Criteo vs. Steelhouse - SteelHouse's Amended Answer and Counterclaims

Case 2:16-cv-04207-SVW-MRW Document 36 Filed 09/20/16 Page 1 of 59 Page ID #:664
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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.
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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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Plaintiff,
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CASE NO. 2:16-CV-04207 SVW

(MRWx)
CRITEO S.A.,
v.
STEEL HOUSE, INC.,
Defendant.
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AMENDED ANSWER AND

COUNTERCLAIMS OF DEFENDANT
STEEL HOUSE, INC. TO CRITEO
S.A.S COMPLAINT AND DEMAND
FOR JURY TRIAL
Hon. Stephen V. Wilson
Action Filed: June 13, 2016
Trial Date: Not Yet Determined
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STEEL HOUSE, INC.,

Counter-Claimant,
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v.
CRITEO S.A.,
Counter-Defendant.
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ATTORNEYS AT LAW
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STEEL HOUSE, INC.S AMENDED ANSWERS AND

COUNTERCLAIMS TO CRITEO S.A.S COMPLAINT
Case Number: 2:16-cv-04207 SVW (MRWx)
Defendant and counter-claimant Steel House, Inc. (SteelHouse), by its
attorneys, hereby responds to the complaint and demand for jury trial of plaintiff
and counter-defendant Criteo S.A. (Criteo), upon information and belief based
on a reasonable investigation of the allegations, as follows:
AMENDED 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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client spreads its money around to a portfolio of multiple marketing vendors in
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the hopes of maximizing its return. Many online advertisers (e-tailers) reallocate
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their money on a weekly or even daily basis. Nothing is static in the industry, and
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daily opportunities to serve advertisements to consumers on websites numbers in
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the billions.
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Although Criteo and SteelHouse compete for clients in the Ad Tech industry,
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Criteo and SteelHouse offer drastically different products and use very different
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pricing models. Criteo offers a standard, non-customizable solution and competes
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by promising companies the most clicks, which merely refers to a consumer
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2 COUNTERCLAIMS TO CRITEO S.A.S COMPLAINT
clicking on Criteos ads. Criteo prices its products on a pay-per-click model,
where clients 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.
By contrast, SteelHouses business model is the antithesis of Criteos.
Where Criteo charges per click, SteelHouse believes that clicks do not singularly
define advertising, and charges clients for ads served (ads placed on the websites),
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not ads clicked. While Criteo offers a standard, one-size-fits-all advertising
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approach, SteelHouse offers its clients an end-to-end, customizable, unlimited
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solution for creating and executing ad campaigns. And where Criteo believes that
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it should have complete control over its clients ad campaigns; SteelHouse gives
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total control to the client. SteelHouses business model is about transparency, and
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offering its clients a creative solution, unlike Criteos 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, client-focused products and services. For instance, SteelHouse
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provides its clients with the ability to develop, create, customize, and launch ad
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campaigns. With SteelHouse, a client can create an advertisement from scratch or
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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 clients with
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real-time data, which show its clients how consumers are reacting to their ads, and
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allows its clients to respond to consumers while they are on the advertisers
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website. These products and services are highly appealing to advertisers, who
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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 clients want a unique, tailored approach to online
advertising, they are choosing SteelHouse over Criteo, despite Criteos apparent
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 clients to choose SteelHouse over Criteo.
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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, client-specific approach to
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advertising, as opposed to Criteos standard, one-size-fits-all approach.
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2.
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 clients, and therefore denies the allegations of Paragraph 2 of the Complaint.
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3.
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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
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the allegations of Paragraph 3 of the Complaint.
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4.
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
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,
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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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6.
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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 client service, which many clients have found preferable
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over Criteos standardized, rigid approach to online advertising. 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
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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13.
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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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a common Ad Tech industry term. On these bases, SteelHouse denies the
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remaining allegations of Paragraph 14 of the Complaint.
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15.
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.
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SteelHouse denies the allegations of Paragraph 16 of the Complaint,
and particularly denies that the dominant web analytics solution, Google Analytics,
uses Last-Click Attribution or tracks clicks.
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17.
SteelHouse denies that Google Analytics, Adobe Analytics, and IBM
Coremetrics can track and measure clicks or Last-Click Attribution, and on that
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,
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SteelHouse lacks knowledge or information sufficient to form a belief as to
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Criteos conversion rate or ROAS, and therefore denies the remaining allegations
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of Paragraph 20 of the Complaint.
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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 clients a
unique, customizable product that is dramatically different from Criteos standard,
one-size-fits-all model. SteelHouse lacks knowledge or information sufficient to
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.

22.
SteelHouse admits that it and Criteo compete for retargeting business,
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but avers that SteelHouse offers its clients a unique, customizable product that is
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dramatically different from Criteos standard, one-size-fits-all model. SteelHouse
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offers retargeting as one part of a larger set of services it offers its clients.
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SteelHouse denies the remaining allegations of Paragraph 22 of the 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
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superior to its competitors. SteelHouse denies all remaining allegations of
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27.
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, and on these bases, admits that it
has beaten Criteo in head-to-head comparisons on these factors, among others.
SteelHouse otherwise denies the allegation of Paragraph 27 of the Complaint, and
particularly denies that its claims in this email were false or misleading, or that it
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 client of
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SteelHouse. SteelHouse lacks knowledge or information sufficient to form a belief
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as to the remaining allegations of Paragraph 29 of the Complaint, and, on that
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basis, denies such allegations.

Criteo Uncovers SteelHouses Unlawful Scheme
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30.
SteelHouse admits that in late spring or early summer 2015, a head-to-
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head comparison of Criteos and SteelHouses products and services occurred at
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the request of TOMS Shoes (TOMS). SteelHouse denies the remaining
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31.
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
SteelHouse avers that it won TOMS business because SteelHouse has numerous
features that Criteo does not offer. SteelHouse offers custom segmentation, self-
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service campaign management, andCreativewhich allows clients to develop,
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create, customize, and launch ad campaigns. SteelHouse lacks knowledge or
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information sufficient to form a belief as to what TOMS believed, and as to
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TOMS actions with respect to Criteo, and on such basis, denies the allegations.
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SteelHouse denies all remaining allegations of Paragraph 31 of the 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.
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Creative Services, and Reporting and Services. SteelHouse also denies that its
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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.
SteelHouse lacks knowledge or information sufficient to form a belief as to the
remaining allegations of Paragraph 35 of the Complaint, and, on that basis, denies
such allegations.
36.
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 solely track clicks; rather such tools track site visits
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and other metrics. SteelHouses code ensures that visits are properly recorded
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using open Application Programming Interfaces APIs supplied by analytics
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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 solely track clicks; rather such tools track site visits
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and other metrics.
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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.
42.
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
Criteos Chief Revenue Officer (Criteos CRO), and that Criteos CRO alerted
SteelHouse to a potential issue with attribution. SteelHouse denies the remaining
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such allegations.
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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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SteelHouse admits that it received log files from Criteo. SteelHouse
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denies the log files show counterfeit clicks. SteelHouse further admits that it
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informed Criteo that it was investigating the issue. SteelHouse denies all
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49.

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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
provided comments to the statement. SteelHouse lacks knowledge or information
Complaint, and, on that basis denies such allegations.
52.
SteelHouse denies Paragraph 52 of the Complaint.
53.
SteelHouse admits that it contacted its clients 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
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engaged in fraud or counterfeited clicks.
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as to whether Criteo performed another head-to-head comparison with another
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client, and as to whether SteelHouse allegedly beat Criteo in the comparison, and,
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on that basis, denies such allegations. SteelHouse denies that a head-to-head
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comparison is a comparison of clicks between two vendors. Companies compare
SteelHouse denies engaging in any unlawful or misleading conduct, and
particularly denies that it engaged in any acts of counterfeiting, and therefore
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,
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.

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
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Creative Services, and Reporting and Services. SteelHouse therefore denies the
63.
SteelHouse denies that it made any false statements. SteelHouse also
Services, and Reporting and Services. SteelHouse otherwise lacks knowledge and
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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clients 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
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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
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that its principal place of business is in California, and that it has advertised and
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sold products and services to e-tail clients through the United States. SteelHouse
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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.
SECOND CLAIM FOR RELIEF
(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
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
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that it counterfeited clicks. SteelHouse denies that a head-to-head comparison is a
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comparison of clicks between two vendors. Companies compare many things
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when they compare products in head-to-head competitions. Click count is just one
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factor. SteelHouse regularly outperforms Criteo in Segmentation, Campaign
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Management, Creative, Creative Services, and Reporting and Services.
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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
conclusion of law to which no response is necessary, but to the extent it is deemed
an allegation of fact, SteelHouse denies it made any misrepresentations, and
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.
SteelHouse admits that it knew TOMS worked with other marketing
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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,
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on that basis, denies such allegations.
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81.
SteelHouse denies that it counterfeited clicks or stole attribution.
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SteelHouse lacks knowledge or information sufficient to form a belief as to why
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any of Criteos clients stopped contracting with Criteo or decreased their
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advertising budget with Criteo, or why potential clients decided not to sign on with
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Criteo, and, on that basis, denies such allegations. SteelHouse denies all remaining
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82.
SteelHouse denies that it engaged in wrongful acts, counterfeited
clicks, or made false or misleading statements, and therefore denies the associated
allegations. SteelHouse asserts that the remaining allegations in Paragraph 82 of
the Complaint are conclusions of law to which no response is necessary, but to the
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
84.
85.
10
FOURTH CLAIM FOR RELIEF
11
(Libel California Civil Code 45)
12
13
14
86.
SteelHouse hereby incorporates by reference its responses set forth in

87.
SteelHouse admits that it represented that its products and services
15
consistently outperformed Criteos products and services. This representation was
16
based not on click counts, but on a combination of the products and services that
17
SteelHouse offers. SteelHouse denies that a head-to-head comparison is a
18
comparison of clicks between two vendors. Companies compare many things
19
when they compare products in head-to-head competitions. Click count is just one
20
factor. SteelHouse regularly outperforms Criteo in Segmentation, Campaign
21
Management, Creative, Creative Services, and Reporting and Services.
22
SteelHouse further denies that it has advertised head-to-head competitions as part
23
of its regular business advertisements. SteelHouse therefore denies that its
24
representations were false, and denies all remaining allegations of Paragraph 87 of
25
the Complaint.
26
88.
27
SteelHouse denies that its representations to clients and potential
clients were false. SteelHouse lacks knowledge or information sufficient to form a
28
ATTORNEYS AT LAW
LOS ANGELES
belief as to the remaining allegations of Paragraph 88 of the Complaint, and, on
that basis, denies such allegations.
89.
Creative Services, and Reporting and Services. SteelHouse denies that it
counterfeited clicks, and particularly denies that its representations about its
products and services were false, and therefore denies the allegations of Paragraph
10
11
90.
SteelHouse asserts that the allegations of Paragraph 90 of the
12
Complaint assert a conclusion of law to which no response is necessary, but to the
13
extent it is deemed an allegation of fact, SteelHouse denies that its statements were
14
libelous, and therefore denies the allegations of Paragraph 90 of the Complaint.
15
16
91.
SteelHouse denies that its statements were libelous, and therefore
17
FIFTH CLAIM FOR RELIEF
18
(Trade Libel)
19
20
21
22
23
92.

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
24
it represented that its products and services consistently outperformed Criteos
25
products and services. This representation was based not on click counts, but on a
26
combination of the products and services that SteelHouse offers. SteelHouse
27
28
ATTORNEYS AT LAW
LOS ANGELES
Services, and Reporting and Services. SteelHouse therefore denies the remaining
allegations of Paragraph 94.
5
6
7
8
95.
SteelHouse denies that it made libelous statements, and therefore

96.
SteelHouse denies that it made libelous statements, and therefore
SIXTH CLAIM FOR RELIEF
10
(Violation of California Business & Professions Code 17200 et seq.

(Unfair Competition Law))
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
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.

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
28
ATTORNEYS AT LAW
LOS ANGELES
false representations, and therefore denies the allegations of Paragraph 101 of the
Complaint.
102. SteelHouse admits that it uses the wires of the United States in
interstate commerce. SteelHouse also admits that it targets e-tailers in multiple
states and various nations outside the United States. SteelHouse denies engaging
in any unlawful or misleading conduct, and particularly denies that it counterfeited
clicks, and therefore denies all remaining allegations of Paragraph 102 of the
Complaint.
103. SteelHouse denies engaging in any unlawful or misleading conduct,
10
and particularly denies that it counterfeited clicks, and therefore denies the
11
12
104. SteelHouse denies that it fraudulently stole attribution for sales or
13
inflated its performance metrics. SteelHouse asserts that the remaining allegations
14
are a conclusion of law to which no response is necessary, but to the extent they
15
are deemed allegations of fact, SteelHouse denies the remaining allegations of
16
17
18
19
SteelHouse denies engaging in any fraudulent conduct, and therefore denies the
20
21
106. SteelHouse denies that it counterfeited clicks or that it made false or
22
misleading statements, and therefore denies the allegations of Paragraph 106 of the
23
Complaint.
24
107. SteelHouse denies the allegations of Paragraph 107 of the Complaint.
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
SEVENTH CLAIM FOR RELIEF
(Violations of California Business & Professions Code 17500 et seq.

(False Advertising Law))
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
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.
113. SteelHouse denies engaging in any unlawful or wrongful conduct, and
27
28
ATTORNEYS AT LAW
LOS ANGELES
1
2
REQUEST FOR RELIEF

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.
8
9
AFFIRMATIVE DEFENSES
115. SteelHouse asserts the following affirmative defenses. There may be
10
additional affirmative defenses to the claims alleged by Criteo that are currently
11
unknown by SteelHouse. Therefore, SteelHouse reserves the right to amend its
12
Amended Answer to allege additional affirmative defenses in the event that its
13
discovery of additional information indicates that they are appropriate. By
14
asserting these affirmative defenses, SteelHouse does not admit that it bears the
15
burden of proving these affirmative defenses. Criteo bears the burden of proving
16
all of the elements to support its claims.
17
18
19
20
FIRST AFFIRMATIVE DEFENSE

(Failure to State a Claim Upon Which Relief Can Be Granted)
To All Causes of Action
116. Upon information and belief, Criteos claims are barred, in whole or
21
in part, because it has failed to state a claim for which relief can be granted for
22
each of its claims. With respect to its first and seventh claims, Criteo failed to
23
allege facts sufficient to allege that SteelHouse made false or misleading
24
statements in advertising, or that those statements were sufficiently disseminated to
25
the purchasing public. With respect to its second claim, Criteo failed to allege
26
facts sufficient to state that SteelHouse engaged in fraudulent acts. With respect to
27
its third and sixth causes of action, Criteo failed to allege facts sufficient to show
28
that SteelHouse engaged in wrongful or unlawful activity. With respect to its
ATTORNEYS AT LAW
LOS ANGELES
fourth and fifth causes of action, Criteo failed to allege facts sufficient to show that
SteelHouse made false statements about Criteo.
SECOND AFFIRMATIVE DEFENSE
(Waiver, Estoppel, or Laches)
117. Upon information and belief, Criteos claims are barred by one or
more of the following doctrines: waiver, estoppel, and laches. Criteo told
SteelHouse that Criteo believed SteelHouse was engaging in fraudulent activity,
but then allowed SteelHouse to remedy the alleged activity. Criteo informed
10
SteelHouse that Criteo wanted to resolve this dispute amicably and that if
11
SteelHouse did as Criteo wished, the dispute would go away. SteelHouse was
12
therefore induced to change its code regarding its attribution system at Criteos
13
request in order to pacify Criteo. Criteos claims are therefore barred under the
14
doctrines of waiver or estoppel. Criteo also had knowledge of the advertising
15
emails containing allegedly false statements upon which Criteo bases its first and
16
seventh causes of action for months, but Criteo failed to take any action or even
17
complain of the allegedly false advertisements. Criteos causes of action are
18
therefore barred by the doctrines of laches.
19
THIRD AFFIRMATIVE DEFENSE
20
(Unclean Hands)
21
22
118. Upon information and belief, Criteos claims are barred, in whole or
23
in part, by the doctrine of unclean hands. SteelHouse is informed and believes, and
24
therefore alleges, that Criteo is engaged in a fraudulent scheme to falsely inflate its
25
performance metrics that it reports to clients and potential clients. Criteo also
26
disparaged SteelHouse to SteelHouses clients, knowing that its statements against
27
SteelHouse were false. Criteo has therefore engaged in unlawful behavior, and its
28
claims are barred by the doctrine of unclean hands.
ATTORNEYS AT LAW
LOS ANGELES
FOURTH AFFIRMATIVE DEFENSE
(Justification)
119. Criteos claims are barred, in whole or in part, because SteelHouse
was engaged in lawful conduct. SteelHouses actions, with respect to the subject
matters alleged in each cause of action, were undertaken in good faith, with the
absence of intent to injure Criteo or other third parties, and constitute lawful,
proper, and justified means to further the sole purpose of engaging in and
continuing SteelHouses business. SteelHouse truthfully asserted its belief that its
10
products and services were superior to Criteos, and SteelHouse engaged in lawful
11
competition.
12
FIFTH AFFIRMATIVE DEFENSE
13
(Privilege of Competition)
14
15
16
actions are protected by the privilege of competition. SteelHouse and Criteo are
17
competitors, and the competitive privilege allows SteelHouse to make truthful
18
claims as to its products and services in comparison to Criteos products and
19
services. The competitive privilege thus bars Criteo from recovery on each of its
20
causes of action.
21
SIXTH AFFIRMATIVE DEFENSE
22
(Intervening Causes)
23
24
121. Criteos claims are barred, in whole or in part, because the damages
25
claimed by Criteo were caused by or made worse by intervening causes, including
26
the actions and decisions of multiple third party e-tail clients who independently
27
made decisions with respect to running ad campaigns with the marketing vendor of
28
their choice.
ATTORNEYS AT LAW
LOS ANGELES
SEVENTH AFFIRMATIVE DEFENSE
(Lack of Standing)
122. Criteos claims are barred, in whole or in part, because Criteo lacks
standing to bring forth its claims. Criteo has not plead facts sufficient to show that
it has suffered actual injury from any alleged acts by SteelHouse of which Criteo
complains. Rather, Criteo claims injury to the Ad Tech industry as a whole and
third party e-tail clients. Therefore, Criteo lacks standing to bring its suit.
EIGHTH AFFIRMATIVE DEFENSE
10
(Lack of Causation)
11
12
123. Criteos claims are barred, in whole or in part, because SteelHouse did
13
not directly or proximately cause or contribute to any injury or damage alleged by
14
Criteo.
15
NINTH AFFIRMATIVE DEFENSE
16
(Speculative Damages)
17
18
124. Criteos claims are barred, in whole or in part, because any damages
19
claimed by Criteo are speculative. Criteos injuries are based on its belief that any
20
e-tail clients that worked with SteelHouse would have chosen to work with Criteo
21
if the e-tail clients were aware of SteelHouses alleged conduct. Criteos alleged
22
damages are thus based on lost profits which are based on the decisions of multiple
23
third parties, and cannot be proven with certainty.
24
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
TENTH AFFIRMATIVE DEFENSE
(No Punitive Damages)
To The Second, Third, Fourth, and Fifth Causes of Action
125. Criteos claims are barred, in whole or in part, because punitive
damages are not available under applicable provisions of law, including but not
limited to California Civil Code Section 45(a).
ELEVENTH AFFIRMATIVE DEFENSE
(Failure to Join Indispensable Party)
10
126. Criteos claims are barred, in whole or in part, because Criteo has
11
failed to join an indispensable party pursuant to California Code of Civil Procedure
12
section 389.
13
TWELFTH AFFIRMATIVE DEFENSE
14
(Truth)
15
To The First, Fourth, Fifth, Sixth, and Seventh Causes of Action
16
17

has made truthful statements about its performance.
PRAYER FOR RELIEF ON PLAINTIFFS CLAIMS
18
19
SteelHouse respectfully demands judgment as follows:
20
A.
and denying all relief requested by Criteo;
21
22
For an order dismissing with prejudice all claims against SteelHouse
B.
That the Court find that SteelHouse is entitled to recover its costs of
23
defending suit, expenses, and reasonable attorneys fees, as permitted
24
by law; and
25
26
C.
That SteelHouse be awarded such other and further relief that the
Court may deem just and proper.
27
28
ATTORNEYS AT LAW
LOS ANGELES
AMENDED COUNTERCLAIMS
1
2
SteelHouse asserts the following counterclaims arising from Criteos
unlawful attempts to thwart legitimate competition by SteelHouse in the
burgeoning online advertising market.
1.
Criteo is a long-time player in the advertising technology (Ad Tech)
industry. Criteo offers online advertisers (e-tailers) an archaic, one-size-fits-all,
non-customizable approach to ad campaigns. To induce e-tailers to hand over
complete control to Criteo (along with a large budget), Criteo claims its click rate
is the highest in the retargeting industryat times claiming it is somehow four
10
times the industry average.
11
2.
SteelHouse is an innovative newcomer that has taken the Ad Tech
12
industry by storm. SteelHouse offers its clients a best-in-class suite of advertising
13
applications, including segmentation, creative, campaign management, and
14
reporting.1 This end-to-end suiteunlike anything ever before offered in the
15
industryprovides each client the ability to create unique, customizable ads and
16
campaigns tailored to its various customers. By offering superior products and
17
services with greater choice and flexibility, SteelHouse has succeeded in attracting
18
clients and gaining market share.
19
3.
In an effort to win back clients, injure SteelHouse, and blunt
20
SteelHouses successful and lawful competition, Criteo has engaged in devious
21
tactics. In doing so, Criteo hopes to protect the secret to its past success:
22
23
24
25
26
27
28
ATTORNEYS AT LAW
LOS ANGELES
Segmentation is an advertising practice that divides the marketplace into subsets

of consumer segments. Advertisers then decide which portion to target. For
example, an advertiser who is a jeweler may initially want to serve ads to
consumers who have searched for jewelry. SteelHouse would target these
consumers and serve ads based on the consumers search history. Later, the
advertiser may wish to segment further, and narrow the field to those who have
searched for gold necklaces. SteelHouses user-friendly suite gives advertisers
complete control to implement that change. In short, SteelHouses User Interface
allows customers to choose and control segments throughout any campaign.
SteelHouse also provides more than a thousand reporting metrics to give e-tailers
unlimited ways to review, report, and optimize campaign and marketing goals.
artificially high and manufactured click-count numbers. Because Criteo charges its
clients on a Pay-Per-Click (PPC) or Cost-Per-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 and enhancing its click numbers.
4.
Indeed, SteelHouse learned, through extensive analysis, that 3.6% of
Criteos users generate 25% of its clicks. Such behavior by real human users is
highly unlikely. This behavior is indicative of adware, bots, click farms, or other
code created by Criteo or its affiliates to generate clicks and drive up Criteos
click-count numbers.
10
5.
Criteo has engaged in unlawful conduct, particularly false advertising,
11
trade libel, and unfair competition. By fraudulently inflating its click-count
12
numbers, Criteo has deceived its own clients, and diverted actual and potential
13
clients from SteelHouse. Criteo has compounded that behavior by making false,
14
misleading, and malicious statements about SteelHouse directly to its clients (prior
15
to the filing of any lawsuit). These false allegations have not only caused
16
SteelHouse substantial harm by damaging its reputation in the Ad Tech industry,
17
but have also resulted in loss of actual and potential clients, and loss of revenue.
18
6.
Criteos playbook is transparent. By discrediting SteelHouse, an
19
innovative newcomer that does not charge e-tailers based on clicks, Criteo seeks to
20
maintain a business model that rewards Criteo for its false and misleading behavior
21
and distract unwanted attention from Criteos own conduct. Criteos actions create
22
a barrier to entry that helps ensure Criteos continued industry dominance.
23
7.
Criteos false and misleading actions and statements have caused
24
SteelHouseand the Ad Tech industry as a wholesubstantial and irreparable
25
injury. SteelHouse seeks actual, punitive, treble, and compensatory damages, and
26
attorneys fees, as well as a permanent injunction prohibiting Criteo from: (i)
27
enhancing and manufacturing its click count by falsely attributing clicks with no
28
attributable source; (ii) enhancing and manufacturing its click count by falsely
ATTORNEYS AT LAW
LOS ANGELES
attributing clicks that occur after a consumer has purchased a product from a
website and engaging in click cluster generation; (iii) engaging in other conduct
designed to artificially inflate its click-count numbers; and (iv) disparaging
SteelHouse, its officers, agents, servants, employees, attorneys, and any other
persons who are acting in concert or participation with it, its services, or its
products to actual and potential clients, consumers, or competitors.

I.
7
8
9
10
8.
THE PARTIES
Counterclaimant SteelHouse is incorporated under the laws of
Delaware with its principal place of business in California.

9.
SteelHouse is informed and believes, and thereon alleges, that
11
Counter-defendant Criteo is incorporated as a Socit Anonyme under the laws of
12
the French Republic, with its principal place of business in Paris, France.
II.
13
14
10.
JURISDICTION AND VENUE
This Court has jurisdiction over these counterclaims pursuant to 28
15
U.S.C. 1331 and 1367 as this Court has jurisdiction over the counterclaims that
16
arise under federal law, and supplemental jurisdiction over claims that arise under
17
the same facts.
18
11.
This Court also has jurisdiction over these counterclaims pursuant to
19
28 U.S.C. 1332 because there is complete diversity of citizenship of the parties.
20
SteelHouse is a citizen of Delaware and California; Criteo is a citizen of a foreign
21
state; and the matter in controversy exceeds the sum of $75,000, exclusive of
22
interests and costs.
23
12.
III. FACTUAL BACKGROUND

The Online Marketing Ad Tech Industry
24
25
26
Venue is proper in this District under 28 U.S.C. 1391(b).
13.
The Ad Tech industry is an evolving industry. Online marketing
27
vendors are constantly adapting to keep up with a rapidly evolving marketplace.
28
Generally, the Ad Tech industry works through billions of interactions daily
ATTORNEYS AT LAW
LOS ANGELES
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.
14.
First, a consumer goes to a publishers website (e.g., the Los Angeles
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
impression loads in a users web browser, information about the page and the user
is passed to an ad exchange, which auctions it off to the advertisers. Millions of
10
auctions occur in parallel. The winners ad is then loaded into the webpage nearly
11
instantly in an attempt to get the targeted consumer to ultimately visit the
12
advertisers website. The whole process takes just milliseconds to complete.
13
15.
There are a large number of competitors in the Ad Tech Industry. E-
14
tailers often work with multiple marketing firms at the same time and determine
15
where and how to allocate their advertising budget on a daily basis. E-tailers track
16
vendors performance through web analytic providers by providing them with a
17
unique tracking code. Web analytic providers track user engagement with
18
websites and other devices.
19
16.
Criteo is a multi-national, publicly traded, long-time player in the Ad
20
Tech industry. Criteo earns at least ten times the revenue of SteelHouse. Criteos
21
model is built on advertisers relinquishing control of their advertising campaigns to
22
Criteo. Criteos clients do not control the visual creative in their ads, impressions,
23
spend, or geographical targeting. Indeed, a Criteo client informed SteelHouse that
24
with [Criteos] dashboard, we werent able to have much control over the
25
account. Criteos own salesforce embraces this control-centric model. In a
26
January 29, 2016 email from Criteo salesperson David Hughes to Chuck Melber at
27
Nomad Goods, Inc., Hughes stated that theres literally no extra dev[elopment]
28
work we do the creative for you.
ATTORNEYS AT LAW
LOS ANGELES
17.
Criteo shares little information with its clients, and promises
performance without client insight or control. Indeed, Criteo flaunts that its clients
provide Criteo with a large budget with minor oversight. For instance, during a
presentation at the Bank of America Merrill Lynch Global Technology Conference
in June 2014, Criteos Chief Financial Officer, Benoit Fouilland, stated that 70% of
its revenue is generated through an uncapped budget where as long as we can
provide volume at the return of expenses . . . they are willing to take it. Unlike
SteelHouse, Criteo is a black box and takes a one-size-fits-all approach to Ad
Tech.
Criteo Claims The Highest Click Rate In The Industry
10
18.
11
Criteos business model is based on promising e-tailers the most
12
clicks. Clicks refers to any page view on an advertisers website that contains
13
Criteo in the query string parameters of the unique tracking code that each e-tail
14
client gives to the marketing vendor in order to track performance. In these
15
tracking codes, Criteo appears in the utm parameter of the tracking code
16
whenever a consumer clicks on a Criteo ad on a publishers website, for example:
17
http://www.example.com/home.html?utm_source=Criteo_x&utm_medium=
18
display.
19.
19
Criteos singular reliance on clicks is proven in its advertisements of
20
its numbers. Criteo claims it has the highest click rate in the retargeting industry,2
21
somehow outperforming its competitors by more than 400 percent, including
22
industry giants Google and Facebook. No company has ever come close to the
23
number of clicks that Criteo self-reports. See Figure 1.
24
Retargeting is a form of online advertising. Retargeting is a cookie-based

technology that uses JavaScript code to track a users internet activity. For
example, an advertiser has a code or pixel on its website. Every time a new visitor
26 comes to an advertisers website (i.e. Adidas), the code or tracking pixel drops a
browser cookie enabling the advertiser to track the users internet activity. Later,
27 when that same user browses the internet, the cookie allows marketing vendors
(such as Criteo and SteelHouse) to display the ads of an advertiser whose website
28 the user previously visited (i.e. Adidas).
25
ATTORNEYS AT LAW
LOS ANGELES
1
2
Figure 1
3
4
5
6
7
8
9
10
11
12
13
14
15
20.
16
As early as 2012, Criteo started proclaiming its click rates as the
17
highest in the retargeting industry. In May 2012, Criteo claimed in a comment to
18
DMEurope, a European newswire available via the internet, that it achieve[s] ten
19
times higher click through rates than the market average, having achieved around
20
.06 percent and rising. In February 2014, at the Stifel Nicolaus Technology,
21
Internet & Media Conference held at the Fairmont Hotel in San Francisco,
22
California, which is attended by marketing vendors and e-tail clients in the Ad
23
Tech industry,3 Criteos Executive Chairman and Co-founder, Jean-Baptiste
24
3
Participants included Activision Blizzard, Inc., AT&T, Benchmark Electronics,

Citrix Systems, Credit Karma, Inc., Go Daddy, Pandora Media, Inc., and many
26 others. The full list of participants at the conference is available at:
25
27
28
ATTORNEYS AT LAW
LOS ANGELES
http://www.stifel.com/newsletters/eimages/2014/corporate_events/tech_conference
/invite/stifel_tech_2014_invite_ce.pdf.
Rudelle, touted that Criteos click through rate is on average 3 or 4 times higher
than the typical click through rate you would see in the internet.
21.
In 2015, Eric Eichmann, who at the time was President and COO of
Criteo, created a presentation for investorswhich is readily available on Criteos
websitein which Criteo claimed that its click through rate is seven times the
industry average. See Figure 2. All of Criteos statements regarding its click rates,
however, are false and/or misleading.
Figure 2
9
10
11
12
13
14
15
16
17
18
19
20
21
SteelHouse Exposes Criteos Fraudulent Scheme

22.
Criteos click rate is not entirely based on actual user activity, and as a
22
result is false and/or misleading. On information and belief, Criteos click rate is
23
fraudulent because a large percentage of its clicks occur in click clusters as a result
24
of adware, click bots (a software application that runs automated tasks, such as
25
repetitively clicking ads), or code created by Criteo or its affiliates to manufacture
26
fake clicks and mask the source of these clicks.
27
28
ATTORNEYS AT LAW
LOS ANGELES
23.
SteelHouse conducted a detailed analysis of web logs for 99 e-tail
clients that overlap with Criteo, including all 37 shared clients,4 to analyze the
source of Criteos clicks. This analysis is across 14 industries (e.g. fashion, sports,
healthcare, media, and others), includes more than 5.5 billion rows and 21
terabytes of data, and is ongoing. Using this data, SteelHouse analyzed the
individual case activity of each internet user on an advertisers website by using
the internet users globally unique identifier (GUID).5 Page view data logs,
which include GUID information, indicate how the user arrived at the advertisers
website. Page view data logs include both the referrer and the parent referrer. This
10
data, which spans from January 1, 2016 to September 11, 2016, shows an
11
outlandishly high percentage of Criteo clicks have no attributable source.

24.
12
More than half (54.8%) of Criteos clicks have no attributable source.
13
None. Put simply, more than half of the claimed clicks do not originate from any
14
known website or publisher. This means the source of origin or the parent referrer
15
for the click is empty. Although the source of an ad may sometimes be unknown
16
due to security technology, like Secure Sockets Layer (SSL), the average
17
percentage of clicks from unattributable sources due to security for any marketing
18
vendor generally is less than 8%. Criteos percentage of clicks that have no
19
attributable source is more than six times the industry average. Because all
20
marketing vendors, including Criteo and SteelHouse, bid on ad space from the
21
same publishers (the majority of which are not secure), it is implausible that Criteo
22
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ATTORNEYS AT LAW
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Of the 99 overlapping clients analyzed by SteelHouse, not all clients are

currently active clients of either SteelHouse or Criteo. Rather, these e-tail clients
are overlapping as between Criteo and SteelHouse because the advertiser has
installed a tracking pixel for each vendor. The tracking pixel enables both
SteelHouse and Criteo to track data on the advertisers website, regardless of
whether the e-tail client is current running an ad campaign with either Criteo or
SteelHouse. By contrast, shared e-tailers are client who have in the past or are
currently running both SteelHouse and Criteo ad campaigns at the same time.
5
Websites generate user GUIDs in order to keep visitors identities anonymous.
could have six times the number of clicks with no attributable source than the rest
of the retargeting industry.
25.
Having a referrer or attributable source (i.e. indication of where the
click originated) is standard internet protocol. The sheer volume of Criteo clicks
that have no attributable sourcemore than 50%suggests that Criteo purposely
stripped out the publishers information or that these clicks are fake. In other
words, these clicks were not generated by actual human users.
8
9
26.
By counting and reporting clicks that have no attributable source,
Criteo falsely elevates its click count. For e-tail clients singularly focused on click
10
counts, Criteos fraudulent behavior makes it impossible for any other marketing
11
vendor to compete for the business of these e-tailers.
12
27.
On information and belief, Criteo also generates clicks after
13
consumers purchase a product. Because the ultimate goal of serving ads is actual
14
e-commerce sales, marketing vendors generally stop serving consumer ads once
15
the consumer has made a purchase from a particular website. Criteo, however,
16
does not.
17
28.
SteelHouse analyzed 99 overlapping clients, from January 1, 2016 to
18
September 11, 2016, and found that 20.31% of Criteos clicks occur after a
19
consumer has made a purchase on a particular website. Criteos practice of serving
20
post-sale ads drives up Criteos click rate enabling it to charge its clients more,
21
while providing nothing more in return.
22
29.
SteelHouses analysis further revealed a pattern in Criteos clicks:
23
click clusters. Click clusters are patterns of clicks that occur in high volume from
24
the same user for the same advertiser in a short period of time. Across the 99
25
advertisers analyzed, every advertiser had instances of click clusters. In most
26
advertisers, the highest instances of click clustering numbered at 100 clicks or
27
more for a single user.
28
ATTORNEYS AT LAW
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30.
As explained above, 54.8% of Criteo clicks have no attributable
source. But for the other 45.2% where the referrer was known, SteelHouses
analysis showed that click clusters were occurring readily on non-reputable
websites. For instance, click clusters occurred on the following websites:
winloot.com, unwinit.com, and greenatom.net (which is no longer on the internet).
See Figure 3. In contrast, when Criteos ads were served on Facebook, a reputable
publisher, click clusters never occurred.
Figure 3
9
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ATTORNEYS AT LAW
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31.
As part of its click cluster analysis, SteelHouse analyzed the
percentage of times a user generated two or more clicks within a 30-minute period
across the 99 accounts from January 1, 2016 to September 11, 2016. SteelHouse
discovered that a significant percentage of Criteos clicks often appear as click
clusters. 44.9% of Criteos apparent clicks are from users clicking the same
advertisement within a 30-minute period. This is thirteen times the industry
standard.
32.
This means that almost 1 out of every 2 users who clicks on a Criteo
ad generates at least one subsequent click within the following 30 minutes.
10
Tellingly, there is often no post-click activity or interaction with the advertisers
11
website that one typically sees with a real user. This lack of activity indicates
12
these clicks are not a result of actual internet users making authentic clicks.
13
33.
When SteelHouse examined subsequent clicks after a 30 minute time-
14
period, it discovered that a significant percentage of Criteos clicks occur in click
15
clusters even over a longer timeframe. Criteos click clusters thus are not limited
16
to 30 minutes after an initial click, but continue to occur for hours, days, and weeks
17
after a users initial click on an ad.
18
34.
SteelHouse analyzed all 99 advertisers from January 1, 2016 to
19
September 11, 2016 to determine the number of times a single user clicked on an
20
ad for the same advertiser in a rolling 30-day window. 25% of Criteos clicks
21
occur in click clusters, where a single user clicked on an ad for the same
22
advertiser at least eight times to as many as 1,311 times in a 30-day period. Such
23
behavior by a real human user is highly unlikely. This behavior is indicative of
24
adware, bots, click farms, or other code created by Criteo or its affiliates to
25
generate clicks and drive up Criteos click count numbers.
26
35.
SteelHouses data analysis also revealed that a startling percentage of
27
Criteos overall clicks occur in click clusters. While a real human user may click
28
on a single ad or even two or three ads for the same advertiser within a 30-day
ATTORNEYS AT LAW
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period, it is improbable that a real user would click ads at the high volumes
discovered in the data.
36.
Across all 99 advertisers analyzed, 37.5% of clicks occurred in click
clusters of five of more clicks for a single user clicking a single advertiser in a 30-
day period. 20.1% of clicks occurred in click clusters of ten or more clicks in a 30-
day period. 13.0% of clicks occurred in click clusters of 15 or more clicks; 9.2%
of clicks occurred in click clusters of 20 or more clicks; and 2.4% of all clicks
occurred in click clusters of 50 or more clicks in a 30-day period. See Figure 4.
Figure 4
10
11
12
13
14
15
16
17
18
19
20
21
37.
But while these clicks account for a large percentage of Criteos total
22
click count, only a small fraction of users account for these clicks. 3.6% of
23
users clicked a Criteo ad for the same advertiser eight or more times in a 30-day
24
period, but these users generated more than 25% of Criteos total clicks.
25
26
27
28
ATTORNEYS AT LAW
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38.
Individual clients show similar results. For Client A,6 20.8% of clicks
occurred in click clusters of five or more clicks for a single user in a rolling 30-day
time period; 10.9% of clicks occurred in click clusters of ten or more clicks; 7.8%
of clicks occurred in click clusters of 15 or more clicks; 6.1% of clicks occurred in
click clusters of 20 or more clicks; and 3.7% of clicks occurred in click clusters of
50 or more times.
39.
These clusters occur frequently throughout the entire time period
analyzed, with click clusters intermixed with single clicks by individual users in a
rolling 30-day time period. See Figure 5 (click clusters indicated in red). In
10
addition to the frequency with which these clusters occur, there is often very little
11
time between clicks, with multiple clicks occurring in rapid succession in a rolling
12
30-day time period. See Figure 6 (time between clicks highlighted in yellow).
13
Figure 5
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24
25
26
6
Client A preferred that its name was not mentioned in SteelHouses Amended
Answer and Counterclaims. To respect that e-tailers wishes, that e-tailer is
28 referred to as Client A.
27
ATTORNEYS AT LAW
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Figure 6
2
3
4
5
6
7
8
9
10
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40.
A small portion of users generated a significant portion of Client As
13
clicks: a mere 3.7% of users clicked on a Client A ad at least five times in a 30-
14
day period, but accounted for nearly one quarter of all of the clicks.
15
41.
SteelHouse discovered the same pattern when analyzing Criteos
16
clicks for Brilliant Earth. For Brilliant Earth, 33.0% of clicks occurred in click
17
clusters of five or more clicks for a single user in a rolling 30-day time period;
18
17.1% of clicks occurred in click clusters of ten or more clicks; 10.7% of clicks
19
occurred in click clusters of 15 or more clicks; 7.4% of clicks occurred in click
20
clusters of 20 or more clicks; and 2.0% of clicks occurred in click clusters of 50 or
21
more clicks. Like Client A, a small portion of users generated a significant portion
22
of Brilliant Earths clicks: 3.8% of users clicked on a Brilliant Earth ad at least 7
23
times in a 30-day period, but accounted for nearly one quarter of all of the clicks.
24
42.
Although in a completely different industry, the same pattern
25
remained true when analyzing Criteos clicks for Lens.com. For Lens.com, 23.4%
26
of clicks occurred in click clusters of five or more clicks for a single user in a
27
rolling 30-day time period; 15.5% of clicks occurred in click clusters of ten or
28
more clicks; 13.0% of clicks occurred in click clusters of 15 or more clicks, 12.3%
ATTORNEYS AT LAW
LOS ANGELES
of clicks occurred in click clusters of 20 or more clicks; and 9.7% of clicks
occurred in click clusters of 50 or more clicks. Again, like Client A and Brilliant
Earth, a small portion of users generated a significant portion of Lens.coms clicks:
3.3% of users clicked on a Lens.com ad at least 5 times in a 30-day period, but
accounted for nearly one quarter of all of the clicks. This pattern of a small
percentage of users accounting for 25% of Criteos clicks is rampant throughout
the data SteelHouse analyzed.
43.
Further, SteelHouse made another unbelievable discovery when it
focused its analysis on individual users and IP addresses. Across all 99 accounts
10
analyzed over the entire 9 month period, the most active user clicked a Criteo ad
11
an unbelievable 1,536 times. The most active IP address clicked a Criteo ad
12
20,647 times across 96% of all 99 advertisers queried. Such behavior is not typical
13
of real human users, but rather adware, bots, click farms, or other code created by
14
Criteo or its affiliates to generate clicks and drive up Criteos click-count numbers.
15
44.
Despite Criteos fantastic traffic rates, Criteos post-click sales do not
16
boast similar success. This is not surprising, given Criteos pervasive click
17
clusters. By examining web log data across the 99 accounts, SteelHouse
18
discovered that Criteos referred traffic has a 76.08% bounce or abandonment rate.
19
A bounce rate is the rate at which a user abandons the site with one page view and
20
no interaction with the site within 30 minutes of clicking on the ad. Once again,
21
such activity is uncharacteristic of a human user browsing the internet. Criteos
22
bounce rate is more than double the industry average. See Figure 7. And despite
23
Criteo generating on average four times the number of sessions as its competitors,
24
Criteos average conversion rate is barely half of its competitors. Because the
25
behavior patterns of the users are contrary to actual internet users typical web
26
behavior, these patterns indicate that bots, adware, or other automated code
27
generated these clicks.
28
ATTORNEYS AT LAW
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Figure 7
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Criteos Practices Harm SteelHouse And The Ad Tech Industry

45.
Upon information and belief, in an effort to drive up its click numbers
16
and generate increased revenue, Criteo or its affiliates regularly inject adware into
17
users personal computers, serve ad impressions through the adware, and buy
18
inventory from non-reputable sourcesnon-secure websites or publishers that are
19
untrustworthy.
20
46.
Adware is a type of software that runs in the background of a
21
computer unknown to the user. Adware can automatically display or download
22
advertising material when a user is online. By using adware, Criteo is able to
23
inject its ads into a users computer even when unwanted and take credit for clicks
24
that are not occurring through an actual human user.
25
47.
Criteos use of adware was even called out by renowned Harvard
26
professor Benjamin Edelman, who has a long history of fraud investigation. In
27
April 2015, Professor Edelman gave a presentation at the 2015 UK Investor Show
28
on his research of the Ad Tech industry. In this presentation, Professor Edelman
ATTORNEYS AT LAW
LOS ANGELES
documented instances where adware by a company called Revizer injected a
Zappos ad onto Zappos.com on behalf of Criteo. This process resulted in Criteo
charging advertisers for traffic that already occurred on Zapposs website. Such
practices have damaged SteelHouse, other advertisers, and the Ad Tech industry by
making online marketing vendors less trustworthy to their clients and consumers.
48.
These practices have raised concern as far-reaching as the U.S.
Senate. 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
10
11
computers and bots that artificially inflate click rates.

49.
Since Criteo refuses to reveal its methodology, Criteo is able to
12
manipulate the numbers it reportsthereby generating more revenue based on
13
fraudulent clicks and click clusters. Criteos fraudulent behavior in counterfeiting
14
clicks and generating click clusters has damaged SteelHouse and prohibited
15
SteelHouse from being able to compete fairly for e-tail clients singularly focused
16
on click rates.
17
50.
By fraudulently generating clicks and click clusters, Criteo reports
18
false data into Google Analytics and other analytic systems. Criteo is then able to
19
falsely advertise click rates that are at least four times higher than its competitors
20
in the retargeting industry, which affects e-tailers decisions when selecting a
21
marketing vendor. More disturbingly, Criteo charges its clients for all of these
22
clicks, further inflating its click count and revenue. Upon information and belief,
23
at least $400 million of Criteos projected 2016 revenue of $1.7 billion is based on
24
fraudulent clicks.
25
51.
Furthermore, the inclusion of fraudulent clicks in analytics systems
26
skews the relative performance of Criteo versus other marketing vendors giving
27
Criteo an unfair and artificial advantage. In turn, advertisers who are unaware of
28
ATTORNEYS AT LAW
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this behavior are making inaccurate decisions around budget allocations that
directly benefits Criteo.
52.
By falsely inflating its click-count numbers through click clusters and
other practices, Criteos statements regarding its click rate have deceived, or are
intended to deceive, actual and potential clients of Criteo and divert actual and
potential clients from SteelHouse. For clients whose only concern is click rate,
SteelHouse has lost clients and potential clients based on Criteos fraudulent click-
count numbers during head-to-head competitions. This has allowed Criteo to
consistently beat SteelHouse in click count during these competitions. As a
10
result of Criteos fraudulent click-count numbers, SteelHouse lost the following
11
clients: Arhaus, Moda Operandi, TrueFacet, 1800Flowers, and TOMS, amongst
12
others.
13
53.
Further, SteelHouse has relied on Criteos statements about its click
14
rate in making business decisions. Due to Criteos statements regarding its
15
industry-leading click rates, SteelHouses business model is not click-centric.
16
Indeed, it refuses to charge its clients on a CPC basis. Rather, to differentiate itself
17
from Criteo and compete in the retargeting industry, SteelHouse focused on
creating distinct products and services, including its new Creative Ad Suite.
Criteos Unlawful Attempt To Discredit SteelHouse
19
18
20
54.
Despite Criteos claimed click rates, some clients still choose
21
SteelHouse over Criteo. To combat this competition, Criteo generated a malicious
22
and false attack against SteelHouse in an effort to discredit the upstart, and
23
ultimately win back clients.
24
55.
Criteos sales employees have falsely claimed to current and potential
25
SteelHouse clientsincluding, but not limited to, Brilliant Earth, Nike, RevZilla,
26
Treehouse Island, Inc., EVO Gear, MyBinding.com, VistaPrint, Deckers Outdoor
27
Corporation, Brads Deals, SVSound, RIPT Apparel, Unique Vintage, Gardners
28
Supply Company, Novosbed, Turn5, Windstar Cruises, Eventbrite, Carved, and
ATTORNEYS AT LAW
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Jack Rogers USAthat SteelHouse was purposely and maliciously altering its
click-count numbers, and stealing attributions to demonstrate that it outperformed
Criteo in a variety of metrics.
56.
Despite SteelHouse informing Criteo that SteelHouse implemented a
code change on May 5, 2016 to ensure no such attributions could occur, Criteo
made oral and written representations to SteelHouses current and potential clients
accusing SteelHouse of intentionally stealing attributions to deceive clients. Criteo
knew or should have known these statements were false, as through its discussions
with SteelHouses executives, it knew that any misattribution was inadvertent and
10
not intentional. Moreover, following SteelHouses code change on May 5, 2016,
11
Criteo Senior Product Manager Robert Shaw told SteelHouse on a conference call
12
on May 12, 2016, that it would take him up to six months to QA (conduct quality
13
assurance) and determine if the change was effective. Without waiting to verify
14
that the change had worked, Criteo continued its campaign to contact SteelHouses
15
current and potential clients and disparage the company and wrongly claim that
16
SteelHouse was stealing Criteo clicks.
17
57.
Prior to sending a cease and desist letter or filing a lawsuit, and
18
knowing that SteelHouse was working with Criteo to resolve any issues relating to
19
attribution, Criteos salesforce commenced its attack on SteelHouse.
20
58.
For instance, on May 9, 2016, John Shea, a member of Criteos
21
salesforce sent emails to SteelHouse clients, including Windstar Cruises, RIPT
22
Apparel, Eventbrite, and others. John Sheas emails to SteelHouse clients
23
referenced inflated SteelHouse performance levels, and mislead a number of
24
SteelHouse clients into believing that SteelHouse was somehow inflating its
25
metrics relating to performance.
26
27
59.
Also on May 9, 2016, Molly Winter, a Criteo employee, sent similar
emails to SVSound, stating that SteelHouse was producing artificially positive
28
ATTORNEYS AT LAW
LOS ANGELES
performance results, which resulted in SVSound immediately contacting
SteelHouse to question its practices.
60.
On May 10, 2016, Dave Nutt, a Criteo employee, sent an email to
Unique Vintage, a SteelHouse client, even though that client was not currently
using Criteos services. In fact, that client had not worked with Criteo since the
previous year. 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 of days and described SteelHouses conduct as hairy
and accused SteelHouse of inflated click and post-click volumes. Between May
10
9 and May 13, 2016, David Nutt similarly pursued several SteelHouse clients,
11
including RIPT Apparel, Windstar Cruises, and Eventbrite.
12
61.
On May 12, 2016, Shaun Seaman, another member of Criteos
13
salesforce, engaged in identical tactics. He sent numerous emails to SteelHouse
14
clients, including Brads Deals, JibJab Media, Jack Rogers USA, and Carved.
15
Shaun Seamans actions resulted in SteelHouses clients questioning SteelHouses
16
business practices.
17
62.
Criteos attack on SteelHouse also included a number of oral
18
conversations that Criteo representatives had with SteelHouse clients and
19
prospects, including Shutterfly, Yodle, Brilliant Earth, and others. In these
20
conversations, Criteo accused SteelHouse of fraud and deceptive business
21
practices. These conversations also occurred prior to the filing of any lawsuit.
22
63.
Criteo knew or should have known that its statements were false
23
and/or misleading. In fact, Criteo knew that the alleged fraudulent behavior it
24
accused SteelHouse of was unintentional, and not fraudulent. Criteo knew that
25
SteelHouse was collaborating with Criteo to address the alleged issue. Criteo and
26
SteelHouse discussed releasing a statement regarding the issue. SteelHouse even
27
made edits to that statement. But Criteo never informed SteelHouse which clients
28
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were going to receive this email. Nor did Criteo tell SteelHouse that it was going
to target SteelHouse clients that were not even working with Criteo.
64.
Criteos false and/or misleading statements about SteelHouses
business practices damaged the commercial reputation of SteelHouse. Criteo knew
or should have known that actual and potential clients 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, and revenue.
65.
Criteos actions have damaged SteelHouse. Indeed, over twenty-five
10
clients, including VistaPrint, Nike, TOMS, Thrift Books, Shutterfly, RevZilla, and
11
others, have left SteelHouse, or substantially reduced the amount of money they
12
spend with SteelHouse on advertising. These clients informed SteelHouse that
13
they departed or reduced spend as a direct result of Criteos accusations about
14
SteelHouses conduct.
15
FIRST COUNTERCLAIM
16
17
Violations of Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a),

(False and/or Misleading Advertising)
18
66.
19
20
SteelHouse hereby incorporates by reference its allegations contained
in Paragraphs 1 through 65 of these Counterclaims, as if fully set forth herein.

67.
For the reasons alleged in Paragraphs 1 through 65 of these
21
Counterclaims, Criteo has violated Section 43(a) of the Lanham Act, which
22
prohibits false and misleading advertising.
23
68.
Criteo made false and misleading statements in commercial
24
advertising about the nature, quality and characteristics of Criteos products and
25
services, including that its click rate is the highest in the retargeting industryfour
26
times its competitors. At times, Criteo even claims its click rate is somehow seven
27
28
ATTORNEYS AT LAW
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69.
The above-referenced statements were false or misleading because
Criteo or its affiliates inflate its click count through the use of adware, click bots,
or code that Criteo or its affiliates developed. More than half of Criteos clicks
have no attributable source. 20.31% of its clicks are generated after a consumer
has already purchased a product from a website, 44.9% of its clicks occur in click
clusters of two or more clicks in a 30-minute window, and 25% of Criteos clicks
occur in click clusters, of at least eight clicks, in a 30-day period. The inclusion of
clicks without an attributable source, generated after a consumer has already
purchased a product, and that occur in click clusters, artificially inflate Criteos
10
click count. Criteo then advertises its enhanced click rate to induce clients to use
11
its products and services. Criteos statements regarding its click count are false
12
and/or misleading.
13
70.
Criteos statements deceived, or are intended to deceive, actual and
14
potential clients of Criteo and divert actual and potential clients from SteelHouse.
15
Based on Criteos claimed superior click rate, SteelHouses potential and current
16
clients decided to work with Criteo rather than SteelHouse.
17
71.
Criteos deception was material to and likely to influence the
18
purchasing decisions of e-tailers, because Criteo advertises, at least, four times the
19
click rate as any other retargeting company. Such a claim influences the
20
purchasing decisions of e-tailers that are singularly focused on click rates.
21
72.
Criteo caused its false and misleading statements to enter interstate
22
commerce because its products and services are advertised and sold across state
23
lines through the internet. Its salesforce and officers have made false and
24
misleading statements regarding its click rate via email. Indeed, Criteos click rate
25
is readily available on its website. Criteo advertised and sold its products and
26
services to e-tail clients throughout the United States.
27
28
ATTORNEYS AT LAW
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73.
Criteos false and misleading statements have injured SteelHouse. As
a result of Criteos false and misleading statements, SteelHouse has lost business.
SteelHouse lost the following clients: Arhaus, Moda Operandi, TrueFacet,
1800Flowers, and TOMS, amongst others.
74.
As a further result of Criteos false and misleading statements, the Ad
Tech industry as a whole has been injured, and Criteo has lessened the good will
associated with SteelHouses products.
SECOND COUNTERCLAIM
7
8
Violation of California Business & Professions Code 17500 et seq.

(False Advertising)
75.
10
11
12
13

76.
Criteo committed acts of false and misleading advertising within the
meaning of California Business & Professions Code 17500 et seq.

77.
14
15
16
17
18
78.
Criteo knew, or should have known, through the exercise of
19
reasonable care, that the above-reference statements were false and/or misleading
20
because Criteo or its affiliates inflate its click count through the use of adware,
21
click bots, or code that Criteo or its affiliates developed. More than half of
22
Criteos clicks have no attributable source. 20.31% of its clicks are generated after
23
a consumer has already purchased a product from a website, 44.9% of its clicks
24
occur in click clusters of two or more clicks in a 30-minute window, and 25% of
25
Criteos clicks occur in click clusters, of at least eight clicks, in a 30-day period.
26
The inclusion of clicks without an attributable source, generated after a consumer
27
has already purchased a product, and that occur in click clusters, artificially inflate
28
Criteos click count. Criteo knew or should have known that its data did not
ATTORNEYS AT LAW
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support the conclusion that real internet users were engaging in actual clicks on all
of its ads. Yet, Criteo falsely advertises its enhanced click rate to induce clients to
use its products and services.
4
5
6
79.
Criteos statements deceived, or are intended to deceive, actual and
potential clients of Criteo and divert actual and potential clients from SteelHouse.
80.
Criteos deception was material to and likely to influence the
purchasing decisions of e-tailers because it advertises at least four times the click
rate as any other retargeting company, which influences the purchasing decisions
of e-tailers that are singularly focused on click rates.
10
81.
On information and belief, Criteo engages in the unlawful business
11
activities in State of California and has its U.S. headquarters in the State of
12
California. Accordingly, Criteo made or disseminated these false and misleading
13
advertisements in California. Specifically, at the Fairmont Hotel in San Francisco,
14
California, Criteos Executive Chairman and Co-founder, Jean-Baptiste Rudelle
15
made false or misleading statements about Criteos click rate.
16
82.
Criteos false and misleading statements injured SteelHouse. As a
17
result of Criteos false and misleading statements, SteelHouse has lost business.
18
SteelHouse lost the following clients: Arhaus, Moda Operandi, TrueFacet,
19
1800Flowers, and TOMS, amongst others.
20
83.
As a further result of Criteos false and misleading statements, the Ad
21
Tech industry as a whole has been injured, and Criteo has lessened the good will
22
associated with SteelHouses products.
23
THIRD COUNTERCLAIM
24
25
Violation of California Business & Professions Code 17200 et seq.

(Unfair Competition Law)
26
84.
27
28
ATTORNEYS AT LAW
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85.
Criteo 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,
falsely enhancing its click rate by claiming credit for clicks with no attributable
source, clicks after a consumer has purchased a product from a website, and
fraudulently generating click clusters.
86.
Criteos acts and practices are unlawful because they violate section
43(a) of the Lanham Act, 15 U.S.C. 1125(a), California Business & Professions
10
Code 17500 et seq., constitute intentional interference with contract, intentional
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interference with prospective economic advantage, and trade libel as set forth
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above and below.
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87.
Criteo represented in email advertisements, orally at trade shows,
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through oral communications by its salesforce, and on its own website that it has
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the highest click rate in the retargeting industry, at least four times that of its
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competitors. These statements are false and misleading, as Criteos apparent
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superior click rate is the result of fake clicks generated through adware, click bots,
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or code that Criteo or its affiliates developed to generate fake clicks and mask the
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source of its clicks.
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88.
Further, SteelHouse has relied on Criteos statements about its click
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count rates in making business decisions. SteelHouse business model is not click-
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centric. Rather, to combat the emphasis of clicks, SteelHouse has focused on
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creating distinct products and services, including its new Creative Ad Suite.
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89.
Criteos acts and practices were fraudulent within the meaning of the
UCL because they were designed to deceive and defraud SteelHouse and e-tailers.
90.
Criteo knew, or should have known through the exercise of reasonable
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care, that its statements about its click rate were false and misleading because
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Criteo counts clicks with no attributable source, that occur in clusters, and after a
ATTORNEYS AT LAW
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consumer made a purchase. These clicks were generated through adware, click
bots, or Criteo or its affiliates code.
91.
SteelHouse has suffered injury in fact and lost money as a result of
Criteos unlawful acts and practices, and has been irreparably harmed and will
continue to suffer irreparable harm by reasons of these violations.
FOURTH COUNTERCLAIM
Intentional Interference with Contract
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92.

93.
SteelHouse maintained contracts with its e-tail clients, including, but
not limited to Nike, VistaPrint, Bodybuilding.com., and TOMS.

94.
Criteo knew that SteelHouse had contracts with its e-tail clients
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including, but not limited to Nike, VistaPrint, Bodybuilding.com, and TOMS.
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Criteo knew these clients were shared clients. Indeed, Criteo directly referenced
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the fact that these e-tailers were clients of SteelHouse in Criteos communications
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to these e-tailers.
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95.
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96.
These statements are misleading because Criteo or its affiliates have
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artificially inflated its click-count numbers through the use of adware, click bots,
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and code. Criteo made these false statements to disrupt SteelHouses contractual
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relationships with its clients.
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97.
Criteo also intentionally made false and misleading statements about
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SteelHouses attribution method to SteelHouses e-tail clients, and wrongly
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accused SteelHouse of fraud. Indeed, Criteo strategically selected SteelHouse
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clients to target. Then Criteo made false statements orally and via email to these
clients, accusing SteelHouse of fraud and disparaging SteelHouse. Criteos actions
were intended to induce SteelHouse clients to breach their contractual relationships
with SteelHouse.
98.
As a result of Criteos false and misleading statements, SteelHouse
lost actual clients with whom it had contractual relationships including, but not
limited to Nike, VistaPrint, Bodybuilding.com, and TOMS.
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99.
Criteos actions damaged SteelHouse by causing SteelHouse to lose
clients, and by extension, revenue. SteelHouses damages include all lost profits,
expenses and prospective profits, in an amount to be determined at trial.
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FIFTH COUNTERCLAIM
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Intentional Interference with Prospective Economic Advantage
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100. SteelHouse hereby incorporates by reference its allegations contained

101. SteelHouse maintained continuing economic relationships with
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numerous e-tailers, including, but not limited to Nike, VistaPrint,
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Bodybuilding.com, and TOMS that probably would have continued to result in
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future economic benefit to SteelHouse.
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102. Criteo knew that SteelHouse had relationships with these e-tailers.
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Criteo knew these clients were SteelHouse clients as they were shared clients.
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Moreover, Criteo directly referenced the fact that these e-tailers were clients of
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SteelHouse in Criteos communications to the e-tailers.
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103. Criteo made false and misleading statements in commercial
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advertising about the nature, quality, and characteristics of Criteos products and
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104. These statements are misleading because Criteo or its affiliates have
artificially inflated its click count numbers through the use of adware, click bots,
and code. Criteo made these false statements to disrupt SteelHouses relationships
with its clients.
105. Criteo also intentionally made false and misleading statements about
SteelHouses attribution method to SteelHouses e-tail clients, and wrongly
accused SteelHouse of fraud.
106. As a result of Criteos false and misleading click-count numbers, and
false and misleading statements accusing SteelHouse of fraud, Criteo has induced
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actual clients to either stop contracting with SteelHouse or decrease their
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advertising budget with SteelHouse including, but not limited to Nike, VistaPrint,
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Bodybuilding.com, and TOMS. Moreover, as a result of Criteos conduct,
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potential clients were dissuaded from retaining SteelHouse. Criteos conduct and
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statements constitute false and misleading advertising within the meaning of
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Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a), as well as violations of
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California Business & Professions Code sections 17200 et seq. and 17500 et seq.,
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as set forth above. SteelHouse has suffered actual harm from Criteos wrongful
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conduct, including loss of actual and potential revenue in an amount to be
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determined at trial.
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SIXTH COUNTERCLAIM
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Trade Libel
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107. SteelHouse hereby incorporates by reference its allegations contained

108. Criteo represented in email advertisements, at trade shows, through
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oral communications by its salesforce, and on its own website that its click rate is
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the highest in the retargeting industryfour times its competitors. At times, Criteo
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even claims its click rate is somehow seven times the industry average.
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109. In sum, Criteo claims its products and services are superior to
SteelHouse, and its other competitors. These statements are false, as Criteos
apparent superior click rate is the result of fake clicks generated through adware,
click bots, or code that Criteo or its affiliates developed to generate fake clicks and
mask the source of these clicks.
110. Criteo also made claims both orally and in written emails to actual and
potential SteelHouse clients accusing SteelHouse of engaging in a fraudulent click
scheme to inflate its numbers and deceive clients. These statements are false
because SteelHouse has not engaged in fraud, nor intentionally inflated its click
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count numbers.
111. Criteo made these statements with actual knowledge of their falsity, or
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did not use reasonable care in determining their truth or falsity. Criteo advertised
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its false click rates with full knowledge that its data did not support the conclusion
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that real internet users were engaging in actual clicks on all of its ads. Further,
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Criteo made statements accusing SteelHouse of fraudulent behavior with full
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knowledge that SteelHouses behavior was unintentional and it had implemented a
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code change to stop this behavior. Despite claiming to SteelHouse that it would
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take Criteo several months to determine whether the code change was working,
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Criteo continued to send emails to SteelHouses clients alleging deception and
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fraud immediately after the code change and without waiting for confirmation.
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Criteo has acted with actual malice in disparaging the quality of SteelHouses
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products and services.
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112. Criteos statements were a material and substantial part in inducing
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actual clients to cease working with SteelHouse or drastically decrease their
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advertising with SteelHouse. Moreover Criteos statements were material and
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played a substantial part in persuading SteelHouses potential clients to not work
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with SteelHouse. As a direct result of Criteos disparaging statements, more than
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twenty-five clients have stopped working with SteelHouse, including Nike,
VistaPrint, Bodybuilding.com, and TOMS.
113. Criteos statements caused direct pecuniary loss to SteelHouse in the
form of lost clients, lost advertising budgets, and loss of potential clients. Criteos
statements have also severely damaged the goodwill and reputation of SteelHouse
and its products and services. SteelHouse seeks actual and special damages in an
amount to be proven at trial, as well as punitive damages to punish Criteo for its
willful, malicious, and wrongful conduct.

PRAYER FOR RELIEF
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WHEREFORE, Counterclaimant hereby prays for judgment in its favor as

follows:
(a)
A permanent injunction enjoining and restraining Criteo, its officers,
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agents, servants, employees, attorneys, and other persons who are acting in concert
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or participation with them perpetually from:
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(i)
falsely attributing clicks with no attributable source;
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(ii)
falsely attributing clicks that occur after a consumer has purchased a

product from a website;
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(iii)
engaging in click cluster generation;
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(iv)
engaging in other conduct designed to artificially inflate its click

count numbers; and
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(v)
disparaging SteelHouse, its officers, agents, servants, employees,
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attorneys, and any other persons who are acting in concert or
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participation with them, its services, or its products to actual and
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potential clients, consumers, or competitors;
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(b)
For monetary relief including, but not limited to, actual,
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compensatory, treble, and punitive damages, and restitution, as permitted by law,
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in amounts to be determined at trial;
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(c)
For an award to SteelHouse for costs, expenses, and reasonable

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attorneys fees, as permitted by law; and

(d)
For such other relief as the Court may deem just and proper.
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Dated: September 20, 2016

Daniel Scott Schecter
Marvin S. Putnam
Laura R. Washington
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By /s/Marvin S. Putnam_________
Marvin S. Putnam
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ATTORNEYS AT LAW
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DEMAND FOR JURY TRIAL
SteelHouse hereby demands a jury trial on all claims and issues triable to a jury.
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Dated: September 20, 2016

Daniel Scott Schecter
Marvin S. Putnam
Laura R. Washington
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By /s/Marvin S. Putnam_________
Marvin S. Putnam
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ATTORNEYS AT LAW
LOS ANGELES

Criteo vs. Steelhouse - SteelHouse's Amended Answer and Counterclaims

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Criteo vs. Steelhouse - SteelHouse's Amended Answer and Counterclaims

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Case 2:16-cv-04207-SVW-MRW Document 36 Filed 09/20/16 Page 1 of 59 Page ID #:664

LATHAM & WATKINS LLP

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CASE NO. 2:16-CV-04207 SVW

AMENDED ANSWER AND

STEEL HOUSE, INC.,

STEEL HOUSE, INC.S AMENDED ANSWERS AND

Case 2:16-cv-04207-SVW-MRW Document 36 Filed 09/20/16 Page 2 of 59 Page ID #:665

Defendant and counter-claimant Steel House, Inc. (SteelHouse), by its

on a reasonable investigation of the allegations, as follows:

AMENDED 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

client spreads its money around to a portfolio of multiple marketing vendors in

daily opportunities to serve advertisements to consumers on websites numbers in

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

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

STEEL HOUSE, INC.S AMENDED ANSWERS AND

2 COUNTERCLAIMS TO CRITEO S.A.S COMPLAINT

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

Case 2:16-cv-04207-SVW-MRW Document 36 Filed 09/20/16 Page 3 of 59 Page ID #:666

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

Indeed, Criteos model is so intensely focused on delivering clicks, that it claims a

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.

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

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

approach, SteelHouse offers its clients an end-to-end, customizable, unlimited

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

campaigns. With SteelHouse, a client 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

STEEL HOUSE, INC.S AMENDED ANSWERS AND

3 COUNTERCLAIMS TO CRITEO S.A.S COMPLAINT

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

Case 2:16-cv-04207-SVW-MRW Document 36 Filed 09/20/16 Page 4 of 59 Page ID #:667

Criteo over its competitors. But no longer.

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

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

These allegations are categorically false and also illogical, as SteelHouses

business model and litigation strategy.

SteelHouse admits that it is an online marketing vendor. SteelHouse

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

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

SteelHouse denies engaging in any unlawful or misleading conduct,

SteelHouse denies engaging in any unlawful or misleading conduct,

the allegations of Paragraph 3 of the Complaint.

SteelHouse denies engaging in any unlawful or misleading conduct,

4 COUNTERCLAIMS TO CRITEO S.A.S COMPLAINT

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

Case 2:16-cv-04207-SVW-MRW Document 36 Filed 09/20/16 Page 5 of 59 Page ID #:668

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,

Campaign Management, Creative, Creative Services, and Reporting and Services.

SteelHouse therefore denies the allegations of Paragraph 5 of the Complaint.