Overstock.com Drops Suit Against Claria

Discount e-tailer Overstock.com has dropped its lawsuit against Claria, the desktop software company formerly known as Gator, according to court documents.

Overstock.com had filed separate legal complaints against Claria and WhenU.com, alleging the adware companies violated its trademark and engaged in unfair business practices by serving ads on its Web sites.

The suits, filed in U.S. District Court in Overstock.com’s home state of Utah, also claimed that the companies’ practice of serving ads from competitors was an unfair business practice. The retailer filed a motion to dismiss the case, and the judge granted it, earlier this week.

At the heart of these claims is the question of whether Claria and WhenU are leeching off publishers or providing a requested service for customers by displaying ads in exchange for the free use of software, such as Claria’s Gator eWallet.

Overstock.com executives had no comment, but the company may be responding to some writing on the wall. On November 19, U.S. District Judge Nancy Edmunds ruled against Wells Fargo , which had filed a similar complaint against WhenU, another desktop competitive advertising tool. 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, but Edmunds dismissed a similar case against WhenU filed by U-Haul.

But there are still plenty of lawsuits to be decided or dismissed before Claria’s business model gets a legal clean bill of health. The company still faces similar litigation brought against it by L.L. Bean, United Parcel Service, Extended Stay America, Six Continents Hotels, Lending Tree, Tiger Direct, and Hertz.

When reached by telephone, Claria senior vice president and chief marketing office Scott Eagle declined to comment except to note that half of the companies with outstanding complaints had advertised on Claria’s network. Eagle said he stood by what he previously told this publication. On June 30, discussing Overstock.com’s complaint, he pointed out that Overstock.com was an early endorser of the Claria business model, using it as an advertising vehicle for two years and doing “hundreds of thousands of dollars” worth of business with Claria.

In June 2002, a group of top-tier publishers — including The New York Times Co., The Washington Post Co., and Gannett — filed suit against Gator on the grounds that its ad-supported software infringed on their copyrights and trademarks by serving pop-up ads on users’ screens while they were on those companies’ news sites. Although that case might have decided whether the business model was legal, the parties reached a surprise confidential settlement in February that left the issue of Claria’s and Whenu’s business models up in the air.

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