detection system drastically and made it much more robust, and that advertisers could truly rely on Google to use their best efforts to detect click fraud,” says Gresham. “That restored a sense of confidence that if you’re going to pay Google so much per click, you can rely that you’re going to get legitimate clicks.”

At the moment, Gresham is taking on the world’s largest Internet domain name registrar, GoDaddy.com. The accusation: cyber-trespass. It seems GoDaddy started putting its own ads—then invited Google to place click-ads—on domain names that had been registered, but the websites had not actually been built. As an example, Gresham says, if he had a domain name that was registered but not being used—but was filled with ads—“If you click on one of those ads, [the advertiser] is going to pay a dollar, let’s say, and some of that money is going to go to GoDaddy and some of it is going to go to Google, but none of it goes to the registrant of the domain name.” Gresham is considering adding Google as a defendant.

Asked about the intimidation factor in taking on some of the world’s biggest corporate giants at a relatively young age, Gresham seems surprised.

“At this point, it’s no big deal at all,” he says. “Look at it this way: If you can take on … Google, there’s nobody else you’re afraid of. They’re the 800-pound gorilla in the room.”