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Tue, Jul 08, 2003 - Page 12 News List

Desktops become legal minefield

POP-UPS Opinions have been divided in a series of US federal court cases about ads that appear over a Web site without the consent of the site's publisher

NY TIMES NEW SERVICE , NEW YORK

A US federal court decision last month gave a victory to online advertising companies such as WhenU Inc over the Web sites of bigger companies. WhenU's chief executive Avi Naider -- shown in his New York office last Wednesday -- says the company must work to distance itself from negative publicity generated by the lawsuits over the ads. Photo: NY Times New Service

A series of legal skirmishes over who owns the real estate on a computer user's screen is turning into a war. A US federal court decision late last month gave a victory to online-advertising companies like the Gator Corp and WhenU Inc over the Web sites of bigger companies.

The legal wrangling involves pop-up ads that appear over a Web site without the consent of the Web-site publisher. Rather than being displayed by the site's publisher, these ads are triggered by software that resides on a user's computer.

The software enables ads to be displayed the same way instant- messaging software displays message windows over a Web page.

The software from WhenU and Gator monitors the computer's Web surfing patterns. When the user types in keystrokes or clicks on links that indicate commercial activity -- for example, completing a car form on Ford's Web site or searching for airline tickets on Expedia -- the software displays a coupon or ad on part of the computer screen. Often the ads or coupons are from a manufacturer's rival or a competing Web site.

Web site publishers and marketers have had a love-hate relationship with this technology. It is an effective marketing tool, prompting viewers to click on ads at much higher rates than typical ads, including conventional pop-up ads.

Lots of computer users have this software, with WhenU claiming more than 30 million active users and Gator claiming 37 million.

But for those who go through the trouble and expense of attracting users to their sites, only to have a rival snatch them away with a last-second offer, this technology is vexing and, some say, illegal.

Take WeightWatchers.com, the online unit of the dieting company Weight Watchers International.

Early last year, visitors to its Web site who had downloaded the Gator software were greeted with a pop-up offer to register for a dieting program. Some responded to the offer, only to find it that was from a rival company, DietWatch.com.

WeightWatchers sued DietWatch in federal court and settled the case last year after DietWatch agreed to stop such pop-up ads on Weight-Watchers.com.

Several other companies, including The Washington Post, The New York Times and the online merchant Overstock.com, have gone a step further, suing either Gator or WhenU directly.

These lawsuits contend that Gator and WhenU are confusing customers and unjustly enriching themselves by essentially selling advertising space on the plaintiffs' Web sites without consent.

The plaintiffs argue that such practices violate federal copyright and trademark laws. But Gator and WhenU contend that their ads are clearly labeled to avoid confusion.

Moreover, they say users have the right to modify an image on the computer screen, whether that modification is through instant- message software, e-mail windows or coupon alerts.

Opponents of Gator and WhenU won a legal victory last year, when Judge Claude Hilton of US District Court in Alexandria, Virgiana, issued a preliminary injunction against Gator, and in favor of several major publishers.

Hilton found enough evidence to support the injunction based on the plaintiffs' claim that Gator's ads violated trademark rights.

The parties settled that suit in February, but the terms were not disclosed.

Last month, however, Judge Gerald Lee of the same court ruled in favor of WhenU in a case that was similar to the case last year.

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