Google Faces a Lawsuit

Web site analytics technology developer Digital Envoy filed a lawsuit this week against Google, charging the search-engine operator with abusing a licensing agreement between the two companies.

Digital Envoy, in Norcross, Georgia, sells a service that uses the IP addresses of Web site visitors to discern demographic details about the visitors, such as their geographic location. The company's customers can then use that data to more precisely target content and online advertisements to those accessing their Web sites.

Google signed on as a customer in November 2000 and currently pays Digital Envoy a flat, $8000 monthly fee for use of its technology, according to the complaint Digital Envoy filed in U.S. District Court for the Northern District of Georgia. That agreement only allows Google to use Digital Envoy's technology on its own Web site, however--not on third-party sites, as it began doing in August 2002, Digital Envoy says.

Alleged Actions

Digital Envoy told Google in February that it considered the company's use of its technology on third-party sites to be a licensing violation, at which time Google "admitted to its conduct but refused to stop," according to the complaint. Google offered to increase its monthly payment to $12,000, an offer Digital Envoy rejected as inadequate, Digital Envoy says.

Digital Envoy is charging Google with misappropriation of trade secrets and unfair competition. The company is seeking unspecified damages for lost licensing revenue, along with punitive damages and all of Google's revenue from its allegedly improper use of Digital Envoy's technology.

Licensing disputes among technology partners aren't uncommon, but this one comes at an inopportune time for Mountain View, California-based Google as it positions itself for an expected initial public offering of its stock sometime this year.

A Google spokesperson declines to comment on the lawsuit.