• April 1, 2009

Google has agreed to a settlement of up to $20 million in a class-action lawsuit on behalf of search marketers who alleged that the company served more ads than they had agreed to pay for.

The lawsuit stemmed from a dispute about the meaning of "daily budget" in Google's AdWords contract with search marketers. The advertisers, Minnesota printing company CLRB Hanson Industries and New Jersey resident Howard Stern (no relation to the radio personality), alleged that Google violated the AdWords agreement by charging marketers up to 120% of their maximum daily budget.

U.S. District Court Judge James Ware in San Jose had earlier ruled that only search marketers who advertised for fewer than 30 days could proceed with the lawsuit.

Google had argued in court papers that it sometimes charged up to 120% of marketers' budgets, but only to make up for days when it under-delivered ads.

A company spokesperson said: "Google believes the claims are without merit, but we are pleased to have the litigation behind us and to move forward with our business objectives."

Most of the settlement will be in the form of ad credits for AdWords marketers, but the two named plaintiffs will receive $20,000 each. Google also agreed to pay the plaintiffs' lawyers more than $5 million.--Wendy Davis