Google loses round against Digital Envoy

Lawsuit accusing search giant of misappropriating trade secrets may proceed, a district court rules.

Stefanie Olsen
Stefanie Olsen Staff writer, CNET News
Stefanie Olsen covers technology and science.
2 min read
A lawsuit accusing Google of misappropriating trade secrets from geo-location specialist Digital Envoy may proceed, a district court in Northern California has ruled.

Last Friday, the U.S. District Court in San Jose, Calif., denied Mountain View, Calif.-based Google's motion for summary judgment on claims that the search giant breached its contract with Digital Envoy, based in Georgia. However, the court dismissed several of Digital Envoy's charges, including claims of unfair competition, on the grounds that the two parties were not direct rivals, according to the court document.

The two companies had a licensing agreement as far back as 2000 that relied on Digital's IP technology to pinpoint the physical location of Web visitors for Google so that it could better serve sponsored search results. (The parties no longer work together.) Digital balked when in 2003, Google broadened use of the geo-location technology to include serving targeted advertisements onto third-party sites in a program called Google AdSense.

"Based on the language contained in the license and the discussions between the parties regarding Google's use of Digital's technology, such utilization might be characterized as a 'sharing,' 'distributing,' or 'otherwise making available,' of Digital's proprietary technology to third parties, as prohibited under the terms of the license," according to the ruling.

"Since the language contained in the license is susceptible to more than one reasonable interpretation, summary judgment is improper," according to the ruling.

Google has said previously that the case lacks merit. According to the court document, Google argued that it held "all you can eat" licensing rights to use Digital Envoy's technology and that it never physically shared the software with third parties.

"We're pleased with the court's ruling and believe our position will be vindicated," Google spokesman Steve Langdon wrote via e-mail.

Digital Envoy first filed its lawsuit in March 2004 in U.S. District Court in Atlanta. A month later, Google countersued, asking for declaratory judgment in the case. The suit was moved from Georgia to San Jose.