Aug 2011 Google Non Prosecution Agreement

AGREEMENTThe United States Attorney?s Office for the District of Rhode Island, United StatesDepartment of Justice (the ?Government?), and Google Inc. (?Google? or the ?Company?), aCalifornia-based corporation with its principal place of business located in Mountain View,California, hereby agree as follows:The Investigation1. The Government has conducted an investigation into the Company?s acceptance ofadvertisements placed by online pharmacy advertisers that did not comply with United Stateslaw regarding the importation and dispensation of prescription drugs.Statement of Relevant Facts2. The Government and the Company agree that the following statements are true andaccurate: IExcept under very limited circumstances, not relevant here, it is unlawful. forpharmacies outside the United States to ship prescription drugs to customers in the United States.Such conduct violates the Federal Food, Drug, and Cosmetic Act, Title 21, United States Code,Section 33 1 and (Introduction into Interstate Commerce of Misbranded or UnapprovedDrugs). Where these prescription drugs are controlled substances, such conduct also violates theControlled Substances Act, Title 21, United States Code, Section 952 (Importation of ControlledSubstances).The Company is a publicly-traded Internet search and technology corporation.The Company offers various advertising services that permit advertisers to havetheir advertising message, and a hyperlink to their website, appear above and next to searchD-results in response to search queries relevant to the advertiser, and on various websites thatcontract with the Company.The Company?s largest advertising program, AdWords, displays sponsoredadvertisernents in response to queries by the Company?s search engine users. Advertisers payfees to the Company for each ad. Advertisers are able to geo?target their advertising campaigns,selecting the countries where the advertisements will display.Online pharmacies advertise through AdWords and other Company advertisingplatforms. The Company adopted initial policies regarding advertising by online pharmacies,and these policies evolved over time as the Company grew.As early as 2003, the. Company was aware that in most circumstances it wasillegal for pharmacies to ship controlled and non?controlled prescription drugs into the UnitedStates from Canada. For example, in March 2003 and again in December 2008, the Nati.onalAssociation of Boards of -Pharmacy advised the Company that the importation of prescriptiondrugs from foreign countries is illegal.The Company was aware that importation of prescription drugs to consumers inthe United States is almost always unlawful because the United States Food and DrugAdministration cannot ensure the safety and effectiveness of foreign prescription drugsthat are not DA?approved and because the drugs may not meet labeling requirements,may not have been manufactured, stored, and distributed under proper conditions, and may nothave been dispensed pursuant to a valid prescription. While Canada has its own regulatoryregime for prescription drugs, Canadian pharmacies that ship prescription drug_s to .S. residentsare not subject to Canadian regulatory authority, and many sell drugs obtained from countriesother than Canada, which lack adequate pharmacy regulations.05*? 3 As early as 2003, the Company was on notice that online Canadian pharmacieswere advertising prescription dru-gs to the Company?s users in the United States through theCompany?s AdWords advertising program. Although the Company took steps to block- pharmacies in countries other than Canada from advertising in the United States throughAdWords, the Company continued to allow Canadian pharmacy advertisers to geo?target theUnited States in their AdWords advertising campaigns. The Company knew that U.S. consumerswere making online purchases of prescription drugs from these Canadian online pharmacies. Forexample, in a November 18, 2003 email, a Company employee discussed the advertising budgetsof several Canadian online pharmacy advertisers and noted that ?[a]ll ship from Canada into theUS via Express Mail.? In an August 23, 2005 email, an employee in the Company?s policygroup stated, ?the majority of Canadian Pharmacies are in business to drive pharmacy trafficfrom the United States to Canada? and target the US in their geo-targeting.?The Company also knew that many of these Canadian online pharmacyadvertisers distributed prescription drugs, including controlled prescription drugs, based on anonline consultation, rather than a valid prescription from a treating medical practitioner. TheCompany was also on notice that many pharmacies accepting an online consultation rather than aprescription charged a premium for doing so, because individuals seeking to obtain prescriptiondrugs without a valid prescription were willing to pay higher prices for the drugs.From 2004 to 2006, the Company retained a third-party veri?cation service,Square Trade, Inc. (?Square Trade?), to verify whether online pharmacies seeking to advertisethrough AdWords were licen_sed in at least one state in the United States or in Canada. SquareTrade required pharmacies seeking to advertise through AdWords to self?certify that they wouldact in accordance with applicable U.S. laws and regulations. During the period that SquareTrade was providing services to the Company, the Company knowingly permitted Canadianonline pharmacies that were certified by Square Trade to advertise the sale of prescription drugsthrough AdWords to U.S. consumers.From 2003 through 2009, the Company provided customer support to some ofthese Canadian online pharmacy advertisers to assist them in placing and optimizing theirAdWords advertisements and in improving the effectiveness of their websites. For example, onor about April 23, 2004, a Google employee based in Canada reported in an email concerning theadvertisements of a large Canadian pharmacy advertiser that ?the Google team is proactivelyadjusting creative and optimizing with Square Trade policy in mind.? On or about June 4, 2004,the same employee emailed a member of the Company?s policy group and stated, ?The Maxteam and [customer support] are sort of furiously working on creative to appease our new policybefore approvals gets to them and disapproves.?(1) I In 2006, the Company?s relationship with Square Trade ended, and the Companybegan using the certi?cation program of a second veri?cation company, PharmacyChecker.comLLC (?PharmacyChecker?). While PharmacyChecker did not certify online pharmacies thatshipped controlled prescription drugs, Canadian or otherwise, PharmacyChecker did certifyadvertisers of non-controlled prescription drugs, including distributors of non-controlledprescription drugs located in Canada. As a result, the Company knowingly permitted Canadianonline pharmacies, certi?ed by Ph-armacyChecker, to advertise the sale of non-controlledprescription drugs through AdWords to U.S. consumers.Some pharmacy advertisers did not qualify for certification by either SquareTrade or, later, PharmacyChecker, but nonetheless advertised through the Company?s AdWordsprogram. The Company was on notice that certain online pharmacy advertisers set up theiradvertising programs so that their AdWords advertisements would not run in the United States.Thus, those advertisements could begin to run without the advertiser being required to obtain aSquare Trade or PharrnacyChecker certi?cation. Once the advertisements began to run on theCompany?s search engine, however,--some pharmacies changed the geo?targeting of theadvertisements so as to cause the advertisements to appear in the United States in response toqueries by U.S. users of the Company?s sear.ch engine. Although the Company was on noticethat some online pharmacies changed their geo?targe.ting in this manner, the Company did notprevent these changes in geo-targeting until after it became aware of the Govemment?sinvestigatio_r1.In addition, as early as July 2004, the Company was on notice that onlinepharmacies were circumventing the Square Trade and PharrnacyChecker certi?cation process byintentionally avoiding the use of certain pharmaceutical terms in the text of their AdWordsadvertisements, while using these same terms as advertising ?keyword? terms. A keyword is aspecific word or phrase selected by the advertiser that the Company uses to trigger the display ofadvertisements in response to a user?s query. Advertisers bid_, in an auction?like format, onkeywords in order to have their advertisements appear when the user enters the selectedkeywords into the Company?s search engine. Once the Company began using Square Trade, andcontinuing throughout the period during which the Company used PharmacyChecker, theCompany conducted manual review of non-certi?ed online pharmacy advertisements only if apharmaceutical term appeared in the text of the advertisement. The Company was on -notice,however, that some online pharmacy advertisers, including some from Canada, avoided thisreview by using the prescription drug tenns as keywords only and not in advertising text. Forexample, in a February 13, 2008 email, a member of the Company?s policy group stated, ?[t]he5 only ads that are getting blocked are those with explicit pharma terms in the ad texts; the shady,fraudulent advertisers know not to do this.? After it became aware of the Government?sinvestigation, the Company made changes to its systems in order to ?ag for review all ads thathad prescription drug terms as keywords. . -(0) The Government and the Company estimate that the total proceeds to theCompany and Canadian online pharmacy advertisers generated from the advertising and sale ofcontrolled prescription dru_gs by Canadian online pharmacies that advertised through theCompany?s AdWords program was approximately $5 00 million.The Government?s investigation did not relate to the award or performance of anygovernment contract or subcontract.In 2009, after the Company became aware of the Government?s investigation ofits advertising practices in the online pharmacy area, and as a result of that investigation, theCompany took a number of signi?cant steps to prevent the unlawful sale of prescription drugs. byonline pharmacies to U.S. consumers. Among other things, the Company became the first searchengine to require online pharmacy advertisers to be. certified by the National Association ofBoards of Pharrnacy?s rigorous Veri?ed Internet Pharmacy Practices Sites program,which conducts site visits, has a stringent standard against the issuance of prescriptions based ononline consultations, and does not certify Canadian online pharmacies. In addition, the Companyretained an independent company to enhance its back-end sweeps, which were designed to detectpharmacy advertisers exploiting ?aws in the Company?s screening systems. The Company hasalso sued pharmacy advertisers who violated the Company?s terms of use, and has reportedsuspected illegal pharmacies to the FDA.Cal? Acceptance of Responsibility3. The Company was on notice that most Canadian online pharmacy advertisers, advertisingthrough the Company?s AdWords program, geo-targeted their advertisements to consumers in- the United States and imported into the United States both controlled prescription drugs, inviolation of Title 21, United States Code, Section 952, and misbranded and unapprovedprescription drugs, in violation of Title 21, United States Code, Section 33l(a) and TheCompany acknowledges that it improperly assisted Canadian online pharmacy advertisers to runthese advertisements that geo?targeted the United States through AdWords, and the Companyaccepts responsibility for the Company?s conduct as set forth above in paragraph 2, ?Statementof Relevant Facts.?Forfeiture4. As a result of the conduct described in paragraph 2 above, the Company agrees to forfeit$500,000,000 (?ve hundred million) to the United States as a substitute res for the proceeds ofcontrolled prescription drug sales by Canadian online pharmacies that advertised through theCompany?s AdWords program. Payment shall be wire-transferred to the Seized Assets DepositAccount of the United States Marshals Service within three days of the execution of thisAgreement.5. The Government contends, and the Company agrees not to contest, that the factscontained in this Agreement are suf?cient to establish that the $500,000,000 (?ve hundredmillion) being paid by the Company to the Government is subject to civil forfeiture to theGovernment and that this agreement, in lieu of a separate af?davit, may be attached to andincorporated into the Civil Forfeiture Complaint to be ?led against said amount. By thisagreement, the Company speci?cally waives service of said Civil Forfeiture Complaint andagrees that a Final Forfeiture Order may enter against the $500,000,000 (?ve hundred million)paid.6. Upon payment of said funds as described in paragraph 4 above, the Company shallrelease any and all claims it may have to such fundsand execute such documents as arenecessary to accomplish the same, including the release of its claim to said funds in a civilforfeiture proceeding brought against said funds.Remediation7. The Company represents that it has a comprehensive compliance and ethics program, andpolicies, procedures and technological tools designed to detect and prevent violations of theselaws and to ensure compliance with internal Company policies and procedures.8. The Company has enhanced its pre-existing compliance program and has undertakenreforms and remedial actions in response to the conduct that has been the subject of theGovernment? investigation.The Company in March 2010 began requiring VIPPS certi?cation for pharmacyadvertisers using AdWords in order to exclude pharmacy advertisers that. import or dispenseprescription drugs in violation of United States law.Because most advertisements the Company accepts are placed electronically andwithout human interaction, the Company uses electronic screening systems to identify pharmacyads for which VIPPS approval of the advertiser is required. The Company has continued toimprove its electronic systems designed to block ads that violate its policies. To supplement itselectronic screening" systems, the Company has retained an independent company to enhance itsback-end sweeps, that is, searches of advertisements running through AdWords, in order toidentify and allow the Company to block pharmacy advertisers that are not VIPPS?approved andthat evaded the Company?s electronic screening mechanisms.Company policy now forbids accepting advertisements from pharmacies locatedin Canada, or elsewhere outside the United States, to run in the United States on AdWords.?The Company shall maintain, and update as necessary, all compliance programsand policies referenced in paragraphs and (0) above. .The Company has cooperated with the FDA, Office of Criminal Investigations, bymaking referrals where the Company determines that criminal investigation of a pharmacyadvertiser is warranted, and the Company will continue to make such referrals.Every three months, beginning three months following the execution of thisAgreement, and continuing for two years following the execution of this Agreement, theCompany shall furnish a report to the FDA detailing the efforts it has taken to comply withparagraphs and above. G0vernment?s Agreements9. In consideration of the Company?s entering into this Agreement and its commitments to:accept corporate responsibility for the conduct described in paragraph 2; forfeit$5 00,000,000 to the United States; enforce its ethics and compliance programs relating to theadvertisement and sale of prescription drugs; and otherwise comply with the terms of thisAgreement, the Government agrees not to prosecute the Company for any crimes relating to the conduct described in paragraph 2 or (ii) any other conduct relating to the advertisement orsale of prescription drugs known to the Government or that was the subject matter of theinvestigation by the Government that led to this Agreement as of the date this Agreement isexecuted, including but not limited to -any alleged violation of Title 21, United States Code,Section 33 1(a) and (Introduction into Interstate Commerce of Misbranded or UnapprovedDrugs), and Title 21, United States Code, Section 952 (Importation of Controlled Substances).10. The Government further agrees to release the Company and its successors and assigns(the ?Related Parties?) from any -civil, administrative or equitable claims the Government has ormay have against the Company or the Related Parties of which the Government is currentlyaware that relate to the conduct described in paragraph 2 or (ii) any other conduct relating tothe advertisement or sale of prescription drugs known to the Government or that was the subjectmatter of the investigation by the Government that led to this Agreement as of the date thisAgreement is executed. The Company expressly understands that the protections provided underthis Agreement shall not apply .to any acquirer or successor entities unless and until such acquireror successor formally adopts and executes this Agreement.1 1. It is understood that this Agreement is binding on the United States Attorney?s Office forthe District of Rhode Island, the United States Attorneys? Offices for each of the other ninety-three judicial districts of the United States and the United States Department of Justice, but thatthis Agreement does not bind any other federal agencies, or any state or local authorities. Anyreference in this Agreement to an obligation of the ?Government? shall be bi.nding on all of the government entities described in this paragraph.Additional Obligations12. It is understood that if, in the two years following execution of this Agreement, theGovernment determines, in its sole discretion, that the Company: has deliberately given false,incomplete, or misleading testimony or information in the investigation that led to thisAgreement; has committed any criminal conduct relating to the advertisement or sale ofprescription dru_gs through AdWords and constituting a felony under United States law after the10 date of this Agreement; or has otherwise deliberately violated any provision of thisAgreement, the Company shall, in the sole discretion of the Government, be subject toprosecution for any "Federal criminal violation of which the Government has knowledge,including a prosecutionbased upon the conduct specified in paragraph 2 herein. Any suchprosecutions that are not time-barred by the applicable statute of limitations on the date of theexecution of this Agreement may be commenced against the Company. In addition, theCompany agrees to toll, and to exclude from any calculation of time, the running of the criminalstatute of limitations for any criminal conduct relating to the advertisement or sale of prescription drugs through AdWords and constituting a felony under United States law for two years from thedate of execution of this Agreement. By this Agreement, the Company expressly intends to andhereby does waive its rights? to make a claim premised upon the statute of limitations, as well asany constitutional, statutory, or other claim concerning pre?indictrnent delay. Such waivers areknowing, voluntary, and in express reliance upon the advice of the Company?s counsel. It isfurther understood that if, within two years following execution of this Agreement, theGovernment determines, in its sole discretion, that the Company: has deliberately given false,incomplete, or misleading testimony or information in the investigation that led to thisAgreement; (ii) has committed any criminal conduct relating to the advertisement or sale ofprescription drugs through AdWords and constituting a felony under United States law after thedate of this Agreement; or has otherwise deliberately violated any provision of thisAgreement, then: any statements made or testimony given by any then current officer, agentor employee of the Company before a grand jury or other tribunal, whether prior or subsequentto the signing of this Agreement, and any leads from such statements or testimony, shall beadmissible in evidence in any criminal proceeding hereinafter brought against the Company; 11the facts set forth in the Statement of Relevant Facts section of this Agreement shall beadmissible in evidence in any federal criminal proceeding hereinafter brought against theCompany; and the Company shall assert no claim under the United States Constitution, anystatute, Rule l1(f) of the Federal Rules of Criminal Procedure, Rule 410 of the Federal Rules of AEvidence, or any other federal rule, that such statements or any leads therefrom should besuppressed or otherwise excluded .from evidence. It is the intent of this Agreement to waive allrights in the foregoing respects.13. It is understood that for a period of two years following the execution of this Agreement,the Company shall fully cooperate with the Government and any federal law enforcement agencydesignated by the Government and provide the Government, upon request and appropriate legalprocess if otherwise required by law, all non?privileged information,. documents, records, orother tangible evidence about which the Government or any designated federal law enforcementagency inquires in connection with the Company?s conduct relating to the advertisement and saleof prescription drugs through AdWords. Nothing in this Agreement shall be construed as awaiver by the Company of any protections of the attomey-client privilege, the attorney work-product doctrine or any other applicable privilege or protection with respect to any information,documents or records requested by the Government.Public Statements14. The Company, through its attorneys, agents, officers, directors or employees who haveauthority to speak, and are speaking on behalf of the. Company, shall not make any -publicstatement contradicting any part of paragraph 2. If the Government notifies the Company that ithas preliminarily determined, in its sole discretion, that the Company has made any suchcontradictory statement, the Company may avoid a ?nding of breach of this Agreement by12trl?repudiating such statement, in a manner satisfactory to the Government, both to the recipients ofsuch statement and to the Government within 48 hours after receipt of notice from theGovernment. The Company consents to the public release by the Government of any suchrepudiation. Consistent with the above, the Company may avail. itself of any legal or factualarguments available to it in defending any litigation brought, or in any investigation orproceeding, by the Company or any party other than the Government, as long as doing so doesnot otherwise violate any term of this Agreement. This paragraph is not intended to apply to anystatement made by any individual in the course of any actual or contemplated criminal,regulatory or administrative proceeding or civil case initiated by any governmental or privateparty against such individual.Tl1.e Government?s Discretion 15. The Company agrees that it is within the sole discretion of the. Government to determinewhether there has been a deliberate violation of this Agreement. The Company understands andagrees that the exercise of discretion by the Government under this Agreement is not reviewableby any court. In the event that the Government preliminarily determines that the Company hasdeliberately violated this Agreement, the Government shall provide written notice to theCompanylof that preliminary determination and shall provide the Company with thirty calendardays from the date of that written notice in which to make a presentation to the Government todemonstrate that no deliberate breach has occurred, or to the extent applicable, that the breachhas been cured. The Government shall thereafter provide written notice to the Company of its?nal determination regarding whether a deliberate breach has occurred and has not been cured.Limits of the Agreement16. It is understood that this Agreement does not bind any prosecuting authority other than13the Government. However, if requested by the Company or its attorneys, the Government willbring to the attention of any other prosecuting authorities the existence of this Agreement and thestatus of the Company?s compliance with its obligations under this Agreement.17. If requested by the Company or its attorneys, the Government agrees to bring to theattention of governmental contracting authorities the facts and circumstances relating to thenature of the conduct underlying this Agreement, including the nature and quality of theCompany?s cooperation and remediation. By agreeing to provide this information togovernmental contracting authorities, the Government is not agreeing to advocate on theCompany?s behalf, but rather to provide facts to be evaluated independently by the governmentcontracting authorities.Public Filing18. The Company and the Government agree that this Agreement will be disclosed to thepublic.Integration Clause19. This Agreement sets forth all the terms of the. agreement between the Company and theGovernment. This Agreement supersedes all prior, if any, understandings, promises and/orconditions between the Company and the Government. No modi?cations or additions to thisAgreement shall be valid unless they are in writing and signed by all of the parties.I20. The undersigned represents and warrants to the Government that he/ she has the authorityto enter into this Agreement on behalf of the Company.Cm 9DATED?iTl?*iIIDA DATE?Behalf of the Government TER F. NERONHAUnited States AttorneyDistrict of Rhode Island .7 57 ANDREW J. Senior Litigation Counsel -1. CHARD B. minusAssistant United States AttorneyOn Behalf of Google Inc.KENT WALKERSenior Vice President General CounselGoogle Inc. A ?6CK M. COLLINSPerkins Coie LLPCounsel to Google Inc.15