Online marketing firm sued over pop-up ads

Seven major news organizations will ask a U.S. District Court judge in Virginia on July 12 to stop online advertising company The Gator Corp. from placing pop-up ads on their Web sites until a lawsuit between the two sides can be resolved later this year.

The plaintiffs claim that Redwood City, Calif.-based Gator has been piggybacking off their Web sites by placing pop-up ads that compete with the advertising the sites sell themselves, said Terence Ross, a Washington-based attorney at Gibson, Dunn & Crutcher, the law firm representing the plaintiffs, which include The Washington Post Co., Dow Jones & Co. Inc., Tribune Interactive, The New York Times Co. and Gannett Co. The publishers have 15 Web sites that draw millions of viewers each month.

PDF files of both the 35-page request for an injunction and the 99-page complaint are available on the Gibson, Dunn & Crutcher Web site.

Gator displays ads based on a Web surfer's habits. Those ads are in addition to the ads that the Web sites themselves display. The suit charges that the ads Gator often displays are confused for ads displayed by the Web sites and are often in direct competition to either the Web site or the Web site's advertisers.

"The fundamental fact is that he is making money off of our investments in our Web sites," Ross said this morning.

The lawsuit focuses on issues of trademark and copyright violations, unfair competition and misappropriation and interference with future business contracts, Ross said. He also accused Gator of violating a Virginia state law concerning conspiracy to harm a business.

Gator CEO Jeff McFadden issued a statement yesterday saying that all the charges are untrue and that Gator might countersue the Web site publishers.

"The plaintiffs either haven't done their homework, or more likely are trying to create a 'bump in the road' for Gator, a company that's rapidly winning online advertising dollars from Corporate America with its superior behavioral marketing platform," McFadden said in the statement. "We're highly confident that the allegations made by the plaintiffs are utterly baseless, and that the business practices we've employed for years with over 400 customers (including over sixty Fortune 500 companies) and 22 million active users are legal."

McFadden went on to say that less than one-third of 1 percent of the ads Gator displays are pop-up ads.

"The plaintiffs' true motivation here is clear: they want to slow the momentum of a competitor with a more effective marketing platform that's driving compelling, measurable results for advertisers," McFadden said. Ross said the plaintiffs haven't yet asked for monetary damages against Gator, and he said he isn't even sure if Gator is making a profit.

In his statement, McFadden claims the company is profitable.

But Ross said that even if the company isn't making a profit on the ads it displays on the plaintiffs' Web sites, Gator would still be liable for statutory and monetary damages, which could reach into the millions of dollars.

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