Criteo Vs SteelHouse

Case 2:16-cv-04207-SVW-MRW Document 21 Filed 07/26/16 Page 1 of 44 Page ID #:364
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LATHAM & WATKINS LLP

Daniel Scott Schecter (Bar No. 171472)
Daniel.Schecter@lw.com
Marvin S. Putnam (Bar No. 212839)
Marvin.Putnam@lw.com
Laura R. Washington (Bar No. 266775)
Laura.Washington@lw.com
10250 Constellation Boulevard, Suite 1100
Los Angeles, California 90067
Telephone: +1.424.653.5500
Facsimile: +1.424.653.5501
Attorneys for Defendant and CounterClaimant Steel House, Inc.
UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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CRITEO S.A.,
Plaintiff,
v.
STEEL HOUSE, INC.,
Defendant.
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Hon. Stephen V. Wilson
STEEL HOUSE, INC.,

Counter-Claimant,
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ANSWER AND COUNTERCLAIMS

OF DEFENDANT STEEL HOUSE,
INC. TO CRITEO S.A.S
COMPLAINT AND DEMAND FOR
JURY TRIAL
Action Filed: June 13, 2016
Trial Date: Not Yet Determined
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CASE NO. 2:16-CV-04207 SVW

(MRWx)
v.
CRITEO S.A.,
Counter-Defendant.
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ATTORNEYS AT LAW
LOS ANGELES
Case Number: 2:16-cv-04207 SVW (MRWx)
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, Criteos suit attacks the very essence of what it fears: A new,
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innovative, competitor, SteelHouse, which seeks to revolutionize the online
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advertising (Ad Tech) industry, and ultimately render Criteos business model
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obsolete.
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At the heart of Criteos claims is the inaccurate notion that the entire Ad
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Tech industry believes and operates as Criteo does. It does not. Criteo
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disingenuously paints a picture of an industry obsessed, as it is, with clicks, in
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which advertisers must choose either Criteo or SteelHouse. But this is simply not
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how the Ad Tech industry works.
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Online marketing vendors are constantly adapting to keep up with a rapidly
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evolving marketplace. The industry itself operates akin to Wall Street where the
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customer spreads its money around to a portfolio of multiple marketing vendors
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in the hopes of maximizing its return. Many online advertisers (e-tailers)
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reallocate their money on a weekly or even daily basis. Nothing is static in the
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industry, and daily opportunities to serve advertisements to consumers on websites
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numbers in the billions.
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Although Criteo and SteelHouse compete for customers in the Ad Tech
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industry, Criteo and SteelHouse offer drastically different products and use very
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different pricing models. Criteo offers a standard, non-customizable solution and
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competes by promising companies the most clicks, which merely refers to a
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consumer clicking on Criteos ads. Criteo prices its products on a pay-per-click
model, where customers are charged each time a consumer clicks on one of
Criteos ads. Indeed, Criteos 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.
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By contrast, SteelHouses business model is the antithesis of Criteos.

Where Criteo charges per click, SteelHouse believes that clicks do not singularly
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define advertising, and charges customers for ads served (ads placed on the
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websites), not ads clicked. While Criteo offers a standard, one-size-fits-all
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advertising approach, SteelHouse offers its customers an end-to-end, customizable,
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unlimited solution for creating and executing ad campaigns. And where Criteo
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believes that it should have complete control over its customers ad campaigns;
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SteelHouse gives total control to the customer. SteelHouses business model is
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about transparency, and offering its customers a creative solution, unlike Criteos
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black box operation.
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SteelHouses advertising suite and business model are truly unique within
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the Ad Tech industry. As a result, SteelHouse succeeded upon entering the market
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since October 2009, and has taken market share from other vendors, by offering
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customizable, customer-focused products and services. For instance, SteelHouse
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provides its customers with the ability to develop, create, customize, and launch ad
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campaigns. With SteelHouse, a customer can create an advertisement from scratch
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or choose from hundreds of professionally designed creative advertisements to
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customize. These advertisements may include streaming video, animated scene
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transitions, and countdown timers. Criteo offers no such solution. Not only does
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SteelHouse provide a creative software solution, but it also provides its customers
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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
advertisers 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,
Criteos 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
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advertising, they are choosing SteelHouse over Criteo, despite Criteos apparent
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superior click rate. Troubled by its loss of market share, Criteos solution was to
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accuse SteelHouse of maliciously, intentionally, and fraudulently stealing clicks in
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order to inflate its numbers and induce customers to choose SteelHouse over
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Criteo. These allegations are categorically false and also illogical as SteelHouses
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business model is not based on clicks, which are the obsessive focus of Criteos
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business model and litigation strategy.

NATURE OF THE ACTION
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1.
SteelHouse admits that it is an online marketing vendor. SteelHouse
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denies the remaining allegations of Paragraph 1 of the Complaint, and avers that
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SteelHouses success is attributable to its unique, customer-specific approach to
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advertising, as opposed to Criteos standard, one-size-fits-all approach.
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SteelHouse denies engaging in any unlawful or misleading conduct,
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and particularly denies that it has counterfeited clicks or tricked any e-tailers or
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other customers, and therefore denies the allegations of Paragraph 2 of the
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Complaint.
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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.
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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.
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and particularly denies that it manipulated or exploited metrics, or that it made any
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false advertisements. Specifically, SteelHouse denies that a head-to-head
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comparison is a comparison of clicks between two vendors. Companies compare
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many things when they compare products in head-to-head competitions. Click
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count is just one factor. SteelHouse regularly outperforms Criteo in Segmentation,
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Campaign Management, Creative, Creative Services, and Reporting and Services.
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SteelHouse therefore denies the allegations of Paragraph 5 of the Complaint.
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and particularly denies that it counterfeited clicks or continues to counterfeit clicks.
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SteelHouse admits that Criteo approached SteelHouse and conveyed its belief that
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SteelHouse was stealing credit for clicks, and admits that SteelHouse advised
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Criteo that it had no knowledge of any attribution issue, but would investigate the
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alleged issue. SteelHouse further admits it subsequently informed Criteo it was
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working on a code to resolve any perceived issues identified by Criteo. Except as
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expressly admitted, SteelHouse denies all allegations of Paragraph 6 of the
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Complaint.
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and particularly denies that it counterfeited clicks, and that Criteo has suffered any
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harm as a result of SteelHouses conduct. To the contrary, SteelHouse avers that
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any of Criteos lost revenue or market share is the result of SteelHouses superior
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product offerings and customer service, which many customers have found
preferable over Criteos 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
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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
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STATEMENT OF FACTS
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Performance-Based Online Marketing
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regarding the allegations of Paragraph 13 of the Complaint, and, on that basis,
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denies such allegations.
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14.
SteelHouse admits that a Uniform Resource Locator (URL) is an
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address on the internet that enables computers and other devices to visit the
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address. SteelHouse also admits that e-tailers often contract with multiple
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marketing vendors at the same time. SteelHouse denies that e-trailers track clicks
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on all campaigns, as the majority of campaigns have no tracking method.
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SteelHouse also denies that when tracking is used, the only method of doing so is
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to add tracking codes to a URL. SteelHouse further denies that tracking code is
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LOS ANGELES
a common Ad Tech industry term. On these bases, SteelHouse denies the
remaining allegations of Paragraph 14 of the Complaint.
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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,
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and particularly denies that the dominant web analytics solution, Google Analytics,
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uses Last-Click Attribution or tracks clicks.
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17.
SteelHouse denies that Google Analytics, Adobe Analytics, and IBM
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Coremetrics can track and measure clicks or Last-Click Attribution, and on that
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basis, SteelHouse denies the allegations of Paragraph 17 of the Complaint.

Retargeting
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regarding the allegations in Paragraph 18 of the complaint, and, on that basis,
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denies the allegations.
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19.
SteelHouse admits that Criteo uses Pay-Per Click, also called Cost-
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Per-Click (CPC), pricing model. SteelHouse denies that most marketing vendors
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use Pay-Per-Click. SteelHouse does not (and has not) used a Pay-Per Click or
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Cost-Per-Click pricing model. SteelHouse lacks knowledge or information
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sufficient to form a belief as to the remaining allegations of Paragraph 19 of the
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Complaint, and, on that basis, denies such allegations.
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20.
SteelHouse denies that the amount Criteo can charge its clients per
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click depends on its performance, but rather avers that the amount that Criteo
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charges its clients is based on the number of clicks that Criteo claims to have
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generated. Because SteelHouse uses a different pricing model from Criteo,
ATTORNEYS AT LAW
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SteelHouse lacks knowledge or information sufficient to form a belief as to
Criteos conversion rate or ROAS, and therefore denies the remaining allegations
of Paragraph 20 of the Complaint.

Criteo And SteelHouse Are Direct Competitors
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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
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unique, customizable product that is dramatically different from Criteos standard,
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one-size-fits-all model. SteelHouse lacks knowledge or information sufficient to
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form a belief as to the remaining allegations of Paragraph 21 of the Complaint,
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and, on that basis, denies such allegations.
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22.
SteelHouse admits that it and Criteo compete for retargeting business,
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but avers that SteelHouse offers its customers a unique, customizable product that
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is dramatically different from Criteos standard, one-size-fits-all model.
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SteelHouse offers retargeting as one part of a larger set of services it offers its
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customers. SteelHouse denies the remaining allegations of Paragraph 22 of the
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Complaint.
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23.
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as to the allegations of Paragraph 23 of the Complaint, and, on that basis, denies
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such allegations.
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24.
SteelHouse avers Criteo charges its clients based on the number of
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clicks that Criteo claims to have generated, and therefore denies the allegations of
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and particularly denies that it has engaged in any unlawful conduct, counterfeiting,
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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
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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.
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SteelHouse otherwise denies the allegation of Paragraph 27 of the Complaint, and
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particularly denies that its claims in this email were false or misleading, or that it
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advertised head-to-head competitions as part of its regular business advertisements.
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and particularly denies that SteelHouse counterfeited clicks or cheated in head-to-
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head comparisons. A head-to-head comparison is more than just a comparison of
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Creative Services, and Reporting and Services. Therefore, SteelHouse denies the
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allegations of Paragraph 28 of the Complaint.
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29.
SteelHouse denies engaging in any unlawful or misleading conduct
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and particularly denies that it has advertised head-to-head competitions as part of
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its regular business advertisements. SteelHouse admits that Zappos is a customer
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of SteelHouse. SteelHouse lacks knowledge or information sufficient to form a
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belief as to the remaining allegations of Paragraph 29 of the Complaint, and, on
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that basis, denies such allegations.
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Criteo Uncovers SteelHouses Unlawful Scheme
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ATTORNEYS AT LAW
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30.
SteelHouse admits that in late spring or early summer 2015, a head-to-
head comparison of Criteos and SteelHouses product and services at the request
of TOMS Shoes (TOMS). SteelHouse denies the remaining allegations of
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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
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SteelHouse avers that it won TOMS business because SteelHouse has numerous
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features that Criteo does not offer. SteelHouse offers custom segmentation, self-
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service campaign management, andCreativewhich allows customers to
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develop, create, customize, and launch ad campaigns. SteelHouse lacks
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knowledge or information sufficient to form a belief as to what TOMS believed,
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and as to TOMS actions with respect to Criteo, and on such basis, denies the
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allegations. SteelHouse denies all remaining allegations of Paragraph 31 of the
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Complaint.
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32.
SteelHouse admits that TOMS participated in a second head-to-head
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comparison. SteelHouse lacks knowledge or information sufficient to form a
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belief as to whether Criteo convinced TOMS to run a second head-to-head
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comparison, what metrics were used in the comparison, and the results of the
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comparison, and, on that basis, denies the allegations. SteelHouse denies the
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such allegations.
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34.
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.
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SteelHouse lacks knowledge or information sufficient to form a belief as to the
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remaining allegations of Paragraph 35 of the Complaint, and, on that basis, denies
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such allegations.
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as to whether Criteo used Web traffic analysis software and what it learned from
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that software, and, on that basis, denies such allegations. SteelHouse denies the
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and particularly denies that it engaged in any acts of counterfeiting. SteelHouse
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also denies that analytics tools track clicks; rather such tools track site visits.
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SteelHouses code ensures that visits are properly recorded using open Application
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Programming Interfaces APIs supplied by analytics companies.
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and particularly denies that it engaged in any acts of counterfeiting. SteelHouse
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also denies that analytics tools track clicks; rather such tools track site visits.
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SteelHouse denies that it counterfeited clicks. SteelHouse lacks
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knowledge or information sufficient to form a belief as to the remaining allegations
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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.
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and particularly denies that it engaged in any acts of counterfeiting, and therefore
denies the allegations of Paragraph 42 of the Complaint,
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SteelHouse Attempted To Hide Its Fraud When Confronted By Criteo

43.
SteelHouse admits that it received an email on April 6, 2016, from
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Criteos Chief Revenue Officer (Criteos CRO), and that Criteos CRO alerted
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SteelHouse to a potential issue with attribution. SteelHouse denies the remaining
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such allegations.
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45.
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46.
SteelHouse admits that a meeting took place on April 12, 2016, at
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Criteos New York office, and that Criteos CRO and SteelHouses Chief
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Marketing Officer and Chief Monetization Officer were present. SteelHouse
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admits that a member of Criteos Business Intelligence team attended the meeting
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by phone. SteelHouse admits that its CEO did not attend. SteelHouse further
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admits that Criteo explained that it believed SteelHouse was misattributing clicks,
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and that SteelHouse told Criteo that it would investigate the situation. SteelHouse
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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
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51.
SteelHouse admits that Criteos CRO told SteelHouses Chief
Marketing Officer that Criteo was planning to notify its clients about the
information that Criteo had shared with SteelHouse. SteelHouse admits that it
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provided comments to the statement. SteelHouse lacks knowledge or information
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Complaint, and, on that basis denies such allegations.
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52.
SteelHouse denies the of Paragraph 52 of the Complaint.
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53.
SteelHouse admits that it contacted its customers to explain that its
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tracking pixel was conflicting with Criteos tracking pixel, that it only affected a
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small number of Criteos click-based conversions and a small number of e-tailers,
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and that SteelHouse worked to correct the issue. SteelHouse denies all remaining
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54.
SteelHouse denies the allegations of Paragraph 54 of the Complaint.
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55.
SteelHouse admits that it told some e-tailers that its Discrepancy
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Minimizer Tool was the source of any data discrepancy. SteelHouse denies
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engaging in any unlawful or misleading conduct, and particularly denies that it
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engaged in any acts of counterfeiting, and therefore denies all remaining
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56.
SteelHouse admits that Criteo and SteelHouse executives conducted a
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conference call on May 12, 2016. SteelHouse admits that it told Criteo that a
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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.
57.
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
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SteelHouse denies engaging in any unlawful or misleading conduct, and
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particularly denies that it engaged in any acts of counterfeiting, and therefore
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denies the remaining allegations of Paragraph 57 of the Complaint.
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58.
SteelHouse admits that it received a letter from Criteo dated May 23,
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2016. SteelHouse denies engaging in any unlawful or misleading conduct, and
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59.
SteelHouse admits that Criteo filed this Complaint after June 9,
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2016. SteelHouse denies engaging in any unlawful or misleading conduct, and
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FIRST CLAIM FOR RELIEF
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(Violations of Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a)

(False and/or Misleading Advertising))
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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,
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
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63.
SteelHouse denies that it made any false statements. SteelHouse also
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denies that a head-to-head comparison is a comparison of clicks between two
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vendors. Companies compare many things when they compare products in head-
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to-head competitions. Click count is just one factor. SteelHouse regularly
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outperforms Criteo in Segmentation, Campaign Management, Creative, Creative
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Services, and Reporting and Services. SteelHouse otherwise lacks knowledge and
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information sufficient to form a belief regarding whether SteelHouse outperformed
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Criteo in head-to-head comparisons, and, on that basis, denies the allegations.
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SteelHouse denies all remaining allegations of Paragraph 63 of the Complaint.
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64.
SteelHouse denies that it made any false statements. SteelHouse
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Services, and Reporting and Services. SteelHouse otherwise lacks knowledge or
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information sufficient to form a belief as to why existing and potential Criteo
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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.
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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.
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67.
SteelHouse denies that it has made false statements, and therefore
denies the allegations of Paragraph 67 of the Complaint.
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SECOND CLAIM FOR RELIEF
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(Fraud)
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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
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further denies that it counterfeited or continues to counterfeit clicks, and therefore
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70.
SteelHouse denies that it made false statements. SteelHouse further
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denies that it counterfeited clicks. SteelHouse lacks knowledge or information
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Complaint, and, on that basis, denies such allegations.
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71.
SteelHouse denies that it made false statements. SteelHouse further
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denies that it counterfeited clicks, and therefore denies the allegations of Paragraph
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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.
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74.
SteelHouse denies that it was counterfeiting clicks. SteelHouse lacks

75.
SteelHouse asserts that whether a representation is material is a
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conclusion of law to which no response is necessary, but to the extent it is deemed
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an allegation of fact, SteelHouse denies it made any misrepresentations, and
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therefore denies the allegations of Paragraph 75 of the Complaint.
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76.
SteelHouse denies that it made misrepresentations, and therefore

77.
SteelHouse denies that it engaged in fraud, and therefore denies the
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THIRD CLAIM FOR RELIEF
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(Intentional Interference With Prospective Economic Advantage)
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78.
SteelHouse hereby incorporates by references its responses set forth in

79.
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such allegations.
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80.
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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 Criteos 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
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clicks, or made false or misleading statements, and therefore denies the associated
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allegations. SteelHouse asserts that the remaining allegations in Paragraph 82 of
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the Complaint are conclusions of law to which no response is necessary, but to the
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extent it is deemed an allegation of fact, SteelHouse denies the allegations.
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83.
SteelHouse denies that it engaged in wrongful conduct, and therefore
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84.
17
85.
18
FOURTH CLAIM FOR RELIEF
19
(Libel California Civil Code 45)
20
21
22
86.
SteelHouse hereby incorporates by reference its responses set forth in

87.
SteelHouse admits that it represented that its products and services
23
consistently outperformed Criteos products and services. This representation was
24
based not on click counts, but on a combination of the products and services that
25
SteelHouse offers. SteelHouse denies that a head-to-head comparison is a
26
comparison of clicks between two vendors. Companies compare many things
27
when they compare products in head-to-head competitions. Click count is just one
28
factor. SteelHouse regularly outperforms Criteo in Segmentation, Campaign
ATTORNEYS AT LAW
LOS ANGELES
18
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.
10
89.
11
12
13
14
Creative Services, and Reporting and Services. SteelHouse denies that it
15
counterfeited clicks, and particularly denies that its representations about its
16
products and services were false, and therefore denies the allegations of Paragraph
17
18
90.
SteelHouse asserts that the allegations of Paragraph 90 of the
19
Complaint assert a conclusion of law to which no response is necessary, but to the
20
extent it is deemed an allegation of fact, SteelHouse denies that its statements were
21
libelous, and therefore denies the allegations of Paragraph 90 of the Complaint.
22
23
91.
SteelHouse denies that its statements were libelous, and therefore
24
FIFTH CLAIM FOR RELIEF
25
(Trade Libel)
26
27
92.
28
ATTORNEYS AT LAW
LOS ANGELES
19
1
2
3
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 Criteos
products and services. This representation was based not on click counts, but on a
combination of the products and services that SteelHouse offers. SteelHouse
10
11
Services, and Reporting and Services. SteelHouse therefore denies the remaining
12
allegations of Paragraph 94.
13
14
15
16
95.
SteelHouse denies that it made libelous statements, and therefore

96.
SteelHouse denies that it made libelous statements, and therefore
17
SIXTH CLAIM FOR RELIEF
18
(Violation of California Business & Professions Code 17200 et seq.

(Unfair Competition Law))
19
20
21
22
23
24
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
97.

98.

SteelHouse denies engaging in any unlawful or fraudulent conduct, and
particularly denies that it counterfeited clicks, and therefore denies the allegations
of Paragraph 98.
99.

20
SteelHouse denies engaging in any unlawful or wrongful conduct, and therefore
100. SteelHouse asserts that this allegation is a conclusion of law to which
SteelHouse denies engaging in any unlawful or wrongful conduct, and therefore
101. SteelHouse denies engaging in any unlawful or misleading conduct,
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
10
11
Complaint.
102. SteelHouse admits that it uses the wires of the United States in
12
interstate commerce. SteelHouse also admits that it targets e-tailers in multiple
13
states and various nations outside the United States. SteelHouse denies engaging
14
in any unlawful or misleading conduct, and particularly denies that it counterfeited
15
clicks, and therefore denies all remaining allegations of Paragraph 102 of the
16
Complaint.
17
103. SteelHouse denies engaging in any unlawful or misleading conduct,
18
and particularly denies that it counterfeited clicks, and therefore denies the
19
20
104. SteelHouse denies that it fraudulently stole attribution for sales or
21
inflated its performance metrics. SteelHouse asserts that the remaining allegations
22
are a conclusion of law to which no response is necessary, but to the extent they
23
are deemed allegations of fact, SteelHouse denies the remaining allegations of
24
25
26
27
SteelHouse denies engaging in any fraudulent conduct, and therefore denies the
28
ATTORNEYS AT LAW
LOS ANGELES
21
1
2
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))
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
106. SteelHouse denies that it counterfeited clicks or that it made false or
108. SteelHouse hereby incorporates by reference its responses set forth in

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
Criteos clients and potential clients, and SteelHouses clients and potential clients.
In the event that this allegation is a typographical error and is intended to refer to
SteelHouses 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, Criteos clients
and potential clients, and SteelHouses 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.
22
1
2
113. SteelHouse denies engaging in any unlawful or wrongful conduct, and

REQUEST FOR RELIEF
3
4
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
10
11
115. SteelHouse asserts the following affirmative defenses. There may be
12
additional affirmative defenses to the claims alleged by Criteo that are currently
13
unknown by SteelHouse. Therefore, SteelHouse reserves the right to amend its
14
Answer to allege additional affirmative defenses in the event that its discovery of
15
additional information indicates that they are appropriate. By asserting these
16
affirmative defenses, SteelHouse does not admit that it bears the burden of proving
17
these affirmative defenses. Criteo bears the burden of proving all of the elements
18
to support its claims.
19
20
21
22
FIRST AFFIRMATIVE DEFENSE

(Failure to State a Claim Upon Which Relief Can Be Granted)
116. Upon information and belief, Criteos claims are barred, in whole or
in part, because it has failed to state a claim for which relief can be granted.
23
SECOND AFFIRMATIVE DEFENSE
24
(Waiver, Estoppel, or Laches)
25
26
117. Upon information and belief, Criteos claims are barred by one or
more of the following doctrines: waiver, estopped, and laches.
27
THIRD AFFIRMATIVE DEFENSE
28
(Unclean Hands)
ATTORNEYS AT LAW
LOS ANGELES
23
1
2
118. Upon information and belief, Criteos claims are barred, in whole or
in part, by the doctrine of unclean hands.
FOURTH AFFIRMATIVE DEFENSE
(Justification)
5
6
119. Criteos claims are barred, in whole or in part, because SteelHouse

was engaged in lawful conduct.
FIFTH AFFIRMATIVE DEFENSE
(Privilege of Competition)
9
10

actions are protected by the privilege of competition.
11
SIXTH AFFIRMATIVE DEFENSE
12
(Intervening Causes)
13
14
121. Criteos claims are barred, in whole or in part, because the damages
claimed by Criteo were caused by or made worse by intervening causes.
15
SEVENTH AFFIRMATIVE DEFENSE
16
(Lack of Standing)
17
18
122. Criteos claims are barred, in whole or in part, because Criteo lacks
standing to bring forth its claims.
19
EIGHTH AFFIRMATIVE DEFENSE
20
(Lack of Causation)
21
123. Criteos claims are barred, in whole or in part, because SteelHouse did
22
not directly or proximately cause or contribute to any injury or damage alleged by
23
Criteo.
24
NINTH AFFIRMATIVE DEFENSE
25
(Speculative Damages)
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
124. Criteos claims are barred, in whole or in part, because any damages
claimed by Criteo are speculative.
TENTH AFFIRMATIVE DEFENSE
24
(No Punitive Damages)
125. Criteos claims are barred, in whole or in part, because punitive
damages are not available.
ELEVENTH AFFIRMATIVE DEFENSE
(Failure to Join Indispensable Party)
6
7
126. Criteos claims are barred, in whole or in part, because Criteo has
failed to join an indispensable party.
TWELFTH AFFIRMATIVE DEFENSE
(Truth)
10
11

has made truthful statements about its performance.
PRAYER FOR RELIEF ON PLAINTIFFS CLAIMS
12
13
SteelHouse respectfully demands judgment as follows:
14
A.
and denying all relief requested by Criteo;
15
16
For an order dismissing with prejudice all claims against SteelHouse
B.
That the Court find that SteelHouse is entitled to recover its costs of
17
defending suit, expenses, and reasonable attorneys fees, as permitted
18
by law; and
19
20
C.
That SteelHouse be awarded such other and further relief that the
Court may deem just and proper.
21
22
23
24
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
25
COUNTERCLAIMS
1
2
SteelHouse asserts the following counterclaims as a result of Criteos
unlawful conduct, aimed at stifling SteelHouses 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. Criteos 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
10
miraculously claims its click rate is somehow four times as high as the rest of the
11
industry.
12
2.
SteelHouse, an innovative company, entered the Ad Tech industry
13
relatively recently, and has taken the industry by storm. SteelHouse offers its
14
customers a best-in-class suite of marketing applications, including segmentation,
15
creative, campaign management, and reporting. This end-to-end suiteunlike
16
anything in the industryprovides a customizable, tailored approach to ad
17
campaigns. In contrast to Criteo, which completely controls its customers ad
18
campaigns, SteelHouse allows each customer the ability to create unique,
19
customizable ads tailored to its individual clients. SteelHouses innovative model
20
has succeeded in attracting customers and gaining market share. By offering
21
superior products and services and its customers greater choice and flexibility,
22
SteelHouse has succeeded in attracting customers from Criteo, despite Criteos
23
claimed market-leading click rate numbers.
24
3.
In an effort to win back customers, injure SteelHouse, and blunt
25
SteelHouses successful and lawful competition, Criteo has resorted to
26
gamesmanship and unlawful tactics. In doing so, Criteo hopes to protect the secret
27
to its past success: Artificially high and manufactured click count numbers.
28
Because Criteo charges its customers on a Pay-Per-Click (PCP) or Cost-Per-
ATTORNEYS AT LAW
LOS ANGELES
26
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. Criteos 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
10
customers, prior to the filing of any lawsuit. These false allegations have not only
11
caused SteelHouse substantial harm by damaging its reputation in the Ad Tech
12
industry, but have also resulted in loss of actual and potential clients, and loss of
13
revenue.
14
5.
Criteos playbook is transparent. If it can discredit SteelHouse, an
15
innovative newcomer that does not charge e-tailers based on clicks, Criteo can
16
maintain a business model that rewards Criteo for its false and misleading behavior
17
and distract unwanted attention from Criteos own conduct. It also creates a
18
barrier to entry that helps ensure Criteos continued industry dominance. Criteos
19
false and misleading actions and statements have caused SteelHouseand the Ad
20
Tech industry as a wholesubstantial and irreparable injury. SteelHouse seeks
21
actual, punitive, treble, and compensatory damages, and attorneys fees, as well as
22
preliminary and permanent injunctions prohibiting Criteo from: (i) falsely
23
attributing clicks with no attributable source; (ii) falsely attributing clicks that
24
occur after a consumer has purchased a product from a website and engaging in
25
cluster click counting; (iii) engaging in other conduct designed to artificially
26
inflate its click count numbers; and (iv) disparaging SteelHouse, its officers,
27
agents, servants, employees, attorneys, and any other persons who are acting in
28
concert or participation with them, it services, or its products to actual and
ATTORNEYS AT LAW
LOS ANGELES
27
potential clients, consumers, or competitors.

I.
2
3
4
5
6.
THE PARTIES
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 socit anonyme
under the laws of the French Republic, with its principal place of business in Paris,
France.
II.
8
9
8.
JURISDICTION AND VENUE
This Court has jurisdiction over these counterclaims pursuant to 28
10
U.S.C. 1331 and 1367 because this Court has jurisdiction over the
11
counterclaims that arise under federal law, and supplemental jurisdiction over
12
claims that arise under the same facts.
13
9.
This Court also has jurisdiction over these counterclaims pursuant to
14
28 U.S.C. 1332 because there is complete diversity of citizenship of the parties.
15
SteelHouse is a citizen of Delaware and California and Criteo is a citizen of a
16
foreign state, and the matter in controversy exceeds the sum of $75,000, exclusive
17
of interests and costs.
18
10.
III.
19
20
Venue is proper in this District under 28 U.S.C. 1391(b).
11.
FACTUAL BACKGROUND
Criteo is a multi-national, publicly traded, long-time player in the Ad
21
Tech industry and earns ten times the revenue as SteelHouse. Criteos model is
22
built on advertisers relinquishing control of their advertising campaigns to Criteo.
23
Criteos customers do not control the visual creative in the ads, nor the targeting.
24
Criteos customers provide Criteo with a large budget and receive very little in
25
return. Criteo shares little information with its customers, and promises
26
performance without customer insight or control. Unlike SteelHouse, Criteo is a
27
black box and takes a one-size-fits-all approach to Ad Tech.
28
ATTORNEYS AT LAW
LOS ANGELES
12.
The Ad Tech industry is an evolving industry. Online marketing

28
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, publishers website, exchanges, DSP (Demand Side
Platform), DMP (Data Management Platform), advertisers, and web analytics
providers like Google Analyticsall of which take place within milliseconds.
13.
First, a consumer goes to a publishers website (e.g., New York
Times) and data is sent from the consumer to the publisher and back to the
consumers 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
10
impression loads in a users web browser, information about the page and the user
11
is passed to an ad exchange, which auctions it off to the advertisers. Millions of
12
auctions are occurring in parallel. The winners ad is then loaded into the webpage
13
nearly instantly in an attempt to get the consumer to ultimately visit the
14
advertisers website. The whole process takes just milliseconds to complete.
15
14.
Despite the fact that ad space in the exchanges are priced in terms of
16
Cost-Per-Thousand-Impressions (CPM), the price for 1,000 ad impressions,
17
Criteo uses a CPC pricing model. In the exchanges, Ad Tech firms bid on ad space
18
on the publishers website through auctions. The price of those impressions is
19
often determined through real-time bidding and takes place in milliseconds as a
20
users computer loads a webpage.
21
15.
Criteo, however, allows its clients to set a price at which it is willing
22
to pay-per-click. For example, a Criteo client may set the CPC at 50 cents. But
23
Criteo alone determines what it will bid in exchanges, and bids $2.00 per thousand
24
impressions. If the client is unhappy with the number of clicks and decides to
25
increase the CPC from 50 cents to $1.00, Criteo could continue to bid on the
26
exchange at $2.00 per thousand impressions, but now gets 50 cents more per click,
27
increasing its profits while not actually increasing customer performance. This
28
model deceives customers. Criteos customers believe that an increased CPC bid
ATTORNEYS AT LAW
LOS ANGELES
29
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.
Criteos business model is based on promising e-tailers the most
clicks, which refers to when a consumer clicks on an online ad. Criteos 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.
10
Such practices have damaged SteelHouse, other advertisers, and the Ad Tech
11
industry as a whole by making online marketing vendors less trustworthy to their
12
customers and consumers as a whole.
13
18.
Criteo, however, gains significant advantage by controlling click
14
counts. Criteos insatiable appetite for clicks is proven in its advertisements of its
15
numbers: Criteo claims it has the highest click rate in the industry, somehow
16
outperforming its competitors by more than 400 percent, including industry giants
17
Google, Facebook, and others. No company has ever come close to the number of
18
clicks that Criteo self-reports. See Figure 1.
19
20
21
22
23
24
25
26
27
28
ATTORNEYS AT LAW
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30
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
19.
As early as 2012, Criteo started proclaiming its click rates are the
18
highest in the industry, claiming it achieve[s] ten times higher click through rates
19
than the market average, having achieved around .06 percent and rising. In 2014,
20
at the Nicolaus Technology, Internet, & Media Conference, Criteos Executive
21
Chairman and Co-founder, Jean-Baptiste Rudelle, touted that Criteos click
22
through rate is on average 3 or 4 times higher than the typical click through rate
23
you would see in the internet. In 2015, Criteo also claimed that its click through
24
rate is seven times the industry average. Criteos website currently claims that
25
marketers using our platform have seen . . . average click-through rates of over
26
25%. Criteo even proclaims that by using their services clients have seen up to
27
203% increase in click through rates.
28
ATTORNEYS AT LAW
LOS ANGELES
20.
But more than half (52%) of Criteos clicks have no attributable

31
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, Criteos 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 Criteos clicks. In June 2016, SteelHouse examined web
logs and tracking pixels for three of these overlapping customers (Customer A,
10
11
12
Customer B and Customer C) to determine the source of Criteos clicks.

22.
SteelHouse determined that 40% of Criteos clicks for Customer A
had no attributable source. See Figure 2.
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ATTORNEYS AT LAW
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32
1
2
23.
SteelHouse determined that 61.36% of Criteos clicks for Customer B
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
24.
SteelHouse determined that 48.69% of Criteos clicks for Customer C
21
22
23
24
25
26
27
28
ATTORNEYS AT LAW
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33
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
25.
Criteo also generates fake clicks after consumers purchase a product.
16
Advertising systems generally stop serving consumer ads once the consumer has
17
made a purchase from a particular website. Criteo, however, does not. Up to 8
18
percent of Criteos clicks occur after a consumer has made a purchase on a
19
particular website, during a period of time that most other e-tailers stop serving an
20
ad. By fraudulently generating clicks, Criteo is able to advertise more than four
21
times the click rate as everyone else in the industry, including industry giants like
22
Facebook and Google.
23
26.
In addition to the timing of these clicks, these clicks often appear as
24
clusters of clickswhere multiple clicks are being attributed to Criteo from the
25
same site in rapid succession. 16% of Criteos clicks are from users clicking the
26
same advertisement within a 30-minute period. This is eight times the industry
27
standard. Criteo charges its clients for all of these clicks, further inflating its click
28
count and revenue.
ATTORNEYS AT LAW
LOS ANGELES
34
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 attributionthe method Criteo
bases its CPC model upondue 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. Criteos fraudulent behavior in counterfeiting
10
clicks has damaged SteelHouse and prohibited SteelHouse from being able to
11
compete fairly for e-tail clients focused on click rates.
12
29.
By falsely inflating its click count numbers, Criteos statements
13
regarding its high click count have deceived, or are intended to deceive, actual and
14
potential customers of Criteo and divert actual and potential customers from
15
SteelHouse.
16
30.
Nonetheless, some customers still chose SteelHouse over Criteo. In
17
an effort to explain customers rationale for choosing SteelHouse over Criteo,
18
Criteo has generated a malicious and false attack against SteelHouse in an effort to
19
discredit SteelHouse, its business model, and ultimately win back customers.
20
Criteo has falsely claimed to current and potential SteelHouse customers that
21
SteelHouse was purposely and maliciously altering its click-count numbers, and
22
stealing attributions to demonstrate that it outperformed Criteo in a variety of
23
metrics. Criteo sent emails to actual and potential clients of both Criteo and
24
SteelHouse, and made oral representations to SteelHouses current and potential
25
clients that SteelHouse was intentionally stealing attributions to deceive customers.
26
31.
For instance, on May 9, 2016, prior to sending a cease and desist letter
27
or filing a lawsuit, and knowing that SteelHouse was working to resolve any issues
28
relating to attribution with Criteo, John Shea, a member of Criteos salesforce sent
ATTORNEYS AT LAW
LOS ANGELES
35
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 Criteos
services. In fact, that client had not worked with Criteo for over six months. This
client also reached out to SteelHouse regarding Criteos persistence in accusing
SteelHouse of fraud. Indeed, David Nutt sent this client several emails in a matter
10
of days and described SteelHouses conduct as hairy and accused SteelHouse of
11
inflated click and post-click volumes. Between May 10 and May 13, David Nutt
12
similarly pursued several SteelHouse clients.
13
33.
On May 12, 2016, Shaun Seaman, another member of Criteos
14
salesforce, engaged in identical tactics, sent a number of similar emails to
15
SteelHouses clients, resulting in SteelHouses clients questioning SteelHouses
16
business practices.
17
34.
Criteos attack on SteelHouse also included a number of oral
18
conversations that Criteo representatives had with SteelHouse customers, prior to
19
the initiate of any lawsuit, accusing SteelHouse of fraud and deceptive business
20
practices.
21
35.
Criteo knew that its statements were false and/or misleading. In fact,
22
Criteo knew that the alleged fraudulent behavior it accused SteelHouse of doing
23
was unintentional, not fraudulent, and was based on different attribution methods
24
(methods of identifying the actions of online customers that contribute to sales, and
25
assigning values to those actions). Criteo knew that SteelHouse was collaborating
26
with Criteo to address the alleged issue. Criteo and SteelHouse discussed releasing
27
a statement regarding the issue, and SteelHouse made edits to that statement. But
28
Criteo never informed SteelHouse, which clients were going to receive this email
ATTORNEYS AT LAW
LOS ANGELES
36
nor did Criteo tell SteelHouse that it was going to target SteelHouse clients that
were not even working with Criteo.
36.
Criteos false and/or misleading statements about SteelHouses
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 SteelHouses products and services. As a result of
Criteos false and/or misleading statements, SteelHouse lost actual and potential
clients, costing SteelHouse lost revenue.
10
37.
Criteos actions have damaged SteelHouse. Indeed, over twenty-five
11
customers have left SteelHouse and informed SteelHouse that it was directly a
12
result of Criteos accusations about SteelHouses conduct. This Counterclaim
13
follows.
14
FIRST COUNTERCLAIM
15
16
Violations of Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a),

(False and/or Misleading Advertising)
17
38.
18
19
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
20
Counterclaims, Criteo has violated Section 43(a) of the Lanham Act, which
21
prohibits false and misleading advertising.
22
40.
Criteo has made false and misleading statements in commercial
23
advertising about the nature, quality and characteristics of Criteos products and
24
services, including that Criteo generates more than four times the number of clicks
25
than its competitors.
26
41.
The above-referenced statements were false or misleading, because at
27
least half of Criteos clicks have no attributable source. At least 8 percent of its
28
clicks are generated after a consumer has already purchased a product from a
ATTORNEYS AT LAW
LOS ANGELES
37
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 Criteos click count, which
Criteo then uses to induce customers to use its products and services.
42.
By falsely inflating its click count numbers, Criteos statements have
deceived, or are intended to deceive, actual and potential customers of Criteo and
divert actual and potential customers from SteelHouse.
8
9
43.
Criteos deception was material to and likely to influence the
purchasing decisions of e-tailers, because Criteo advertises four times the click rate
10
as any other company, which influences the purchasing decisions of e-tailers that
11
are focused on click rates.
12
44.
Criteo caused its false and misleading statements to enter interstate
13
commerce because its products and services are advertised and sold across state
14
lines through the internet. Criteo advertised and sold its products and services to e-
15
tail clients throughout the United States.
16
45.
Criteos false and misleading statements have injured SteelHouse. As
17
a result of Criteos false and misleading statements, SteelHouse has lost business.
18
As a further result of Criteos false and misleading statements, the advertising
19
industry as a whole has been injured, and Criteo has lessened the good will
20
associated with SteelHouses products.
21
SECOND COUNTERCLAIM
22
23
Violation of California Business & Professions Code 17500 et seq.

(False Advertising)
24
46.
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES

47.
Criteo committed acts of false and misleading advertising within the
meaning of California Business & Professions Code 17500 et. seq..

48.

38
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 Criteos 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
10
product, and that occur in click clusters, artificially inflate Criteos click count,
11
which Criteo then uses to induce customers to use its products and services.
12
50.
By falsely inflating its click count numbers, Criteos statements have
13
deceived, or are intended to deceive, actual and potential customers of Criteo and
14
divert actual and potential customers from SteelHouse.
15
51.
Criteos deception was material to and likely to influence the
16
purchasing decisions of e-tailers because it advertises four times the click rate as
17
any other company, which influences the purchasing decisions of e-tailers that are
18
focused on click rates.
19
52.
On information and belief, Criteo engages in the unlawful business
20
activities in State of California and has its U.S. headquarters in the State of
21
California. Accordingly, Criteo made or disseminated these false and misleading
22
advertisements in California.
23
53.
Criteos false and misleading statements have injured SteelHouse. As
24
a result of Criteos false and misleading statements, SteelHouse has lost business.
25
As a further result of Criteos false and misleading statements, the advertising
26
industry as a whole has been injured, and Criteo has lessened the good will
27
associated with SteelHouses products.
28
ATTORNEYS AT LAW
LOS ANGELES
39
THIRD COUNTERCLAIM
2
3
Violation of California Business & Professions Code 17200 et seq.

(Unfair Competition Law)
54.
5
6

55.
Criteo has committed one or more acts of unfair competition within
the meaning of California Business & Professions Code 17200 et seq. (UCL).
Criteos acts and practices constitute unlawful, unfair and/or fraudulent business
acts or practices within the meaning of the UCL, including, but not limited to,
10
falsely reporting the number of clicks by claiming clicks with no attributable
11
source, and claiming clicks after a consumer has purchased a product from a
12
website.
13
56.
Criteos acts and practices are unlawful because they violate section
14
43(a) of the Lanham Act, 15 U.S.C. 1125(a), California Business & Professions
15
Code 17500 et seq., and constitute intentional interference with contract and
16
intentional interference with prospective economic advantage as set forth above
17
and below.
18
19
20
57.
Criteos 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
21
care, that its methods of falsely counting clicks with no attributable source, and
22
counting clicks after consumers made purchases from a website challenged herein
23
were false and/or misleading.
24
59.
SteelHouse has suffered injury in fact and lost money as a result of
25
Criteos unlawful acts and practices, and has been irreparably harmed and will
26
continue to suffer irreparable harm by reasons of these violations.
27
28
ATTORNEYS AT LAW
LOS ANGELES
40
FOURTH COUNTERCLAIM
Intentional Interference with Contract
3
4
60.
61.
SteelHouse has maintained contracts with its e-tail clients.
62.
Criteo knew that SteelHouse had contractscalled Insertion Orders
7
8
9
with its e-tail clients.

63.
10
11
than its competitors. Criteo has done this by artificially inflating its click count
12
numbers, including by falsely claiming clicks that have no attributable source, and
13
falsely claiming clicks that occur after a consumer has purchased a product.
14
64.
Criteo has also intentionally made false and misleading statements
15
about SteelHouses attribution method to SteelHouses e-tail clients, and wrongly
16
accused SteelHouse of fraud.
17
18
19
65.
As a result of Criteos false and misleading statements, SteelHouse
lost actual customers with whom it had contractual relationships.

66.
Criteos actions have damaged SteelHouse by causing SteelHouse to
20
lose clients, and by extension, revenue. SteelHouses damages include all lost
21
profits, expenses and prospective profits, in an amount to be determined at trial.
22
FIFTH COUNTERCLAIM
23
Intentional Interference with Prospective Economic Advantage
24
25
26
67.

68.
SteelHouse has maintained continuing economic relationships with
27
numerous e-tailers that probably would have continued to result in future economic
28
benefit to SteelHouse.
ATTORNEYS AT LAW
LOS ANGELES
41
69.
Criteo knew that SteelHouse had relationships with these e-tailers.
70.
advertising about the nature, quality, and characteristics of Criteos 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.
8
9
10
11
71.
Criteo has also intentionally made false and misleading statements
about SteelHouses attribution method to SteelHouses e-tail clients, and wrongly

accused SteelHouse of fraud.
72.
As a result of Criteos false and misleading click count numbers, and
12
false and misleading statements accusing SteelHouse of fraud, Criteo has induced
13
actual clients to either stop contracting with SteelHouse or decrease their
14
advertising budget with SteelHouse, and potential clients were dissuaded from
15
retaining SteelHouse. Criteos conduct and statements constitute false and
16
misleading advertising within the meaning of Section 43(a) of the Lanham Act, 15
17
U.S.C. 1125(a), as well as violations of California Business & Professions Code
18
sections 17200 et seq. and 17500 et seq., as set forth above. SteelHouse has
19
suffered actual harm from Criteos wrongful conduct in the amount of lost revenue
20
and potential revenue, in an amount to be determined at trial.

PRAYER FOR RELIEF
21
22
23
24
WHEREFORE, Counterclaimant hereby prays for judgment in its favor as

follows:
(a)
A preliminary injunction and permanent injunction enjoining and
25
restraining Criteo, its officers, agents, servants, employees, attorneys, and other
26
persons who are acting in concert or participation with them during the pendency
27
of this action and thereafter perpetually from:
28
ATTORNEYS AT LAW
LOS ANGELES
(i)
falsely attributing clicks with no attributable source;

42
(ii)
product from a website and engaging in cluster click counting;
2
3
(iii)
engaging in other conduct designed to artificially inflate its click

count numbers; and
4
5
falsely attributing clicks that occur after a consumer has purchased a
(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,
10
compensatory, treble, and punitive damages, and restitution, as permitted by law,
11
in amounts to be determined at trial;
12
13
14
(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.
15
16
17
18
19
20
21
Dated: July 25, 2016

Daniel Scott Schecter
Marvin S. Putnam
Laura R. Washington
By /s/Daniel S. Schecter_________
22
23
24
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
43
DEMAND FOR JURY TRIAL
SteelHouse hereby demands a jury trial on all claims and issues triable to a jury.
3
4
5
6
7
8
9
Dated: July 25, 2016

Marvin S. Putnam
Laura R. Washington
By /s/Daniel S. Schecter_________
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
44

Criteo Vs SteelHouse

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Criteo Vs SteelHouse

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Case 2:16-cv-04207-SVW-MRW Document 21 Filed 07/26/16 Page 1 of 44 Page ID #:364

LATHAM & WATKINS LLP

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Hon. Stephen V. Wilson

STEEL HOUSE, INC.,

ANSWER AND COUNTERCLAIMS

CASE NO. 2:16-CV-04207 SVW

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

Case 2:16-cv-04207-SVW-MRW Document 21 Filed 07/26/16 Page 2 of 44 Page ID #:365

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

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

ANSWER TO THE COMPLAINT

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

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

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

how the Ad Tech industry works.

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

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

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

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

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

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

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

Case 2:16-cv-04207-SVW-MRW Document 21 Filed 07/26/16 Page 3 of 44 Page ID #:366

consumer clicking on Criteos ads. Criteo prices its products on a pay-per-click

Criteos ads. Indeed, Criteos model is so intensely focused on delivering clicks,

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

By contrast, SteelHouses business model is the antithesis of Criteos.

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

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

SteelHouse gives total control to the customer. SteelHouses business model is

black box operation.

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

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

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

Case 2:16-cv-04207-SVW-MRW Document 21 Filed 07/26/16 Page 4 of 44 Page ID #:367

advertisers website. These products and services are highly appealing to

their ads to stand out to consumers.

Criteo over its competitors. But no longer.

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

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

business model and litigation strategy.

SteelHouse admits that it is an online marketing vendor. SteelHouse

SteelHouses success is attributable to its unique, customer-specific approach to

advertising, as opposed to Criteos standard, one-size-fits-all approach.

SteelHouse denies engaging in any unlawful or misleading conduct,

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

SteelHouse denies engaging in any unlawful or misleading conduct,

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

Case 2:16-cv-04207-SVW-MRW Document 21 Filed 07/26/16 Page 5 of 44 Page ID #:368

the allegations of Paragraph 3 of the Complaint.

SteelHouse denies engaging in any unlawful or misleading conduct,

of Paragraph 4 of the Complaint.

SteelHouse denies engaging in any unlawful or misleading conduct,

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,