WhenU Wins Legal Victory

WhenU.com won an important legal victory last week, when a federal judge issued a summary judgment for the New York adware company in its legal fight with U-Haul over WhenU’s pop-up ads.

In a two-page order, U.S. District Court Judge Gerald Lee last Thursday 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-Haul moved to have the four remaining charges dismissed without prejudice, which would end the case. Lee said he would consider the motion.

The summary judgment, which short-circuits the trial slated to begin next week, did not include the court’s opinion in the case, which U-Haul filed last October. (The U.S. district court in Alexandria, Va., is known as the “rocket docket” for its quick disposal of cases.) Lee is expected to issue an opinion in the next few weeks explaining his rationale for granting the summary judgment.

“We are obviously pleased that the judge has dismissed the core of U-Haul’s legal claims against us,” said Avi Naider, WhenU’s chief executive. “We look forward to seeing the full opinion of the court.”

A representative for Phoenix-based U-Haul declined to comment on the case before the judge’s opinion was released.

The case could mark a watershed moment in the long legal battles of WhenU and the more well-known adware company, Gator. It could mark the first time a judge has ruled the companies’ similarly controversial business models are legal. Both WhenU and Gator serve ads on a user’s desktop in response to browsing activity. Web site publishers have said the ads are a violation of their trademarks and copyrights, and accused the companies of unfair business practices. WhenU and Gator are the targets of a number of lawsuits over the matter, including suits filed earlier this week by Overstock.com.

In the most watched legal case, Gator settled in February with a powerhouse group of publishers, including The New York Times and The Washington Post, before a judge ruled on the case. However, the judge in that case did issue a temporary injunction prohibiting Gator from displaying its ads on the plaintiffs’ Web sites. The settlement’s details were not disclosed, but it is commonly believed Gator agreed not to serve ads while users are on the publishers’ sites.

A number of cases remain against WhenU, including suits brought by TigerDirect, 1-800 CONTACTS, and Wells Fargo. Gator has cases pending against it from TigerDirect, UPS, Hertz, L.L. Bean, and PriceGrabber.com.

Naider said the legal cases overshadowed the important shift adware companies have led in the online advertising industry: matching the right message to the right consumer at the right time. He pointed to the Online Journal’s recent announcement of interest-based targeting, NYTimes.com’s wide-angle targeting option, and the success of paid search, as examples of how the industry has moved forward by giving consumers offers in the right context.

“The desktop model is complementary,” he said. “The growth of Internet advertising is going to be dependant on the growth of multiple models that take advantage of the Internet’s capability.”

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