WhenU Can Keep On Popping Up

  |  November 19, 2003   |  Comments

UPDATE: A federal judge refused to grant Wells Fargo's request to shut down the desktop advertising service.

Today, in a courtroom for the Eastern District of Michigan, Wells Fargo got a big rebuff in its lawsuit against WhenU.

The bank claimed that WhenU's ads, which appear in separate branded windows on the desktop in response to a user's Web site visits, obscured its own Web site and advertising. However, U.S. District Judge Nancy Edmunds said consumers wouldn't likely be confused by the source of the ads. Her 70-page ruling was the result of a six-week trial held in Detroit, in which both sides brought multiple expert witnesses and engaged in demonstrations of how the software worked.

The judge found that targeting consumers according to interests expressed by their Web behavior is a legitimate use of the Internet, and that allegations that trademark or copyright law were being violated were without merit. The Court also found that, contrary to the plaintiff's charges, "WhenU protects the privacy and security of its users" by the specific way it tracks advertisements, which avoids cookies and eliminates profiling of individual users.

"Our second court victory in the last couple of months should remove any doubts about our approach and we think it's worth pursuing," said WhenU CEO Avi Naider. WhenU maintains that it provides legitimate comparative advertising, and the judge wrote that an injunction against WhenU's operations "would threaten the integrity of the competitive process."

In a statement, Wells Fargo said, "We see today's decision as a set back for consumers' struggles to protect their desktop (sic) from deceptive, confusing and intrusive forms of advertising. This form of advertising can create confusion for impacted customers who visit financial sites and believe the offers they are receiving are from that financial institution. The source of these pop-up advertisements may not always be clear to the customer. It's important for customers to know who they are dealing with online, and we took action to eliminate this source of confusion for our customers.

In July, another federal judge granted WhenU's motion to dismiss the meat of the charges brought against it by U-Haul: trademark and copyright infringement, unfair competition, trademark dilution and contributory infringement. U.S. District Court Judge Gerald Lee agreed with WhenU's argument that computer owners control their computers and what appears on them.

The Wells Fargo suit is the fifth against New York City-based WhenU; it's also been sued by 1-800 Contacts, Overstock.com, Quicken Loans, U-Haul and Weight Watchers. Naider said the suits were time-consuming and expensive for the privately-held company. "Large companies like Wells Fargo can force small companies to spend tremendous amounts of money," he said.

This second victory, Naider said, confirms the validity of WhenU's model. "We believe that the future of Internet advertising will incorporate to a large degree desktop advertising models," Naider said.

While the ruling is a clear victory for WhenU, it's unclear what impact it would have on other pending lawsuits faced by the Claria Corporation, formerly known as Gator, a desktop advertising company with a similar model -- and similar legal troubles. Gator continues to face lawsuits from Overstock.com, TigerDirect, PriceGrabber.com, UPS, Hertz, and L.L. Bean.

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ABOUT THE AUTHOR

Susan Kuchinskas

Susan Kuchinskas has covered interactive advertising since its invention. The former staff writer for Adweek, Business 2.0, and M-Business covers technology, business and culture from Berkeley, CA.

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