From InternetNew.com - http://www.internetnews.com/IAR/article.php/1581401

February 7, 2003
News Publishers, Gator Settle Suit
By Brian Morrissey

The legal battle between a group of publishers and adware maker Gator has ended, according to attorneys on the case.

The settlement, reached on Tuesday, includes a confidentiality agreement that binds either side from disclosing its details.

Last June, a handful of publishers -- including The New York Times Co., The Washington Post Co., and Gannett -- filed suit against Gator on the grounds that its ad-supported software infringed on their copyrights and trademarks by serving pop-up ads on users' screens while they were on those companies' news sites.

"I am allowed to confirm that this case has been settled and it is the end of active litigation," said Terrence Ross, an attorney at Gibson, Dunn & Crutcher representing the publishers.

Janet Collum, an attorney with Cooley Godward representing Gator, confirmed the settlement.

The case was scheduled to go to trial on Jan. 27, but lawyers for both side asked the judge for more time to negotiate a settlement.

Gator, which claims more than 500 advertisers, has been at the center of a firestorm of controversy (and lawsuits) in the last two years. The company offers software utilities for things like filling in electronic forms. In exchange for the free software, a program called OfferCompanion is bundled with the utility. OfferCompanion displays pop-up ads on users' screens based on their online behavior.

Publishers claimed that users often do not know they have OfferCompanion on their computer, mistakenly believing the pop-up ads come from the site they are visiting. Further, they claimed Gator unfairly infringes on their property by serving ads for competing products or services on top of their Web sites. Gator has responded that its 30 million users agree to receive the ads, know they are from Gator, and have the right to choose what is displayed on their desktops.

Gator still faces about a dozen lawsuits, according to Collum. In October 2002, UPS filed suit against the company, seeking an injunction against Gator serving ads to its users when they are on the UPS Web site. Hotel-chain operator Six Continents also brought a copyright and trademark infringement suit against Gator a month later.

While citing the case's confidentiality agreement, Ross did say, " It's been settled to our satisfaction."

Dave Morgan, chief executive of Tacoda Systems and a former lawyer in the newspaper industry, said the settlement is most likely an admission by Gator that its business model is untenable. (Tacoda Systems, which sells ad-targeting services to online publishers, counts some of the plaintiffs among its clients.)

"It was only a question about how hard they were going to fight it. It seems like they decided to go with the odds and settle," he said. "[A settlement] would have to mean a change to the business model, because the core business model was what they were being sued over."

One industry source said Gator might move alter its business model by serving ads when a user exits a site, instead of while on the site.

Morgan said such a move would alleviate one of publishers' main complaints: Gator ads appearing over their sites, obscuring their content and trademarks with competitive advertising. Still, he said Gator would probably need to make further changes to have a non-adversarial relationship with publishers.

"If all they're doing is settling with three of them, then they're still going to face a whole bunch of lawsuits," he said. "In the history of American jurisprudence, the big company wins because they have more money."

Since the case was not a class action, any terms agreed to by Gator will not apply to sites other than those operated by the plaintiffs, Ross said.

"Some other cases are going to have to come along to tell us what the precedents are in this field," he said.
From InternetNews.com - http://www.atnewyork.com/news/article.php/1575901
January 28, 2003
Hotels.com Sued by Affiliate for Gator Ads
By Brian Morrissey

MetroGuide.com, an operator of travel-related Web sites, slapped its marketing partner Hotels.com (Quote, Company Info) with a lawsuit, claiming the USA Interactive-owned company violated its copyright and engaged in unfair business practices through its advertising relationship with controversial ad-supported software maker Gator.
The suit contends that Hotels.com and its president, Robert Diener, violated MetroGuide's copyrights by popping up an ad that obscured the logo and content on MetroGuide's HotelGuide Network. The company said the marketing was all the more egregious since HotelGuide is a Hotels.com affiliate.

"They're supposed to be the back-end reservations system on my site and they're taking Gator ads to take away business on the front end of the site," said Mark Metz, MetroGuide's chief executive.

Diener dismissed the suit's claims, calling them "ridiculous."

"Their allegations are wrong," he said. "We plan to vigorously defend it."

Metroguide's Hotelguide's variety of sites provide hotel listings in 170 cities worldwide, using Hotels.com for its online reservations system. It's been a Hotels.com affiliate since January 2000.

Metroguide alleges that Hotels.com began engaging in unfair business practices when it altered its business strategy in March 2002 and began attempting to drive reservations from its own site rather than its affiliate network.

The company cites Hotels.com's relationship with Gator as an example of unfair business practices. Calling Gator "predatory advertising," the complaint argues that Hotels.com contracted with Gator to have pop-up ads for HotelDiscount.com appear when Gator users visit a HotelGuide site.

"Through the use of pop-up windows ... [Hotels.com] has altered the appearance of MetroGuide Web pages to make it appear that the advertisement is in some way affiliated with or sponsored by MetroGuide," according to the complaint.

Diener said Hotels.com experimented with a Gator ad campaign for a couple of weeks, not knowing where the ads would run. The company stopped using them, he said, deciding they were ineffectual. Still, he defended Hotels.com's use of Gator, which he pointed out has hundreds of advertisers.

"We see no infringement of their copyright," he said.

The complaint asks for compensation for past damages. According to Nielsen//NetRatings' AdRelevance unit, Hotels.com parent USA Interactive, which operates a variety of online travel-related companies, was the No. 2 pop-up advertiser in December 2002, trailing only X10.

"I'm just heartbroken and disappointed it's come to this," Metz said. "We have to enforce our rights at some point and draw the line."

Gator has been the subject of a number of legal complaints. The most watched case is that brought by a variety of publishers, including The New York Times Co. and The Washington Post Co., charging Gator with copyright infringement.

Redwood City, Calif.-based Gator provides free software, such as its digital wallet eWallet, which also comes with a program called Offer Companion that serves pop-up ads on users' computers based on their online activity. Often, the ads are for competitors of the site users visit. It has argued that its advertising services are specifically requested by its 25 million users and do not violate any laws.

In November 2002, hotel chain operator Six Continents brought a copyright-and trademark-infringement suit against Gator, citing Hotels.com pop-up ads that obscured the Web sites of some of their hotel properties.

Hotels.com has suffered under the travel slowdown that's persisted since Sept. 11. Earlier this month, it warned investors that its fourth-quarter earnings would be much lower than expected.
From CNN.com - What's fair in online love and ads? - http://www.cnn.com/2001/TECH/interne...idg/index.html

From CNet.com, Aug. 2001 - Chorus of Gator critics grows http://news.com.com/2100-1023-272244.html?tag=rn

From InternetNews.com - Major Web Publishers Sue Gator
By Christopher Saunders June 27, 2002
http://www.internetnews.com/IAR/print.php/1377881

A slew of top online Web publishers filed suit this week against software maker Gator Corp., alleging a host of infringements stemming from its pop-up ad practices.
In a complaint filed June 25 in U.S. District Court for the Eastern District of Virginia, plaintiffs including The Washington Post Co. (Quote, Company Info), The New York Times Co. (Quote, Company Info), Dow Jones & Co. (Quote, Company Info), CondeNet, Knight Ridder Digital (Quote, Company Info), and units of Gannett (Quote, Company Info), charge that Gator's products place unauthorized, targeted pop-up ads on top of their content -- essentially enriching itself at their expense.

The plaintiffs, whose charges include trademark and copyright infringement, unfair competition, and unjust enrichment, are asking for a permanent injunction against Gator, and for all of its profits to be returned to the site publishers, along with triple the cost of damages. (The plaintiffs will appear in court on July 12 to ask for a temporary injunction blocking the ads while the case is open.)

Additionally, the suit asks for Gator to pay for an advertising campaign "to dispel the effects of Gator Corp.'s wrongful conduct and confusing and misleading advertising."

Spokespeople from Redwood City, Calif.-based Gator did not return requests for comment by press time.

The news marks the latest turn of events in the firm's long dispute with online publishers. Earlier this month, Weight Watchers won a suit against competitor DietWatch.com, a Gator client that had been buying ads to appear on WeightWatchers.com. The New York court ordered DietWatch.com to pay $25,000 in damages.

Last year, lawyers for the New York-based Interactive Advertising Bureau began looking into asking for government regulatory action against the firm due to a new Gator ad product that effectively replaced publishers' ad units with its own.

After some heated rhetoric -- and a suit by Gator charging the IAB with "unfounded accusations" -- the trade association said the two parties would table legal action in favor of working to create mutually-beneficial advertising units.

Now, while the IAB and the Online Publishers Association -- which both represent a number of the plaintiffs in this week's suit -- each declined to comment on the new case, sources close to the matter say a white paper published by Gator in April served as the spark for the latest round of legal battles.

The paper, titled "The Next Generation In Online Advertising: User Level Behavioral Marketing," recommends that advertisers use Gator to deliver ads on sites including NYTimes.com and WSJ.com.

"After the white paper ... we then saw a significant uptick in pop-up advertising appearing on our sites, that had not been authorized by us," said Terence Ross of D.C.-based law firm Gibson, Dunn & Crutcher, representing the plaintiffs. "And so the companies decided they had to do something about this."

As a result, the complaint doesn't pull any punches, labeling Gator "a parasite on the Web that free rides on the hard work and investments of Plaintiffs and other Web site owners."

"Gator Corp. makes money by placing advertisements for third parties on the Plaintiffs' Web sites without Plaintiffs' authorization ... and pockets the profits from such sales," the suit reads. "Gator Corp. free rides on the valuable intellectual property rights of the Plaintiffs and the substantial investment Plaintiffs have made, and continue to make, to draw millions of visitors to their Web sites."

The complaint also claims that Gator actively sells the sites' audiences to advertisers, telling prospective advertisers "that it is more effective to advertise on a targeted Web site by buying the URL through Gator Corp. than actually approaching the Web site owner itself." Furthermore, the suit also charges that Gator will be willing to refrain from selling advertising on publishers' sites if the site owner pays a special fee of up to $50,000.

The suit also alleges that Gator's OfferCompanion application is spread similarly to a Trojan horse virus -- while users are downloading a "digital wallet" to store passwords, the ad-serving engine is also surreptitiously loaded onto users' computers. OfferCompanion, which Gator has said is installed on 15 million computers, also is offered in connection with other firms' software downloads. (The firm, for its part, has long maintained that it gives adequate notice of its practices to consumers.)

Ross said the plaintiffs had not contacted Gator prior to filing the suit.

"With the lawsuit against the IAB ... the IAB had simply come out and criticized the practices of these replacement ads, and Gator had run off to court in California and filed a lawsuit against them," he said. "It didn't make much sense to attempt a dialog with them -- they've indicated in the past that they're not interested in a meaningful dialog on this subject."

While Gator did not return requests for comment on this story, spokespeople have told internetnews.com in the past that consumers have the option of closing the pop-up ads. Indeed, the firm contends that the advertising it provides is a service to consumers, since it's targeted to users based on their surfing behavior -- and thus, is more relevant that most ads sold by site publishers.

Despite the longstanding controversy, advertisers in large numbers have flocked to Gator, which has serviced clients including HotJobs.com and Travelocity.
From InternetNews.com - Weight Watchers Files Second Pop-Up Suit , October 9, 2002 - http://www.internetnews.com/IAR/article.php/1479231