RealTime IT News

Major Web Publishers Sue Gator

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. , The New York Times Co. , Dow Jones & Co. , CondeNet, Knight Ridder Digital , and units of Gannett , 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.