Intellectual Property
Aug. 6, 2002
Pop-Up Wars
For frequent Internet users, pop-up advertisements likely draw a reflex response: Click to close, and then go back to what you were reading.
For frequent Internet users, pop-up advertisements likely draw a reflex response: Click to close, and then go back to what you were reading.
You probably think they are annoying, if you think of them at all.
But if you happen to be a Gator Corp. customer, pop-up ads are probably a little more prominent on your computer. And, whether you know it or not, you agreed to their presence.
The Redwood City-based company sends out Internet pop-up ads in exchange for its Ewallet service, which stores personal information, like credit card numbers and mailing addresses.
"Most users find the ad services useful," says Thomas Friel, partner with Cooley Godward and attorney for Gator. "Gator's advertisements consist of discount coupons and other offers for useful products that consumers can benefit from."
But, a dozen of the country's top publishing companies aren't impressed. They've taken issue with Gator's business model, claiming that the ads, which hover over their pages in separate windows, infringe on their copyrights and trademarks.
Gator's business model is certainly innovative. The company's Ewallet software remembers passwords, user identification numbers and credit card account information for its customers. With the software, you never have to waste time filling out purchaser information on eBay or Amazon.
To use the Ewallet, a customer downloads software from Gator.com. The entire process, which includes providing the information that will be stored by the product, takes 10 minutes. After agreeing to Gator's terms and conditions, the Ewallet is ready to go. With a click of a button, Ewallet fills in the information.
But the convenience comes at a price. In exchange for Gator's software, you must agree to let Gator download its OfferCompanion software onto your computer. The OfferCompanion software tracks your Internet surfing and sends ads that are triggered when you connect to various Web sites.
Visit SmartMoney.com, for example, and an ad for American Express investment services might pop up on your screen.
The ads are branded with Gator's logo (alligator eyes) over the acronym GAIN, Gator Advertising and Information Network.
Not surprisingly, the publishers in the case don't believe that the Gator logo is enough to differentiate it from their own advertisements. The Gator ads appear to be authorized by their Web sites, and this, the publishers say, infringes on their trademarks.
And the publishers are one step closer to shutting down the Redwood City company's activities that they claim alter their Web sites. On July 12, a U.S. District Court in Virginia granted the publishers' request for a preliminary injunction against Gator.
The lawsuit, filed against Gator in late June, accuses the company of being "a parasite on the Web that free rides on the hard work and investments of plaintiffs and other Web site owners."
At issue is whether Gator's advertisements, which piggyback on the publishers' Web pages, constitutes trademark infringement and dilution, as well as copyright infringement.
Publishers who filed the suit include The Washington Post Co., The New York Times Co., Dow Jones & Co and Tribune Interactive Inc. Washingtonpost.Newsweek Interactive Co. v. Gator Corp., 02904A (E.D. Va., filed June 25, 2002).
Gator is fighting back. It will be a bloody battle according to intellectual property and Internet law experts, who say the courts have not been kind to companies like Gator in the past.
They point to the copyright and trademark charges leveled against TotalNews of Arizona.
The Washington Post, CNN and Dow Jones, among others, sued TotalNews for "framing" their Web sites in 1997.
TotalNews provided Internet users access to online news sites. A user could visit TotalNews and click on CNN.com to connect to that site. The problem, according to the publishers, was that TotalNews didn't link directly to those news sites. Instead, it framed them.
The content on The Washington Post Web site, for instance, would appear in the body of a TotalNews Web page, surrounded by TotalNews advertisements instead of the ads on The Washington Post site. The publishers retaliated with a copyright and trademark infringement lawsuit that later settled.
TotalNews still operates its Web site. But, to the publishers' satisfaction, it discarded the framing method and instead offers independent links to other Web sites.
As for Gator, the company has come out punching and is aggressively taking on the publishers, who Gator says are trampling on Internet users' free speech rights.
The publishers argue that the frequency of the pop-up ads is a turnoff to customers, who naturally would associate annoying pop-up ads with the Web sites they're visiting, thereby injuring those companies' trademarks.
"The Web-site owners have a claim for trademark infringement if - but only if - they can show consumers think they are sponsoring the pop-up ads, and that confusion causes them some harm," says Mark Lemley, a Boalt Hall law professor and director of the Berkeley Center for Law and Technology. "This harm might be easy to show if consumers found all pop-up ads annoying and refused to patronize any site that used them."
But, as Lemley points out in an ironic twist, the publishers may have a hard time proving that the pop-up ads are harming them because they employ pop-up ads themselves. That's not surprising, considering that advertisements are the main source of revenue for most Internet companies.
"They just want to be the only ones who can," Lemley says.
Gator argues that it has a registered base of users who have been informed clearly about the ads that it offers and are required to enter into an agreement with Gator in order to receive ads, according to Gator attorney Friel. Thus, there is no cause for confusion when one of Gator's advertisements appears in a separate window over the underlying Web site.
"There's no use of anyone's trademarks," Friel says. "There's no touching of anyone's Web services, no altercation of html codes. And the ads don't look the same. Anyone who pays a modicum of attention would know the ads are associated with Gator and Gator's advertisers."
As to the question of copyright infringement, Gator's general counsel and vice president of legal affairs, L. Scott Primak, argues that since Gator is not altering the publishers' Web pages, it can't support a copyright infringement claim.
"Our pop-up ads do not 'appear on' the plaintiffs' Web sites," Primak says. "They are published in separate windows and are not 'on' the plaintiffs' sites."
Primak calls the lawsuit corporate America's attempt to control the Internet.
"It is no secret that the Internet was originally designed by techies for techies and empowered them as individuals," Primak says. "This suit is an attempt by Big Business to fully control what displays on computer screens and when."
If Gator loses in court, the company says it will continue to offer its ad services to users. Gator believes it will have to stop displaying its ads only over the Web sites of the plaintiffs in the case. Other Web sites will be fair game.
Gator toned down its advertisements once before. The Interactive Ad Bureau, a not-for-profit Internet ad interest group, criticized Gator's advertising methods, and Gator retaliated by filing a lawsuit against the agency to protect its business model on Aug. 27, 2001.
Before the lawsuit against the Interactive Ad Bureau, Gator used banner advertisements that covered entirely the underlying Web site's own banner ads.
As part of the settlement with the agency, announced Nov. 28, Gator modified its pop-up ads to the form they appear in today - to the side of the underlying Web site's banner ad. Friel would not comment on the case, citing the settlement's confidentiality agreement.
In the newest case, intellectual property attorneys agree that the publishers will have a more difficult time proving copyright infringement.
"The display is not being altered," Leventhal says. "Gator isn't creating a derivative work."
But the attorney for the publishers, intellectual property litigator Terrence Ross of Gibson, Dunn & Crutcher, begs to differ.
The Washington, D.C.-based Ross disagrees with Gator's premise that its agreement with its users prevents it from infringing on the rights of Web sites' owners.
"Their arguments don't hold much water," Ross says. "The copyright laws and trademark laws apply to both online and off-line materials. They always have."
Eric Sinrod, a Los Angeles partner with Duane Morris, believes that the entrepreneurial spirit of the Internet needs to be protected, as do the intellectual property rights of others.
"But Gator is pushing the envelope," Sinrod says. "I'd be very surprised if this were condoned.
"Up until the mid-to-late '90s, the Internet was dominated by the wild, wild West attitude, and the law has finally had to catch up."
Liz Valsamis
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