District Court Judge Jeremy Fogel in San Jose ruled that the federal Communications Decency Act immunizes Google from liability for pay-per-click ads created through the AdWords platform.
"Providing third parties with neutral tools to create Web content is considered to be squarely within the protections of (the law)," Fogel wrote. "Even if a service provider knows that third parties are using such tools to create illegal content, the service's provider's failure to intervene is immunized."
The lawsuit was brought by New Jersey resident Jenna Goddard, who alleged that she was billed for a ringtone subscription after entering her cell phone number at fraudulent site that she found via an AdWords ad.
She sought to hold Google responsible on the theory that the company violated its stated policy of requiring that mobile content ads directed users to landing pages with accurate pricing information. Goddard argued that she was a "third-party beneficiary" to the contract between Google and its AdWords advertisers.
Fogel dismissed the case without prejudice, meaning that Goddard can potentially file an amended complaint. But it's not clear that her lawyers will be able to draft allegations that will overcome the Communications Decency Act.
This lawsuit was one of a host of cases stemming from complaints about "free" mobile content, in which companies appeared to offer ringtone ads and other material at no charge to people who entered their mobile numbers online, but actually enrolled those people in paid subscription plans. The Florida Attorney General's office extracted a $2.5 million settlement from AT&T, and settlements of $1 million from Epic Advertising's AzoogleAds and Media Breakaway.
In addition, Kamber Edelson, the law firm that represented Goddard, reached a settlement in June with AT&T for a class action involving unauthorized cell phone charges for mobile content including ringtones, games and graphics.