June 27, 2002 4:10 PM PDT
Publishers sue Gator over pop-ups
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Redwood City, Calif.-based Gator is "essentially a parasite on the Web that free rides on the hard work and the investments of plaintiffs and other Web site owners," according to the filing. "In short, Gator sells advertising space on the plaintiffs' Web sites without (their) authorization and pockets the profits from such sales."
Gator develops software that manages passwords and fills out forms for about 10 million Web surfers, who often download the application unwittingly through other popular file-sharing programs. Also bundled in Gator's software is a program called OfferCompanion, which monitors Web surfing behavior and delivers targeted pop-up ads to viewers. For example, a Web surfer may see an advertisement for Ford Motor--delivered by Gator--while visiting Toyota.com.
The lawsuit is the latest legal tussle for Gator. Last year, the Interactive Advertising Bureau (IAB) criticized the company for selling banner ads that obscure those sold by online publishers. Gator sued the IAB, alleging "malicious disparagement" over its statements, but the two parties found common ground when Gator agreed to stop selling banner overlays.
Earlier this year, catalog retailer L.L. Bean sent Gator a cease-and-desist letter, attempting to stop the company from launching ads on its site. Gator countersued, and a case is still pending in Oregon.
The latest suit highlights mounting tension over tactics used by Gator and others. Earlier this year, WeightWatchers.com sued rival DietWatch.com for using Gator to deliver ads to visitors of its site. On June 11, a court granted WeightWatchers a permanent injunction barring DietWatch from serving ads on its site.
This week's action charges that Gator violates the publishers' copyright and trademark rights. By delivering unauthorized pop-up ads, Gator is altering the intended display of the work, a right that has been recognized by the Supreme Court, said Terence Ross, a lawyer for the plaintiffs.
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"The plaintiffs contend consumers' software programs cannot lawfully display pop-up windows while a consumer is surfing the Internet. This flies in the face of the very nature of the Windows operating system and is ridiculous," McFadden said. "It would mean that AOL Instant Messenger, Yahoo Messenger, Microsoft Outlook and dozens of other software applications that automatically display information in separate windows are illegal."
He continued to say that a tiny fraction of Gator's pop-up ads appear on the plaintiff's Web sites and that one of the publishers named in the lawsuit, which he did not identify, has used Gator to display ads on the rival sites for The Wall Street Journal and The Washington Post.
"Gator is emerging as a powerful force in online marketing because its advertising products work well, and while we understand why these plaintiffs/competitors feel threatened by us, being a strong and thriving competitor isn't illegal," McFadden said.
Gator has been selling such advertising for more than a year and has accumulated several top-tier advertisers including Target.com. According to Ross, the plaintiffs were stirred to action after the company published marketing material in April essentially promising ad buyers placement on the Web sites of specific publications, including The New York Times.
"Indeed, on information and belief, Gator tells prospective advertisers that it is more effective to advertise on a targeted Web site by buying the URL through Gator than actually approaching the Web site owner itself," according to the filing.
Ross said the companies went forward with action against Gator because historically, it has been unwilling to discuss its practices with publishers.
"Given Gator's history of running to court whenever anyone criticized them, we did not believe that they were willing to discuss this issue in good faith with us," Ross said.
The companies are seeking a short-term preliminary injunction against Gator, preventing it from delivering ads keyed to their sites. It is also seeking a permanent injunction against the company and monetary damages for any advertising dollars made from their Web pages.