IAB Blasts Gator.com as Unfair, Deceptive

Despite some effort at reconciliation last week, the conflict between the Interactive Advertising Bureau and Gator.com is again heating up, with the New York-based industry group charging that the startup violates publishers’ and advertisers’ legal rights.

Last week, attorneys for the IAB said they planned to recommend options to the industry association’s leadership — including legal action. Based on that news, Redwood City, Calif.-based Gator.com and the IAB entered into what spokespeople at the time described as “early, early discussions,” with sources close to both camps expressing optimism about a mutually successful outcome.

But since then, discussions have broken down, with the IAB publishing a position statement Tuesday morning charging that Gator.com violates federal copyright, trademark and intellectual property law, and indicating that the group intends to pursue “options” with government agencies.

Specifically, the IAB’s charges refer to the software firm’s OfferCompanion product, which displays a pop-up ad that obscures Web site content without the consent of the site’s publishers and advertisers.

For that reason, the trade association says Gator deceives consumers by implying that its ads belong to the Web site over which they appear. Since Gator ads aren’t sanctioned by the sites on which they appear, there’s a possibility that a site visitor could believe a pop-up they receive came from the site — and that’s a problem if they find the ad objectionable.

“Consumers who choose to use the Gator.com software for various services may not be aware that in return for these services, they are allowing Gator.com to cover up advertising sold by the Web site with advertising sold by Gator.com,” said IAB president and chief executive Robin Webster. “The consumer has not replaced the advertising by him or herself. Gator.com has done it, and is thus presenting a false and misleading business relationship between the sites and the substituted advertisers.”

Additionally, the IAB charges that by covering up sites’ ad inventory, Gator hampers Web publishers’ ability to do business with advertisers, and advertisers’ opportunities to reach consumers.

“Gator.com’s practice of visually altering publishers’ content and obscuring the advertisements of unsuspecting advertisers, without notice, substantially interferes with the contractual relationships between Web publishers and advertisers,” Webster said. “In effect, Gator.com is falsely implying relationships that do not exist. Publishers and advertisers who have chosen to be associated with one another are having those relationships damaged and are suffering grave financial harm by losing business opportunities.”

As to the “options” open to the IAB, there are few. As an industry trade group, the IAB is on shaky legal ground trying to sue Gator by itself. But it can petition agencies like the Federal Trade Commission to look into the matter.

Additionally, it can work with group members — such as online media giants like AOL Time Warner and DoubleClick — to aid their filing suit directly.

Clearly, the IAB isn’t taking the issue lightly. But in addition to simply setting Gator straight, sources close to the trade group say it aims to set a precedent with the dispute.

That’s because Gator.com isn’t the only startup that the IAB has its eye on. San Francisco-based eZula, for one, is making headlines with its TopText product, which can turn regular Web text into links to advertisers — without the consent of the page’s publisher.

Meanwhile, sources close to the Redwood City, Calif.-based firm say it’s now in discussions with members of its board of directors and its legal counsel about how best to proceed.

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