Claria Fires Back at L.L. Bean Suits Against Advertisers

  |  June 10, 2004   |  Comments

The longstanding legal battle between the two companies heats up again.

Adware firm Claria has fired back against longtime legal foe L.L. Bean, after the outdoor wear firm filed suit against its advertisers and former advertisers.

Claria's lawsuit, filed in the Eastern District of Texas, claims that L.L. Bean intentionally interfered with existing and potential contractual relationships by suing Claria advertisers. It also accuses the retailer of disparaging its business and conspiring to intimidate Claria's customers and potential customers.

"They have chosen to wage a battle through PR campaigns and by attempting to intimidate their competitors through the filing of frivolous lawsuits," said Jeff McFadden, Claria's CEO, in a statement. "We are outraged by L.L. Bean's irresponsible tactics and have asked the court for damages relating to their reckless actions and anti-competitive and anti-consumer behavior."

The suit is just the latest episode in a series of legal maneuvers between the two companies, though the most recent moves come at a particularly inopportune time for Claria. The company recently filed for a $150 million initial public offering of stock.

L.L. Bean's recent suits named alleged Claria advertisers Nordstrom, J.C. Penney, Gevalia Kaffee, and Atkins Nutritionals, accusing them of infringing on the retailer's trademark by placing pop-up ads over its Web site. (L.L. Bean says Atkins has since agreed not to serve such ads on its Web site, and has agreed to pay "a confidential amount," though Claria says Atkins was never even a client.)

L.L. Bean is also among the litigants in a combined lawsuit against Claria. Other parties include: Hertz Corporation; Six Continent Hotels; Inter-Continental Hotels Corporation; TigerDirect; True Communication; Wells Fargo & Company; WFC Holdings Corporation and Quicken Loans.

"We are not at all surprised that Claria would sue us in response to our efforts to protect our trademark. Given the form of their business, Claria is naturally a litigious operation," said Mary Lou Kelley, L.L. Bean's vice president of e-commerce. "L.L. Bean plans to vigorously press its trademark infringement complaints, and we will be equally vigorous in defending against this latest maneuver by Claria."

While the latest suit accuses L.L. Bean of interfering with Claria's business, the issues involved in the larger legal dispute are important ones for Internet advertising. The legality of targeting ads based upon a particular trademarked term -- be it in the URL of a site visited or a keyword typed into a search engine -- has not yet been decided by the courts. Google, which is involved in legal battles of its own with American Blind and Wallpaper Factory and GEICO, has taken the position that advertisers can use trademarked terms as keywords, though not in ad copy.

"There are a whole bunch of theories that are left to be proven here," said Douglas Wood, an expert on advertising law and a partner with Reed Smith Hall Dickler. "The question here will be whether they should have sued Claria instead of suing advertisers. Everybody's searching at theories to get these issues resolved."

The choice of venue in the latest Claria suit is an interesting one -- neither Claria nor L.L. Bean are headquartered in the Eastern District of Texas. Though Claria cites the location of its former client, JC Penney, as one reason for the choice of venue, a source close to the company says the firm feels it would be a favorable location for the case to proceed.

Adware has proven to be a particularly controversial topic as of late, with the battle fought both on the technological level -- with spyware blockers being released by both independent firms and ISPs -- and in the legislative arena. Utah has already passed an anti-spyware law, though Claria competitor WhenU has challenged the statute in court. California has two bills under consideration, and legislation is also pending at the federal level.

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Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

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