latham & watkins llp - steelhouse€¦ · developed ad tech industry, which emerged with the...

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DEFENDANT’S OPPOSITION TO MOTION FOR PRELIMINARY INJUNCTION

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 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) Hon. Stephen V. Wilson DEFENDANT STEEL HOUSE, INC.’S OPPOSITION TO PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION [Supporting Declarations of Mark Douglas, Christopher Innes and Patrizio Spagnoletto Filed Concurrently Herewith] Hearing Date: August 29, 2016Time: 1:30 p.m. Courtroom: 6

Action Filed: June 13, 2016Trial Date: Not Yet Determined

Case 2:16-cv-04207-SVW-MRW Document 19 Filed 07/25/16 of 32 Page ID #:191

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TABLE OF CONTENTS Page

I. INTRODUCTION .......................................................................................... 1

II. STATEMENT OF FACTS ............................................................................. 3

A. The Online Advertising Industry Is Competitive And Dynamic. .............................................................................................. 3

B. SteelHouse Has Revolutionized The Ad Tech Industry. ..................... 4

C. SteelHouse And Criteo Are Dramatically Different. ........................... 4

1. Different Pricing Models. .......................................................... 4

2. SteelHouse Offers More Information And Control. .................. 5

3. SteelHouse And Criteo Share Few Customers. ......................... 6

D. The Ad Tech Industry Does Not Recognize One Attribution Model. ............................................................................... 6

E. Head-To-Head Comparisons. .............................................................. 8

F. Criteo’s Baseless “Click-Fraud” Accusations. .................................... 8

III. ARGUMENT ............................................................................................... 11

A. Governing Legal Standard. ................................................................ 11

B. Criteo Fails To Demonstrate A Likelihood Of Success. ................... 12

1. Criteo Fails To Meet Its Burden On Its Lanham Act Claim. ................................................................................ 12

a. Criteo Fails To Show SteelHouse’s Attribution Reporting Constitutes False Advertising. ................................................................... 12

(1) SteelHouse’s Attribution Model Is Not False. ............................................................ 12

(2) The Challenged Attribution Was Neither Deceptive Nor Material. ........................ 13

b. Criteo Fails To Show The Comparative Performance Statements Constitute False Advertising. ................................................................... 15

(1) SteelHouse’s Performance Statements Are Not False And Constitute Nonactionable Puffery. ....................................... 15

(2) Criteo Has Not Established Any


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Deception, Materiality, Or Injury. ...................... 16

2. Criteo Is Not Likely To Prevail On Its § 17500 Claim. ....................................................................................... 17

3. Criteo Fails To Demonstrate A Likelihood Of Success On Its Intentional Interference Claim. ....................... 18

4. Criteo Fails To Demonstrate A Likelihood Of Success On Its § 17200 Claim. ................................................ 19

C. Criteo Has Failed To Show Irreparable Harm. .................................. 20

1. There Is No Presumption Of Irreparable Harm. ...................... 20

2. Criteo Has Not Made Any Showing That Irreparable Harm Is Likely In The Absence Of An Injunction. ................................................................................ 21

a. Injunctive Relief Is Improper Because Criteo Has An Adequate Remedy At Law. ................... 22

b. Criteo’s Loss Of Good Will Is Speculative. ................. 22

c. Criteo’s Delay In Seeking Injunctive Relief Undercuts Its Claim Of Irreparable Injury. ................... 23

D. Criteo Has Failed To Demonstrate The Balance Of The Hardships Tips In Its Favor. ............................................................... 24

IV. CONCLUSION ............................................................................................ 25


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TABLE OF AUTHORITIES

Page(s)

Cases

Apple, Inc. v. Samsung Elecs. Co., 877 F. Supp. 2d 838 (N.D. Cal. 2012)................................................................ 25

Bed, Bath & Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners, 52 Cal. App. 4th 867 (1997) ............................................................................... 18

In re Century 21-RE/MAX Real Estate Adver. Claims Litig., 882 F. Supp. 915 (C.D. Cal 1994) ...................................................................... 12

CKE Restaurant v. Jack in the Box, Inc., 494 F. Supp. 2d 1139 (C.D. Cal. 2007) .............................................................. 17

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., 911 F.2d 242 (9th Cir. 1990) .............................................................................. 16

CytoSport, Inc. v. Vital Pharms., Inc., 617 F. Supp. 2d 1051 (E.D. Cal. 2009), aff’d, 348 Fed. Appx. 288 (9th Cir. 2009) .................................................................................................... 22

Dahl v. Swift Distrib., Inc., 2010 U.S. Dist. LEXIS 35938 (C.D. Cal. April 1, 2010) .................................. 24

Della Penna v. Toyota Motor Sales, U.S.A., 11 Cal. 4th 376 (1995) ........................................................................................ 18

Dorado v. Shea Homes Ltd. P’ship, 2011 U.S. Dist. LEXIS 97672 (E.D. Cal. Aug. 31, 2011) ................................. 20

Fed. Trade Comm’n v. Affordable Media, 179 F.3d 1228 (9th Cir. 1999) ............................................................................ 24

Ferring Pharms., Inc. v. Watson Pharms., Inc., 765 F.3d 205 (3d Cir. 2014) ............................................................................... 21

Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989 (9th Cir. 2011) .............................................................................. 21


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Gemini Aluminum Corp. v. California Custom Shapes, 95 Cal. App. 4th 1249 (2002) ............................................................................. 19

Hambrick v. Healthcare Partners Medical Group, Inc., 238 Cal. App. 4th 124 (2015) ............................................................................. 17

Hansen Beverage Co. v. N2G Distrib., 2008 U.S. Dist. LEXIS 105442 (S.D. Cal. Dec. 30, 2008) ................................ 24

Herb Reed Enters., LLC v. Florida Entm’t Mgmt., 736 F.3d 1239 (9th Cir. 2013) ...................................................................... 22, 23

Homeland Housewares, LLC v. Euro-Pro Operating LLC, 2014 U.S. Dist. LEXIS 156676 (C.D. Cal. Nov. 5, 2014) ................................. 18

Implant Direct Sybron Int’l. v. Zest IP Holdings, LLC, 2012 U.S. Dist. LEXIS 76485 (S.D. Cal. May 31, 2012) .................................. 17

Int’l Jensen, Inc. v. Metrosound U.S.A., Inc., 4 F.3d 819 (9th Cir. Cal. 1993) .......................................................................... 25

Kane v. Chobani, Inc., 2013 U.S. Dist. LEXIS 99359 (N.D. Cal. July 15, 2013) .................................. 21

Kwan Software Eng’G v. Foray Techs., LLC, 2013 U.S. Dist. LEXIS 14708 (N.D. Cal. Jan. 22, 2013), aff’d, 551 Fed. Appx. 298 (9th Cir. 2013) .......................................................................................................... 13, 16, 22, 23

Leatherman Tool Grp., Inc. v. Coast Cutlery Co., 823 F. Supp. 2d 1150 (D. Or. 2011) ................................................................... 21

Levi Strauss & Co. v. Shilon, 121 F.3d 1309 (9th Cir. 1997) ............................................................................ 11

Lilith Games (Shanghai) Co. v. uCool, Inc., 2015 U.S. Dist. LEXIS 128619 (N.D. Cal. Sept. 23, 2015) ............................... 25

Lustiger v. United States, 386 F.2d 132 (9th Cir. 1967) .............................................................................. 19

Mazurek v. Armstrong, 520 U.S. 968 (1997) ........................................................................................... 11


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MGM Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197 (C.D. Cal. 2007) (Wilson, J.) .......................................... 21

Moonrunners L.P. v. Time Warner, Inc., 2005 U.S. Dist. LEXIS 41244 (C.D. Cal. June 17, 2005) .................................. 25

Morgan v. AT&T Wireless Servs., Inc., 177 Cal. App. 4th 1235 (2009) ........................................................................... 20

Munchkin, Inc. v. Playtex Prods., LLC, 2011 U.S. Dist. LEXIS 58800 (C.D. Cal. Apr. 11, 2011) ........................ 11

nSight, Inc. v. PeopleSoft, Inc., 2005 U.S. Dist. LEXIS 24639 (N.D. Cal. June 1, 2005) ................................... 16

Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964 (N.D. Cal. 2008)................................................................ 16

Open Text, S.A. v. Box, Inc., 36 F. Supp. 3d 885 (N.D. Cal. 2014) .................................................................. 25

Pom Wonderful LLC v. Pur Beverages LLC, 2015 U.S. Dist. LEXIS 176834 (C.D. Cal. Aug. 6, 2015) ................................. 23

Premier Nutrition, Inc. v. Organic Food Bar, Inc., 475 F. Supp. 2d 995 (C.D. Cal. 2007) .................................................... 11, 22, 23

Settimo Assocs. v. Environ Sys., Inc., 14 Cal. App. 4th 842 (1993) ............................................................................... 18

Skydive Arizona, Inc. v. Quattrocchi, 673 F.3d 1105 (9th Cir. 2012) ............................................................................ 14

Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134 (9th Cir. 1997) ...................................................................... 12, 13

Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832 (9th Cir. 2001) .............................................................................. 24

TYR Sport, Inc. v. Warnaco Swimwear, Inc. 709 F. Supp. 2d 821 (C.D. Cal. 2010) ................................................................ 16

United States v. Jinian, 725 F.3d 954 (9th Cir. 2013) .............................................................................. 19


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Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) ................................................................................... 11, 22, 25

Statutes

18 U.S.C. § 1343 ...................................................................................................... 19

Rules

Federal Rule of Civil Procedure 65(c) ..................................................................... 25


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I. INTRODUCTION

Given its repeated reliance on faulty syllogisms, wholly unsupported

conclusory assertions, and outright misstatements of fact, it is easy to lose sight of

the extraordinary relief Criteo S.A. (“Criteo”) seeks—namely, a preliminary

injunction to: (1) stop a practice that Steel House, Inc., (“SteelHouse”)

discontinued months ago, at Criteo’s instance; and (2) mandate that SteelHouse

stop using an attribution method accepted by the advertising technology (“Ad

Tech”) industry. Criteo provides no legal or factual bases for enjoining an already

discontinued practice or an accepted industry method for evaluating ad

performance. This Court should reject the extraordinarily relief Criteo seeks.

Criteo and SteelHouse are just two of the hundreds of players in the recently

developed Ad Tech industry, which emerged with the advent of online advertising.

SteelHouse is a more recent, Culver City-based innovator that has taken the

industry by storm with its cutting-edge products, innovations, and services. As

more online advertising retailers (known as e-tailers) are choosing SteelHouse for

their online campaigns, the French-based Criteo—a publicly traded industry

behemoth with 11,000 customers and over $1 billion in revenue—is doing

everything in its power to preserve market share and protect an increasingly

disfavored business model, based upon whether an online shopper “clicks” on its

ads.1

Criteo’s motion is based on three fundamental misapprehensions: (1) that its

attribution model is the standard for the entire Ad Tech industry; (2) that web

analytics systems, like Google Analytics, track clicks; and (3) the only way

SteelHouse can “win” customers is by reporting fraudulent ad clicks. Each is

categorically false. Criteo presented the Court with screenshots and videos with

1 SteelHouse has filed Counterclaims against Criteo concurrently with this Opposition. The allegations set forth in the Counterclaims are incorporated by reference herein.


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complex coding, and then claims the screenshots and videos somehow show

SteelHouse “hijacking” internet traffic and “counterfeiting” clicks. They show

nothing of the sort. And they certainly do not show false or misleading

advertising. Instead, Criteo’s supposed “evidence” only establishes two differing

attribution methodologies—i.e., methods of identifying the actions of online

customers that contribute to sales, and assigning values to those actions. Criteo’s

outdated and oversimplified model is based solely on last-clicks, while

SteelHouse’s more holistic model tracks ad views (impressions) that lead a

consumer to visit an e-tailer’s site without clicking an ad, as well as clicks.

Although the Ad Tech industry recognizes and employs numerous

attribution methodologies, including SteelHouse’s model, Criteo asks this Court to

enjoin SteelHouse’s entire business operations, simply because the companies use

different models. Tellingly, this extreme request comes after SteelHouse—in good

faith—ceased the very conduct that supposedly caused Criteo concern. Criteo still

seeks an injunction not because of some prior, ceased practice, but rather it is

alarmed by SteelHouse’s growth and innovation.

There is simply no basis in fact, law, or equity to grant Criteo’s request for

injunctive relief. First, Criteo has failed to meet its burden to show a likelihood of

success on any of its claims. Each claim is premised on the flawed notion that

SteelHouse’s attribution methodology is somehow fraudulent simply because it is

not in line with Criteo’s. Moreover, Criteo cannot demonstrate that the statements

made by SteelHouse were false (in fact they are true) or misleading, or that they

materially induced any behavior by e-tailers.

Second, Criteo has not established that it somehow faces imminent,

irreparable harm, particularly given its delay in seeking injunctive relief. Criteo’s

proffered “evidence” consists solely of self-serving declarations of its executives

that are nothing more than speculative and conclusory assertions and inadmissible


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hearsay.2 Indeed, Criteo has not provided any evidence from a single customer

stating that it was deceived by SteelHouse or moved its business from Criteo to

SteelHouse because of the alleged conduct.

Finally, the equities overwhelmingly favor denial of this preliminary

injunction. The balance of the hardships does not tip in Criteo’s favor. If the

Court denied Criteo’s motion and SteelHouse’s conduct continued, this might

impact no more than 0.3% of Criteo’s customers. In stark contrast, the drastic

relief that Criteo seeks, would gut SteelHouse’s business operations and cause

immeasurable damages, forcing it to abandon its entire attribution model—and

ultimately its business model. Criteo’s motion for preliminary injunction should

be denied in its entirety.

II. STATEMENT OF FACTS

A. The Online Advertising Industry Is Competitive And Dynamic.

Unlike Criteo’s depiction, today’s Ad Tech industry is actually not a

monolith where indistinguishable companies play a zero-sum game in which one’s

loss is another’s gain. (See Declaration of Mark Douglas (“Douglas Decl.”) at ¶

11.) Rather, the industry is a dynamic market involving constant reallocations of

advertising budgets among multiple vendors. It is more akin to the modern

exchange of today’s Wall Street—with millions of ads being sold to market and

delivered each day, but without the regulation or established industry standards.

Like stock trades, decisions to bid for advertising space on websites are made in

milliseconds. Similarly, just as investors use multiple brokerage firms to trade

stocks, e-tailers usually work with multiple marketing firms at the same time and

determine where and how to allocate their advertising budget on an almost daily

basis. Indeed, SteelHouse’s 296 smallest customers changed their advertising

spend 2,213 times in the month of June 2016 alone. (Id.)

2 See SteelHouse’s Evidentiary Objections and Motion to Strike Re: Criteo’s Declarations and Exhibits Thereto filed concurrently herewith.


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Because advertising customers easily and often reallocate their spend among

multiple vendors, there are numerous competitors in the Ad Tech industry. In fact,

there are currently more than 50 vendors competing for retargeting business alone,

which is when e-tailers target potential consumers based upon their prior online

activity. (See Declaration of Christopher Innes (“Innes Decl.”) at ¶ 4.)

B. SteelHouse Has Revolutionized The Ad Tech Industry.

Founded in 2009, SteelHouse is one of Ad Tech’s most recent innovators,

pioneering a cloud-based advertising platform. Unlike its competitors, SteelHouse

provides customers control and access to marketing channels—all from an easy-to-

use user interface called the SteelHouse Advertising Suite. (Douglas Decl. at ¶¶

10, 38, Ex. 6.) The SteelHouse Advertising Suite enables customers to create

targeted ad campaigns and drive high ad engagement based on consumers’ real-

time behavior. SteelHouse’s innovative approach to online advertising has

generated a 150% growth rate in 2015. SteelHouse now reaches more than 350

million consumers per month, across hundreds of the world’s largest brands. (Id.

at ¶ 10.)

C. SteelHouse And Criteo Are Dramatically Different.

1. Different Pricing Models.

Criteo’s business model is based on promising customers the most

“clicks”—which occur when a consumer clicks on an online ad. (Id. at ¶ 34.)

Criteo’s revenue is determined by the number of clicks its ads generate.3

SteelHouse’s customers pay a technology fee, based on the number of ads served

or Cost-Per-Thousand Impressions (“CPM”). (Id. at ¶ 35.) SteelHouse never

charges its customers based on clicks. (Id.)

3 In light of Criteo’s click-based revenue model, it is noteworthy that its self-reported click rate is suspiciously high—four times as high as the rest of the Ad Tech industry. (Douglas Decl. at ¶ 34; see also Counterclaim at ¶ 18 (Figure 1).)


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2. SteelHouse Offers More Information And Control.

Criteo’s model is built on advertisers relinquishing control of their ad

campaigns to Criteo. Criteo’s customers do not control the visual creative in the

ads, nor the targeting. (Id. at ¶ 36.) Criteo essentially offers a one-size-fits-all

approach and operates as a black box, sharing little information with its customers

and promising performance without customer insight or control. (Id.)

In contrast, SteelHouse provides user-friendly tools that give customers

control of their ad campaigns, with the innovative SteelHouse Advertising Suite.

(Id. at ¶¶ 37-38.) Customers can monitor performance in real-time. And based

upon performance, customers can manually alter their ad campaign through the

Advertising Suite, instantly changing the audience, appearance, or any other

feature of the campaign at any time. Unlike the majority of vendors (including

Criteo), SteelHouse’s platform allows customers to target specific audience

segments. SteelHouse also provides customers with up to 1,234 metrics to track

the effectiveness of their ad campaigns; by comparison, Criteo provides less than

100 metrics. (Id. at ¶ 38.)

SteelHouse’s customers also can control how much money they spend on

their ad campaigns at any moment by using the Price By Campaign feature. This

feature gives customers complete control over ad spending, including monthly

budgets and CPM pricing, which they can alter in real-time. (Id. at ¶ 40, Ex. 7.)

SteelHouse’s customers also have full control over creative solutions

through SteelHouse’s Creative Suite. SteelHouse customers have access to the

most up-to-date creative design tools to create their own ad campaigns, thereby

eliminating the expense of a creative agency. For example, customers can upload

video or browse Getty images to perfectly target consumers. (Id. at ¶ 41, Ex. 8.)

And for customers who want design assistance, SteelHouse has a Creative Services

Team available. This creative component of its product, whereby an e-tailer can

create—and continuously tweak—its own ads is but one of SteelHouse’s


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distinguishing innovative differences. And they are all included for the same price.

SteelHouse has signed numerous new customers based solely on the creative

features offered. (Id. at ¶¶ 41-42; see also Innes Decl. at ¶¶ 15-16.)

3. SteelHouse And Criteo Share Few Customers.

Given their distinct differences in pricing and product, SteelHouse and

Criteo are barely competitors. In fact, direct competition is limited to the

retargeting business alone. (Id. at ¶ 4.) Further limiting that direct competition,

SteelHouse also provides prospecting services for potential new consumers; Criteo

does not. Of Criteo’s 11,000 clients, SteelHouse is aware of only thirty-seven that

overlap—a mere 0.3% of Criteo’s customer base. (Id. at ¶ 5.) It is thus

unsurprising that Criteo has previously stated that it did not view SteelHouse as a

direct competitor, and acknowledged that the two companies have very different

businesses. (Id. at ¶ 25.) Nonetheless, in the very first line of its motion, Criteo

now claims SteelHouse is a “direct competitor.”

D. The Ad Tech Industry Does Not Recognize One Attribution Model.

Attribution is the process of identifying a set of online consumer actions

(“events”), such as an online purchase, and then assigning value to each of these

actions or events. (Douglas Decl. at ¶ 25.) There is no single accepted attribution

model in the Ad Tech industry. (Id. at ¶ 26.)

Criteo uses the increasingly disfavored last-click attribution model. Last-

click attribution allocates 100% attribution to the vendor serving an online ad that

is subsequently clicked on to direct a consumer to the advertiser’s website. (Id. at

¶ 27.) The last click-attribution model was developed with the growth of social

media and opportunities to advertise on new platforms. (Id.) As the Ad Tech

industry matured, innovated, and developed, however, many—including online

advertising’s leading trade organization, the Interactive Advertising Bureau (the

“IAB”)—questioned the validity of the last-click attribution model. (Id. at ¶ 28.)


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This repudiation arose because of the over-simplification of single-source

attribution and the unreliability of last-clicks as a metric of ad performance.4 (Id.)

Given the increasing complexity for any attribution, e-tailers have turned to

various web analytics models to monitor vendor performance. The most widely

used web analytics service today is Google Analytics. (Id. at ¶ 20.) As one of the

only supposed evidentiary basis for its claims, Criteo makes the fantastical factual

assertion that industry leader Google Analytics tracks based upon “last-click”

attribution. This could not be further from the truth. In fact, Google Analytics

does not even track clicks. Instead, it tracks website visits called user “sessions,”

defined as interactions that take place on a website within a given time. (Id. at Ex.

1.)

Accordingly, SteelHouse’s attribution methodology is in line with Google

Analytics’ tracking methods. SteelHouse tracks view throughs (when a consumer

sees an ad and then goes to the product website without clicking the ad), as well as

click throughs (when a consumer clicks on an ad). (Id. at ¶¶ 21, 30.) A view

through can be attributed to SteelHouse up to thirty minutes after SteelHouse’s ad

is served. This thirty-minute timeframe is consistent with, and based upon, Google

Analytics’ own definition of a session. (Id. at ¶¶ 20, 30.) SteelHouse reports view

throughs because it provides its customers with more reliable information

regarding attribution (consumers today do not reach advertisers’ websites only

when clicking on ads) and performance. After all, consumers also obviously reach

e-tailers by directly typing a web address into a browser or searching through a

search engine, after seeing an ad. (Id. at ¶ 30.)

4 Such unreliability has only grown with the burgeoning problem of “fake” clicks generated by computers and bots (a software application that runs automated tasks, such as repetitively clicking ads). (Douglas Decl. at ¶ 28, Ex. 3.)


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E. Head-To-Head Comparisons.

Contrary to Criteo’s assertions, head-to-head click comparisons are not

advertisers’ sole determinate in choosing online marketers. (Innes Decl. at ¶ 6.)

Moreover, head-to-head comparisons can involve more than just two vendors, and

are run at the request of advertisers. (Id. at ¶ 7.) When e-tailers conduct

comparisons, they alone set the metrics for the tests, based on any number of

different metrics. Understandably, e-tailers consider many factors when evaluating

potential marketers. Click count or click conversion is just one factor, amongst

many. (Id. at ¶ 11.)

SteelHouse rarely sees the results of these tests, unless the e-tailer informs

SteelHouse. (Id. at ¶ 8.) SteelHouse has never induced a customer to run a head-

to-head comparison. (Id. at ¶ 7.) It is not in its interests. Nonetheless, SteelHouse

understands it regularly outperforms Criteo in audience segmentation, campaign

management, creative tools, creative services, reporting, and client support. (Id. at

¶ 11.) It also understands that Criteo regularly outperforms SteelHouse on click

rates. As such, SteelHouse pitches potential clients on product demos, which show

services Criteo does not offer, like SteelHouse Creative. (Id. at ¶¶ 11-13.) Criteo’s

allegations that SteelHouse created a “click-fraud scheme” to rig head-to-head

competition based on clicks thus defies reason.

F. Criteo’s Baseless “Click-Fraud” Accusations.

Criteo accuses SteelHouse of “counterfeiting” clicks and thereby “cheating”

in head-to-head comparisons simply because SteelHouse’s attribution methodology

is different than Criteo’s. Rather than follow Criteo’s click-based model, which

only attributes value to the last click before a consumer arrives on an advertiser’s

website (a practice that leads to unfair and inadequate results), SteelHouse—like

others in the industry—takes a more holistic approach and assigns value to ad

impressions or view throughs. SteelHouse thus reports view throughs in its User

Interface to its clients and reports those same view throughs to Google Analytics.


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Understandably, SteelHouse’s customers expect the data to match. (Douglas Decl.

at ¶ 45.) This distinction reflects the parties’ differing attribution models. It is not

a fraud for SteelHouse to provide its customers with the promised tabulations of

when a consumer views an ad served and then goes to that advertiser’s website

without clicking the ad. Rather, it is a logical, commonsense performance metric

(and valid business model). Yet, Criteo falsely accuses SteelHouse of somehow

“hijacking” internet traffic.

These accusations began when Mollie Spilman, Criteo’s Chief Revenue

Officer, first contacted SteelHouse on April 6, 2016, regarding some unspecified

concern. SteelHouse’s Chief Marketing Officer, Patrizio Spagnoletto, a friend of

Ms. Spilman, responded the next day, offering to meet with her in New York the

following week. (Declaration of Patrizio Spagnoletto (“Spagnoletto Decl.”) at ¶¶

10-11.) On April 12, 2016, Mr. Spagnoletto and SteelHouse’s Chief Monetization

Officer, Chris Innes, met with Ms. Spilman at Criteo’s office in New York.

Criteo’s employees Robert Shaw and Jaysen Gillespie attended by telephone. At

this meeting, Criteo informed SteelHouse that the issue related to attribution but

never mentioned fraudulent clicks. (Innes Decl. at ¶ 25.)

On April 14, 2016, SteelHouse requested that Criteo provide more detail

regarding Criteo’s attribution concerns so it could conduct a meaningful inquiry.

In response, on April 18, Robert Shaw provided two log files, stating “the

attribution of the click appears to have been altered from the inbound source.” Mr.

Innes responded with an update on April 26 and offered to meet with Criteo to

discuss inquiry results “in depth” while in New York the following week. (Id. at

¶¶ 26-28.)

On May 1, 2016, Ms. Spilman announced that Criteo was going to tell its

clients about SteelHouse’s supposed misconduct. Subsequently, she provided a

draft “announcement.” Rather than object, Mr. Spagnoletto responded with a

limited mark up in the hopes of appeasing Criteo. Criteo then sent the


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“announcement.” SteelHouse sent a written response to the few customers it

shared with Criteo. (Spagnoletto Decl. at ¶¶ 16-19; see also Innes Decl. at ¶ 31.)

Although SteelHouse does not believe its attribution model is or was

inaccurate or flawed (to the contrary, its attribution methodology is an accepted

industry practice), SteelHouse nonetheless acquiesced to Criteo’s demands in an

attempt to avoid the threat of litigation and create further animosity. Accordingly,

on May 5, SteelHouse changed its attribution methodology to exclude all reporting

where SteelHouse and Criteo both served ads. (Douglas Decl. at ¶ 50.)

Following the May 5 reporting change, SteelHouse and Criteo had a

conference call on May 12 in which SteelHouse informed Criteo of the change.

Robert Shaw stated that it would take Criteo up to six months to “QA” (conduct

quality assurance) the issue and that it would inform SteelHouse if it believed the

issue persisted. The issue thus appeared resolved. It was not. (Innes Decl. at ¶

33.) Criteo sent Steel House a cease and desist letter on May 23, 2016.

Criteo could not see the source code change that SteelHouse implemented

and thus believed no change had in fact occurred. SteelHouse therefore decided to

further change the code at the end of May to make it apparent to Criteo that the

demanded change had in fact occurred. (Douglas Dec. at ¶ 51.) These changes

removed all reporting (seen in an iFrame) where SteelHouse and another vendor

(including Criteo) both served ads and the other vendor’s ad was subsequently

clicked. As such, SteelHouse now attributes no value to its own valid ad

impressions (even though they influence consumer’s behavior) when a user

purportedly clicks a Criteo ad. In fact, SteelHouse ceased its supposedly

problematic attribution practice months ago. (Id.) Nonetheless, Criteo continued

to claim otherwise to its customers, and ultimately filed this baseless lawsuit, just


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weeks before the launch of SteelHouse’s new creative products.5

III. ARGUMENT

A. Governing Legal Standard.

“A preliminary injunction is a drastic and extraordinary remedy that should

not be granted unless the movant, by a clear showing, carries the burden of

persuasion.” Premier Nutrition, Inc. v. Organic Food Bar, Inc., 475 F. Supp. 2d

995, 1000 (C.D. Cal. 2007) (citing Mazurek v. Armstrong, 520 U.S. 968, 972

(1997)). Such is particularly the case when the demanded injunction seeks to stifle

competition and commercial speech. As such, “[c]ourts are cautioned that, in

issuing preliminary injunctions, [t]o ensure vigorous competition and to protect

legitimate commercial speech, courts . . . should give advertisers a fair amount of

leeway, at least in the absence of a clear intent to deceive or substantial consumer

confusion.” Munchkin, Inc. v. Playtex Prods., LLC, 2011 U.S. Dist. LEXIS 58800,

*6-7 (C.D. Cal. Apr. 11, 2011) (citations and internal quotation marks omitted).

Criteo bears the heavy burden of establishing that: (1) it is likely to succeed on the

merits; (2) it is likely to suffer irreparable harm in the absence of preliminary

relief; (3) the balance of equities tips in its favor; and (4) an injunction is in the

public interest. Winter v. Natural Res. Def. Council, 555 U.S. 7, 20, 24 (2008).6

5 SteelHouse will launch its new Creative Suite in August 2016, and new user interface (“UI”) in Q1 2017. (Douglas Decl. at ¶ 44, Ex. 9.) SteelHouse began showcasing its new UI at the Consumer Electrics Show (“CES”) in Las Vegas in January 2016, and continues to market its brand and the impending launches. SteelHouse marketed its new Creative Suite at the recent Cannes Lion Festival in France. (Id.) 6 The doctrine of unclean hands bars Criteo from the relief it seeks. See Levi Strauss & Co. v. Shilon, 121 F.3d 1309, 1313 (9th Cir. 1997) (“[E]quity requires that those seeking its protection shall have acted fairly and without fraud or deceit as to the controversy in issue.”). Criteo is barred from injunctive relief because, as detailed more fully in SteelHouse’s Answer and Counterclaims, Criteo has engaged in unlawful conduct, including false advertising, by generating fraudulent


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B. Criteo Fails To Demonstrate A Likelihood Of Success.

1. Criteo Fails To Meet Its Burden On Its Lanham Act Claim.

To establish false advertising under Section 43(a) of the Lanham Act, Criteo

must show: (1) a false statement by SteelHouse in a commercial advertisement

about its own or another’s product; (2) the statement actually deceived or has the

tendency to deceive a substantial segment of its audience; (3) the deception is

material, in that it is likely to influence the purchasing decision; (4) SteelHouse

caused its false statement to enter interstate commerce; and (5) Criteo has been or

is likely to be injured as a result. See Southland Sod Farms v. Stover Seed Co., 108

F.3d 1134, 1139 (9th Cir. 1997). Criteo must establish the alleged statement either

is literally false, or is likely to mislead and confuse customers. Id.

Criteo’s false advertising claim, however, is based on nothing more than:

(a) Criteo’s misapprehension as to SteelHouse’s actual attribution model, which it

baselessly deems “counterfeit click fraud” and (b) a lone email purportedly sent by

a SteelHouse salesperson to “potential customers,” which has not properly been

offered as evidence. Criteo fails to demonstrate a likelihood of success because it

fails to establish the challenged statements are actually false, provide any extrinsic

evidence of customer deception, and establish that such statements were material

to any decision to use SteelHouse’s services.

a. Criteo Fails To Show SteelHouse’s Attribution Reporting Constitutes False Advertising.

(1) SteelHouse’s Attribution Model Is Not False.

A “literally false” statement must be unambiguously false. See In re

Century 21-RE/MAX Real Estate Adver. Claims Litig., 882 F. Supp. 915, 923 (C.D.

Cal 1994). Despite Criteo’s singular focus on click attribution, the industry, as a

whole, does not solely measure attribution based on clicks. SteelHouse’s more- clicks and instituting a smear campaign SteelHouse to drive away SteelHouse customers. This lawsuit is only the latest strategy in that campaign.


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nuanced attribution reporting is not false particularly when examined within this

industry context. “When evaluating whether an advertising claim is literally false,

the claim must always be analyzed in its full context,” including industry

standards. Southland, 108 F.3d at 1139; see also Kwan Software Eng’G v. Foray

Techs., LLC, 2013 U.S. Dist. LEXIS 14708, *8 (N.D. Cal. Jan. 22, 2013), aff’d,

551 Fed. Appx. 298 (9th Cir. 2013) (“Where the statements were made to

sophisticated consumers with unique background knowledge and experience, the

court should consider that as part of the relevant context.”).

Today, there is no singular method to define “attribution” in the Ad Tech

industry. While last-click is one way to measure attribution, it is not the only way.

Indeed, Google Analytics—the dominant tracking web analytics system—does not

even track clicks. Without industry consensus as to how to define attribution,

Criteo cannot establish falsity because it cannot show there is a “clear-cut

definition” from which SteelHouse’s methodology “clearly and unambiguously

deviate[s].” Kwan Software, 2013 U.S. Dist. LEXIS 14708 at *18. Moreover, the

reliance on clicks and the last-click attribution model championed by Criteo has

faced increasing skepticism, including a push from the IAB to move away from

last-click attribution to more sophisticated attribution models. (See Douglas Decl.

at ¶ 28.) Recognizing the inadequacies of last-click attribution, SteelHouse, like

others in the industry, attributes value to ad impressions that result in site visits,

regardless of clicks. Accordingly, Criteo cannot establish falsity.

(2) The Challenged Attribution Was Neither Deceptive Nor Material.

Contrary to Criteo’s contention, Criteo is not entitled to a presumption of

deception and reliance because it has not established any deliberately false conduct

by SteelHouse. First, SteelHouse in no way intended to “take credit” for Criteo’s

clicks. (See Id. at ¶ 46.) Second, Criteo’s assertion is illogical, as SteelHouse has

absolutely no incentive to “take credit” for Criteo’s clicks. Unlike Criteo, which


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only gets paid for clicks, SteelHouse never charges its customers for clicks. (Id. at

¶ 34.) Instead, SteelHouse’s customers pay for impressions (when ads are

published on a website). (Id.) Thus, SteelHouse generates revenue regardless of

whether the ad is clicked and thus has no incentive to manufacture clicks. Third,

this previously challenged conduct (see, e.g., Declaration of Hersh Anand, Exhibits

1, 2)—which SteelHouse stopped months ago—only occurred when an online user

interacted with both SteelHouse and Criteo ads for the same advertising customer

and subsequently arrived on the advertiser’s website by clicking the Criteo ad.

(Douglas Decl. at ¶ 46.) SteelHouse’s prior attribution reporting automatically

notified Google Analytics of this session, because it was based on whether a

customer saw the SteelHouse ad and then went to advertiser’s website (which

occurred), not anticipating the simultaneous ads. (Id. at ¶¶ 45-46.) As such,

Criteo’s assertion that SteelHouse “intended to take credit for clicks and

conversions SteelHouse had nothing to do with” (Mot. at 18) is simply not true.

Moreover, Criteo’s conclusory assertion that “there is evidence that e-tailers

were actually deceived by SteelHouse’s false statements, and the deception was

material because it altered their purchasing decision,” is insufficient to establish

the required elements. In fact, Criteo does not even mention what this supposed

“evidence” is. Criteo has not proffered a single customer survey or declarations

that any customer was in fact deceived by SteelHouse’s attribution and altered its

advertising spend solely because of the purported deception. Cf. Skydive Arizona,

Inc. v. Quattrocchi, 673 F.3d 1105, 1111 (9th Cir. 2012) (consumer declaration

and evidence established materiality requirement). Advertisers are sophisticated

purchasers that look at multiple factors when determining how to allocate their

advertising budget—price, creative tools, tracking metrics offered, audience

segmentation capabilities—not simply clicks. Therefore, even if SteelHouse’s

attribution reporting was false (which it was not), Criteo cannot establish that it

was material to a customers’ decisions to use SteelHouse. Accordingly, Criteo has


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not met its burden of showing the necessary likelihood of success on the merits of

its false advertising claim.

b. Criteo Fails To Show The Comparative Performance Statements Constitute False Advertising.

SteelHouse has no formal advertising campaign, no marketing materials, and

no statement on its website comparing its performance to Criteo. (See Spagnoletto

Decl. at ¶¶ 5-6.) As such, Criteo’s entire claim is based on a single email (see Mot.

at 6; Declaration of Harris Bernstein at ¶ 6) that a SteelHouse salesperson

purportedly sent to potential customers—supposed evidence that Criteo again has

not bothered to provide. Criteo has not established when this email was sent or to

which “potential customers.” Nor has Criteo established that any recipients moved

their business to SteelHouse as a result. As set forth below, Criteo is not likely to

demonstrate false advertising based on the asserted email.

(1) SteelHouse’s Performance Statements Are Not False And Constitute Nonactionable Puffery.

Statements that SteelHouse outperforms competitors, including Criteo, are

not false. SteelHouse has in fact won business from customers following “head-to-

head” comparisons, such as Thrive Market, even where Criteo’s click rates

purportedly were higher. (Innes Decl. at ¶¶ 15-16.) The fundamental flaw to

Criteo’s claim is the baseless presumption that customers measure performance

and determine ad spend solely based on clicks. The proffered email does not even

mention the word click. Further, there is no commonly-used industry definition or

metrics for these performance comparisons. (Id. at ¶ 6.) Customers—who set their

own comparison metrics—compare many different things in these tests, including,

but not limited to, price, creative capabilities, audience segmenting capabilities,

conversion rates, clicks, click-to-conversion rates, audience reach, and other

reporting metrics. (Id. at ¶ 11.) Criteo thus cannot credibly claim, let alone prove,

there is a “clear-cut definition” of performance comparisons from which the


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challenged statements “clearly and unambiguously deviate.” Kwan Software, 2013

U.S. Dist. LEXIS 14708 at *18.

Moreover, under the Lanham Act, only statements of fact are actionable as

false advertising; vague or highly subjective statements of opinion regarding

product superiority are nonactionable puffery. See Cook, Perkiss & Liehe, Inc. v.

N. Cal. Collection Serv., 911 F.2d 242, 246 (9th Cir. 1990) (“Advertising which

merely states in general terms that one product is superior is not actionable.”); see

also Oestreicher v. Alienware Corp., 544 F. Supp. 2d 964, 973 (N.D. Cal. 2008)

(statements of product superiority based on being “faster, more powerful, and more

innovative,” “higher performance,” and having a “longer battery life” are

nonactionable puffery). “Whether a statement is puffery does not depend on the

truth or falsity of a statement; it depends on the degree of generality or specificity.”

TYR Sport, Inc. v. Warnaco Swimwear, Inc. 709 F. Supp. 2d 821, 830 (C.D. Cal.

2010).

Here, one salesperson’s email regarding “performance” is nothing more than

generalized bragging. “Performance” is vague and subjective. This email does not

identify any particular metric by which to determine whether or not this claim is

true. As such, this one salesperson’s single statement is too general to be

actionable and constitutes “mere puffery.” See nSight, Inc. v. PeopleSoft, Inc.,

2005 U.S. Dist. LEXIS 24639, *1 (N.D. Cal. June 1, 2005) (finding claim that

“plaintiff[’]s implementation services were ‘inferior to [defendant’s] services’”

was puffery).

(2) Criteo Has Not Established Any Deception, Materiality, Or Injury.

Criteo also fails to offer any extrinsic evidence that the challenged

statements actually deceived customers or caused any injury to Criteo. See CKE

Restaurant v. Jack in the Box, Inc., 494 F. Supp. 2d 1139, 1145, 1148 (C.D. Cal.

2007) (denying preliminary injunction where plaintiff did not offer “substantial


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extrinsic evidence that a significant portion of the commercial audience has been

deceived”). Criteo has offered no evidence whatsoever that any customers were

deceived by this one email or that any customers actually decreased their

advertising spend with Criteo in favor of SteelHouse. Indeed, the two advertisers

that received the email never opened accounts with SteelHouse. (Innes Decl. at ¶

12.) Sophisticated advertisers are not likely to choose an advertising vendor based

on a single email lauding its own performance. As set forth above, there are a host

of factors (e.g., price, creative capabilities, reporting metrics) that e-tailers consider

in allocating their budget. Accordingly, Criteo has not satisfied its burden of

establishing a likelihood that the email deceived any customer or caused Criteo any

injury.

2. Criteo Is Not Likely To Prevail On Its § 17500 Claim.

Criteo similarly fails to carry its burden of establishing its false advertising

claim under California Business and Professions Code Section 17500.7 Because

the factual bases for Criteo’s section 17500 claim are the same as its Lanham Act

claim, “[t]he claims must stand or fall together[.]” See Implant Direct Sybron Int’l.

v. Zest IP Holdings, LLC, 2012 U.S. Dist. LEXIS 76485, *12 (S.D. Cal. May 31,

2012) (dismissing section 17500 claim where factual basis was more or less

identical to deficient Lanham Act claim); see also Homeland Housewares, LLC v.

Euro-Pro Operating LLC, 2014 U.S. Dist. LEXIS 156676, *12 (C.D. Cal. Nov. 5,

2014). For the same reasons provided above, Criteo has also failed to demonstrate

a likelihood of success of its section 17500 claim.

7 Section 17500 “prohibits the dissemination in any advertising media of any ‘statement’ . . . ‘which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading.” Hambrick v. Healthcare Partners Medical Group, Inc., 238 Cal. App. 4th 124, 154 (2015) (citation omitted).


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3. Criteo Fails To Demonstrate A Likelihood Of Success On Its Intentional Interference Claim.

Criteo also fails to meet its burden regarding its tortious interference claim

because it cannot establish any independently wrongful conduct. See Della Penna

v. Toyota Motor Sales, U.S.A., 11 Cal. 4th 376, 393 (1995) (plaintiff must prove

“the defendant not only knowingly interfered with the plaintiff’s expectancy, but

engaged in conduct that was wrongful by some legal measure other than the fact of

interference itself.”) (emphasis added). The California Supreme Court specifically

developed the independent wrongfulness element to protect against the danger of

imposing tort liability for legitimate competitive business practices, like the one at

issue here. Id. at 389 (“Ours is a competitive economy in which business entities

vie for economic advantage . . . and success goes to him who is able to induce

potential customers not to deal with a competitor.”) (citation omitted). Liability

therefore may only be imposed “for improper methods of disrupting or diverting

the business relationship of another which fall outside the boundaries of fair

competition.” Settimo Assocs. v. Environ Sys., Inc.,14 Cal. App. 4th 842, 845

(1993). Here, Criteo improperly seeks to enjoin SteelHouse solely based on

legitimate business competition. Such conduct is not actionable. See Bed, Bath &

Beyond of La Jolla, Inc. v. La Jolla Village Square Venture Partners, 52 Cal. App.

4th 867, 881 (1997) (“[T]he crux of the competition privilege is that one can

interfere with a competitor’s prospective contractual relationship with a third party

as long as the interfering conduct is not independently wrongful[.]”) (emphasis

omitted).

Criteo’s attempt to rely on its false advertising claims and purported wire

fraud allegations to establish the “wrongful” element must fail. Criteo has not

established a likelihood of success on its false advertising claims. (See Sections


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III.B.1-2, supra.)8 Nor can Criteo rely on its wire fraud allegations. Criteo has not

established the existence of a scheme to defraud or that SteelHouse acted with the

requisite specific intent to defraud. See United States v. Jinian, 725 F.3d 954, 960

(9th Cir. 2013); 18 U.S.C. § 1343. Criteo cannot show that SteelHouse’s

attribution methodology was devised dishonestly or to trick or deceive Criteo or e-

tailers. Jinian, 725 F.3d at 960; see Douglas Decl. at ¶ 46 (“SteelHouse had no

intent to attribute sessions resulting from a click on a Criteo ad.”) Any purported

misattribution lacks the necessary intent to defraud. Further, to the extent Criteo

bases its wire fraud allegations on the challenged salesperson’s email, its claims

are similarly flawed. See Lustiger v. United States, 386 F.2d 132, 138 (9th Cir.

1967) (explaining that reasonable “exaggeration” related to sales puffery will not

“support a finding of a scheme to defraud”).

Finally, Criteo has not established that the alleged harm (disruption in its

customer relationships) was proximately caused by the alleged conduct—a

required element of the claim. Criteo provides nothing more than self-serving

conclusory statements that customers have reduced their business with Criteo as a

result of SteelHouse’s alleged conduct. (See, e.g., Declaration of Nicole Bliss at ¶

8.) The customers could have reduced their business for any number of reasons

unrelated to SteelHouse—one competitor in a market with more than 50 others.

Accordingly, Criteo has not shown a likelihood of success on the merits of its

tortious interference claim.

4. Criteo Fails To Demonstrate A Likelihood Of Success On Its § 17200 Claim.

Criteo’s UCL claim lacks merit because it too is predicated on its defective

8 Even if Criteo could somehow establish that SteelHouse’s attribution model is contrary to industry standards (which it is not), this would not satisfy the wrongfulness element. See Gemini Aluminum Corp. v. California Custom Shapes, 95 Cal. App. 4th 1249, 1256-59 (2002) (holding competitive activity allegedly in violation of industry standards was not enough to overcome competition privilege).


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false advertising claims and unsupported wire fraud allegations. “Section 17200

‘borrows’ violations from other laws by making them independently actionable as

unfair competitive practices.” Korea Supply, 29 Cal. 4th at 1143. As set forth

above, Criteo has not established a likelihood of success on its false advertising

claims or its baseless wire fraud allegations. (See Sections III.B.1-3, supra.)

Because these “borrowed” claims fail, Criteo’s UCL claim under the “unlawful”

prong must also fail. See Dorado v. Shea Homes Ltd. P’ship, 2011 U.S. Dist.

LEXIS 97672, *19 (E.D. Cal. Aug. 31, 2011) (“Where a plaintiff cannot state a

claim under the ‘borrowed’ law, she cannot state a UCL claim either.”).

Criteo also cannot establish its claim under the “fraudulent” prong. Criteo

fails to establish any fraudulent business practice taken by SteelHouse. As set

forth herein, there is not one sole attribution model in the industry. Nor is one

required. Indeed, Google Analytics and other web analytic systems allow

customers to select their attribution methodology. Criteo cannot establish fraud

simply because SteelHouse’s attribution methodology differs from its own.

Moreover, because the industry accepts attributing value to ad views that result in

site visits, the challenged attribution model is not likely to deceive the public. Cf.

Morgan v. AT&T Wireless Servs., Inc., 177 Cal. App. 4th 1235, 1254 (2009).

C. Criteo Has Failed To Show Irreparable Harm.

1. There Is No Presumption Of Irreparable Harm.

Criteo relies on a single outdated case to wrongly argue that irreparable

harm should be presumed. (See Mot. at 24) (citing Valu Eng’g, Inc. v. Nolu

Plastics, Inc., 732 F. Supp. 1024 (N.D. Cal. 1990)). As the Ninth Circuit,

however, has aptly proclaimed, the presumption “is dead.” See Flexible Lifeline

Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 995 (9th Cir. 2011) (“[T]oday we

proclaim that the ‘King’ is dead, referring to Elvis Presley the case – to the extent it

supported the use of a presumption of irreparable harm in issuing injunctive

relief.”); see MGM Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1211


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(C.D. Cal. 2007) (Wilson, J.) (“[T]he presumption of irreparable harm no longer

inures to the benefit of Plaintiffs. The eBay Court plainly stated that Plaintiffs

‘must demonstrate’ the presence of the traditional factors, and therefore have the

burden of proof with regard to irreparable harm.”).

In fact, courts across the country have held that a plaintiff seeking a

preliminary injunction for a false advertising claim is not entitled to a presumption

of irreparable harm. See, e.g., Ferring Pharms., Inc. v. Watson Pharms., Inc., 765

F.3d 205, 206 (3d Cir. 2014) (party bringing false advertising claim “under the

Lanham Act is not entitled to a presumption of irreparable harm when seeking a

preliminary injunction and must demonstrate that irreparable harm is likely.”);

Leatherman Tool Grp., Inc. v. Coast Cutlery Co., 823 F. Supp. 2d 1150, 1157 (D.

Or. 2011) (denying preliminary injunction on false advertising claim, and stating,

“[i]t is now clear that eBay signifies a return to traditional equitable principles,

under which presumptions of harm are not allowed.”).9 Accordingly, Criteo cannot

rely on such a presumption; Criteo needed to establish a likelihood of irreparable

harm and it did not do so.

2. Criteo Has Not Made Any Showing That Irreparable Harm Is Likely In The Absence Of An Injunction.

A plaintiff seeking a preliminary injunction must establish a likelihood—not

the mere possibility—of irreparable harm. See Winter, 555 U.S. at 22 (“Issuing a

preliminary injunction based only on a possibility of irreparable harm is

inconsistent with our characterization of injunctive relief as an extraordinary

remedy that may only be awarded upon a clear showing that the plaintiff is entitled

to such relief.”) (emphasis added); see also Herb Reed Enters., LLC v. Florida

9 Similarly, there is no indication the California legislature ever intended to permit a presumption of irreparable harm for UCL or false advertising claims. See Kane v. Chobani, Inc., 2013 U.S. Dist. LEXIS 99359, *26-27 (N.D. Cal. July 15, 2013) (rejecting a presumption of irreparable harm for UCL and false advertising claims brought under California law).


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Entm’t Mgmt., 736 F.3d 1239, 1249 (9th Cir. 2013) (stating the Winter Court

rejected the Ninth Circuit’s “possibility” of irreparable harm as “too lenient”). A

plaintiff must demonstrate “by the introduction of admissible evidence and with a

clear likelihood of success that the harm is real, imminent and significant, not just

speculative or potential.” CytoSport, Inc. v. Vital Pharms., Inc., 617 F. Supp. 2d

1051 (E.D. Cal. 2009), aff’d, 348 Fed. Appx. 288 (9th Cir. 2009). Criteo fails to

make a showing that imminent, irreparable harm is likely.

a. Injunctive Relief Is Improper Because Criteo Has An Adequate Remedy At Law.

Even if Criteo could prove that customers will reduce their advertising

budget or will not work with Criteo based solely on SteelHouse’s attribution

methodology, such harm is merely financial and does not warrant the extraordinary

relief sought. See Premier Nutrition, Inc. v. Organic Food Bar, Inc., 475 F. Supp.

2d 995, 1007 (C.D. Cal. 2007) (“Mere financial injury does not constitute

irreparable harm if adequate compensatory relief will be available in the course of

litigation.”). Criteo has not shown that “remedies available at law, such as

monetary damages, are inadequate to compensate for [its] injury.” Kwan Software,

2013 U.S. Dist. LEXIS 14708 at *22.

b. Criteo’s Loss Of Good Will Is Speculative.

While a loss of goodwill and reputation can support injunctive relief in some

instances, Criteo “must adduce evidence of likely irreparable harm and may not

rely on ‘unsupported and conclusory statements regarding harm [it] might suffer.”

Pom Wonderful LLC v. Pur Beverages LLC, 2015 U.S. Dist. LEXIS 176834, *15

(C.D. Cal. Aug. 6, 2015) (emphasis in original); see also Herb Reed, 736 F.3d at

1250; Kwan Software, 2013 U.S. Dist. LEXIS 14708 at *24 (denying preliminary

injunction when plaintiff failed “to present any evidence tending to show that the

loss of customers is anything more than speculation or the result of legitimate

competition”) (emphasis added).


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Criteo has offered nothing more than its speculative belief that it might lose

customers or goodwill based on the fact that a handful of customers reduced their

ad spend with Criteo and six are currently running purported head-to-head

comparisons. (See Declaration of Jessica Breslav at ¶ 10.) Yet, these supposed

bases prove nothing more without some nexus to the alleged wrongdoing. See

Premier, 475 F. Supp. 2d at 1007 (vague and unsupported arguments the party may

experience a loss of goodwill were insufficient to establish irreparable harm).

Criteo has not proffered any evidence to show supposed customer losses resulted

from anything more than legitimate competition. Second, there is no irreparable

harm associated with the alleged head-to-head comparisons. Not only has Criteo

failed to identify customers purportedly running these comparisons, it has also

failed to show what metrics these comparisons are using or establish that

SteelHouse is providing those specific customers with false information in an

attempt to rig the competition. Criteo therefore has not proffered sufficient

evidence to show irreparable harm.

c. Criteo’s Delay In Seeking Injunctive Relief Undercuts Its Claim Of Irreparable Injury.

By its own admission, Criteo has been aware of the challenged conduct since

at least January 2016. (Mot. at 7.) This six-month delay belies the supposed claim

of urgency necessary for such extraordinary injunctive relief. So does the almost

twenty-day delay between filing a complaint and seeking a preliminary injunction.

Delay in seeking injunctive relief undercuts any claim that the injunction is

necessary to prevent immediate and irreparable injury, and alone should result in

denial of Criteo’s motion. See Dahl v. Swift Distrib., Inc., 2010 U.S. Dist. LEXIS

35938, *8 (C.D. Cal. April 1, 2010) (“Plaintiff’s long delay before seeking a

preliminary injunction implies a lack of urgency and irreparable harm.”) (citation

omitted); Hansen Beverage Co. v. N2G Distrib., 2008 U.S. Dist. LEXIS 105442,

*17-18 (S.D. Cal. Dec. 30, 2008) (denying preliminary injunction on false


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advertising claim where plaintiff admitted knowing of alleged issue for at least two

months before taking any legal action and then waiting twenty days to move for

preliminary injunction after bringing suit, stating “[d]elays in requesting an

injunction, whether for months or years, tend to negate a claim of irreparable

harm”).10

D. Criteo Has Failed To Demonstrate The Balance Of The Hardships Tips In Its Favor.

Even if Criteo could establish that “serious questions” exist as to the merits

(which it cannot), injunctive relief must still be denied because Criteo has not

shown that the balance of hardships tips sharply in its favor. See Stuhlbarg Int’l

Sales Co. v. John D. Brush & Co., 240 F.3d 832, 840 (9th Cir. 2001). “[C]ourts

must balance the competing claims of injury and must consider the effect on each

party of the granting or withholding of the requested relief.” Winter, 555 U.S. at

24 (internal quotation marks omitted). In determining the impact on both parties,

courts have denied injunctive relief in light of the relative strength and size of the

parties and where the injunction would cause substantial financial hardship to the

defendant. See, e.g., Int’l Jensen, Inc. v. Metrosound U.S.A., Inc., 4 F.3d 819, 827

(9th Cir. Cal. 1993); Open Text, S.A. v. Box, Inc., 36 F. Supp. 3d 885, 910-11 (N.D.

Cal. 2014) (denying proposed injunction because it was “likely to cause a

substantial financial hardship to [the defendant] pending the outcome of this

litigation”); Lilith Games (Shanghai) Co. v. uCool, Inc., 2015 U.S. Dist. LEXIS

128619, *34-35 (N.D. Cal. Sept. 23, 2015) (finding balance tipped in the

defendant’s favor because if court granted the injunction, the defendant “would be

forced to take down its most popular game, threatening [its] viability as a

10 The requested injunctive relief is also moot. SteelHouse’s attribution reporting change on May 5, 2016, stopped and ensures that the challenged conduct “cannot reasonably be expected to recur.” Fed. Trade Comm’n v. Affordable Media, 179 F.3d 1228, 1238 (9th Cir. 1999).


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company,” and would lose profits, market share and goodwill).

Here, Criteo is a long-standing industry behemoth with 11,000 customers

and more than $1 billion in annual revenue. Criteo seeks an injunction that would

force SteelHouse to change its entire attribution model—a model that is in line

with many in the Ad Tech industry, including Google Analytics’ reporting.

Because the injunction would significantly impair SteelHouse’s business

operations, Criteo cannot show that the mere possibility of ad spend decline from

five unidentified clients currently running head-to-head comparisons somehow tips

the balance of hardships in its favor.

IV. CONCLUSION

For the foregoing reasons, SteelHouse respectfully requests that the Court

deny Criteo’s Motion for Preliminary Injunction in its entirety.11

Dated: July 25, 2016 LATHAM & WATKINS LLP Daniel Scott Schecter

Marvin S. Putnam Laura R. Washington By /s/ Daniel Scott Schecter

Daniel Scott Schecter Attorneys for Defendant and Counterclaimant SteelHouse, Inc.

11 Should the Court grant Criteo’s Motion, a substantial bond should issue pursuant to Federal Rule of Civil Procedure 65(c). The broad injunction Criteo seeks would significantly impair SteelHouse’s business operations, a company currently valued at $130 million that employs 248 people. (Douglas Decl. at ¶ 43). Because the bond is the “upper limit” on SteelHouse’s redress for a wrongful injunction and courts “should err on the high side,” SteelHouse requests that should the court issue an injunction, the Court order a bond in the amount of tens of millions dollars. See Apple, Inc. v. Samsung Elecs. Co., 877 F. Supp. 2d 838, 918 (N.D. Cal. 2012) (granting preliminary injunction and ordering the requested bond of over $95 million); Moonrunners L.P. v. Time Warner, Inc., 2005 U.S. Dist. LEXIS 41244, *44 (C.D. Cal. June 17, 2005) (ordering a $5 million bond).


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