Round one begins in a legal fight that could have repercussions throughout the Web publishing industry.
Claiming that it's had enough of the Interactive Advertising Bureau's "unfounded accusations and threats," startup Gator.com is suing the New York-based industry association and seeking to clear its name.
Redwood City, Calif.-based Gator filed a suit Monday in federal court, it said, to protect its right to use its Companion Pop-up Banner, which occasionally appears to deliver an ad in a window that can obscure existing banner ads. The Gator software runs in the background as a user surfs the Web, and pops up windows -- including ones containing ads -- in response to the sites a person visits.
According to Gator, it launched the suit in response the IAB's charges about the ad vehicle's legality and threats of legal action. The lawsuit seeks the federal court's declaration that the group's complaints are unfounded.
Although the IAB declined specific comment until it's had time to read the suit, the organization has made its feelings on the issue clear. It maintains that Gator's business practices mislead Web site visitors into thinking ads are delivered by the publisher, and wrongfully obscure ads that the publisher's already sold to an advertiser.
But Gator's chief executive, Jeff McFadden, says that's not the issue, since his company delivers ads that he claims are more effectively targeted to users than those of the big ad servers and networks (many of whom are represented on the IAB.)
"The danger to the IAB's online publishers isn't Gator -- the danger is irrelevant advertising," McFadden said. "Millions of Web users are already ignoring 99.8 percent of current banners ads, and publishers are perishing at an alarming rate. We believe our proven targeting model can dramatically help to rejuvenate online advertising, so we refuse to allow the IAB to falsely claim that Pop-up Banners are illegal or to interfere in any way with our advertisers' right to deliver relevant advertising, or our consumers' right to decide for themselves what is or isn't displayed on their own computer screens."
"I can understand why the IAB, who represents our competitors, doesn't like our Pop-up Banner Windows, but their claims about its legality are utterly baseless," he said, adding that Gator's ads see click-through rates up to 50 times greater than the industry standard.
The startup also fired back in response to the IAB's allegations that users are unaware that the pop-ups originate from Gator -- which bundles its software with that of other small software players, such as WeatherBug -- saying that users must opt-in to the software by clicking a button to actually install the software.
"When consumers download Gator's free software they are shown an informational screen that clearly describes that they are getting our software at no charge and are allowing Gator to display advertising and information based upon the Web sites they visit," said L. Scott Primak, who is Gator's director of legal affairs. "The consumer must click a permission acceptance button to install the software."
"We understand that Web site publishers want total control over what consumers see. We believe that the central issue is that every consumer has the right to decide what software they want to run on their own personal computer, and to decide what information they want to display on their own computer screen," Primak said.
Similarly, Gator believes users have opted in to viewing its advertising because the company's banners are closable by the user, and McFadden says its software is easily uninstallable.
Now, the ball rests in the IAB's court, which had said earlier on Tuesday that it intended to ask federal regulators to take a look at Gator's practices, but was waiting for Gator and the startup's board of directors to make the first move.
In any event, the industry association is unlikely to sue Gator on its own, even though it has earlier charged trademark, copyright and intellectual property infringement on behalf of its membership. But the group is expected to call on its member companies to file suits against the startup.
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