Pop-Up or Pop Out?

July 1, 2002

By: Mary Ann Alsnauer

Do you find those pop-up ads that seem to flood the Internet these days annoying? If so, you're not alone. In fact, if companies such as The Washington Post and The New York Times have their way, the number of Intenet pop-up ads that you see on their websites will soon be drastically reduced. These publications, along with fourteen other publishers of Internet news sites, recently filed suit in Federal District Court for the Eastern District of Virginia, the home of the so-called "rocket docket", against The Gator Corporation contending that the pop-up ads sold by Gator infringe their intellectual property rights and, in essence, steal revenue rightfully belonging to the plaintiffs. The complaint asserts claims for Trademark Infringement, Unfair Competition, Trademark Dilution, Copyright Infringement, Contributory Copyright Infringement, "Hot News" Misappropriation, Interference with Prospective Economic Advantage, Unjust Enrichment and Violation of the Virginia Business Conspiracy Act.

Gator Corporation is the developer of various software applications, which provide users with a mechanism for storing personal information such as their passwords, user identification numbers and other such data used in surfing the Web. The software includes a program known as "OfferCompanion," which plaintiffs claim is automatically downloaded onto the user's computer, often without his knowledge. OfferCompanion then communicates with Gator's servers that direct the pop-up advertising to appear based upon the site visited by the consumer. Gator sells its services to various companies who can then target advertising to appear on a competitor's site. For instance, the plaintiffs cite the example of ads for hotjobs.com appearing on the Dow Jones' CareerJournal.com site.

What is the theory behind the plaintiffs' complaint? In a nutshell, the plaintiffs claim that the pop-up ads alter the look of their websites, confuse consumers into believing the ads are sponsored by the website owner and interfere with the plaintiffs' ability to generate revenues through the sale of advertising on their websites.

With respect to their claims of copyright infringement, the plaintiffs argue that the look of the site is altered when a pop-up ad appears, blocking other content displayed on the site. As most Internet users are aware, websites are subject to copyright protection and governed by the user's willingness to agree to terms and conditions of use of the site, i.e. a license to display and view the content of the site. As the owner of the copyright on its website, the publisher of that site has the exclusive right, under 17 U.S.C. 106, to reproduce the work, prepare derivative works based upon that work, distribute copies of the work and display the work publicly. Thus, the rights of Internet users to view that sight are derived from the license granted by the copyright holder. Obviously, the terms of the license do not provide for altering the content of the site and any application that does so alter the content without the permission of the owner violates the scope of the license, thus infringing upon the site publisher's copyright. Such an alteration of the original sight is argued to constitute an unauthorized derivative work. Just as the effort of a hacker to revise one of the plaintiffs' websites without their permission would constitute infringement, causing the look of the site to change by the overlay of a pop-up ad is deemed by the plaintiffs here to constitute infringing activity.

The plaintiffs also allege that the use of the ads infringes on their trademark rights. The websites at issue obviously contain the trademarks of the various plaintiffs. Under their argument, the pop-up ads are displayed in conjunction with the publishers' trademarks, giving the Internet user the impression that the ads are sponsored by, authorized by or affiliated with the publisher. Prevention of the mistaken belief that an infringer's goods or services are affiliated with the trademark owner is a cornerstone of trademark law.

The pop-up ads may also use the plaintiffs' trademarks in triggering particular advertising to appear. For instance, if Gator sells advertising to a competitor in such a manner that the competitor's advertising is triggered to appear whenever a competing plaintiff's site is opened, the plaintiff's trademark is being appropriated for use in advertising that will either cause the viewer to believe a connection exists between the two competitors or to divert the viewer's attention away from the plaintiff's services. Such a result would clearly appear to violate the Lanham Act's prohibition against any such deceptive or misleading advertising.

The pop-up ads are also alleged to impact the revenue the publishers might otherwise obtain through their websites. How are revenues affected? If visitors to the plaintiffs' websites are inundated with too many pop-up ads, their interest in visiting the site further may wane. Therefore, if the number of visitors to a particular site drops, that site's ability to sell advertising may be threatened, resulting in lower advertising revenues for the publisher. Further, since the Gator software allows it to sell advertising services to customers which trigger the pop-up ad, it is collecting revenue from the traffic on the plaintiffs' site without contracting with the plaintiffs at all.

Gator has vowed to fight the suit claiming that plaintiffs' attempts to outlaw such pop-up advertising is contrary to the unique nature of the Windows operating system which is designed to allow for the opening of various windows of information at the same time. Gator argues that their windows are no different than applications such as AOL Instant Messenger. An interesting argument, however, such applications are generally willingly used by the Internet user and are not triggered by the user's visit to any particular site. Most importantly, such applications do not make use of a competitor's intellectual property to generate revenue.

The case is one that will be closely watched by other website publishers eager to free their sites from an onslaught of pop-ups as well as many other companies who use Gator's services to buy the advertising that appears in those pop-up windows.