• Pop-Up Ad Company Settles Suits
  • September 17, 2004
  • Law Firm: Manatt, Phelps & Phillips, LLP - Los Angeles Office
  • Adware company Claria has been quietly settling litigation brought by a number of online businesses charging that its delivery of pop-up ads infringes on their trademarks.

    Claria settled a multidistrict litigation with Wells Fargo and Quicken Loans on August 7, 2004. In recent months it also settled cases brought by UPS, Hertz, L.L.Bean, Tiger Direct, and Six Continents (see the May 24, 2004 issue of [email protected] for a report on the L.L.Bean case). Terms of the settlements have not been disclosed.

    "These [matters] have been settled to the satisfaction of all parties," Claria spokesman Scott Eagle told CNET, adding that the company has formed a business relationship with some of the plaintiffs. "Claria will continue to protect [its] business model."

    Early last year Claria settled a high-profile case brought by The Washington Post,The New York Times, Dow Jones, and other media companies. Claria still faces a lawsuit from retail florist Teleflora. The company has asked the court to have the case considered individually, as opposed to a part of the consolidated lawsuit.

    The settlements close one chapter in the ongoing dispute over pop-up ads, but also leave open questions about their legality. Claria's advertising software piggybacks on free downloads such as peer-to-peer application Kazaa, supporting them by delivering targeted ads to users. Once downloaded, Claria's application serves pop-up and pop-under ads to users surfing the Internet or visiting specific sites.

    Plaintiffs charged Claria with violating their copyrights and trademarks by causing competitors' ads to appear on top of or under their Web sites. At one point Claria was defending as many as 13 related cases, so in early 2002 the company applied to have the cases consolidated.

    Although there has yet to be a final decision on the legality of adware, pending lawsuits could still clear up the issue. Claria rival WhenU.com is defending a case brought by Wells Fargo and Quicken Loans. WhenU has also filed an appeal in a New York district court in a case brought by 1-800-Contacts.com, which had won an injunction against the company's pop-up ads. Search engine Google, which allows advertisers to bid for trademarked names to appear in related search results, could also figure in the debate. It is currently fielding lawsuits from Geico and American Blind and Wallpaper that complain that its practices violate their trademarks.

    Significance: Pop-up ads pose interesting and not easily answered questions raised by Internet technology that has no obvious counterpart in the brick-and-mortar world. The pop-up wars have produced a number of conflicting rulings by courts prospecting in this new frontier in trademark law, and marketers can expect the confusion to continue for some time.