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WhenU wins pop-up adware case

'Broad ramifications for search engines'

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WhenU.com has won a court battle over pop-up ads that it displayed on the web site of contact lens seller 1-800 Contacts, after the Second Circuit Court of Appeals ruled that the ads did not breach 1-800 Contacts’ trade marks.

The Court found that WhenU did not “use” 1-800’s trade marks when it included the company's web address – which is similar to its trade marks – in an unpublished search-terms directory, or when it caused pop-up ads to appear on the 1-800 website when viewed by those with WhenU's software on their computers.

WhenU's software exists on 25 million computers, largely as a result of its partnership with Kazaa, the popular file-sharing service.

When internet users download the Kazaa software they also get WhenU's ad-serving software, or adware. Its software examines keywords, URLs and search terms in use on the user's browser and then selects which ads to serve the user.

Following a line of other disgruntled site owners, 1-800 Contacts sued WhenU in October 2002 over the appearance of pop-ups advertising rival contact lens company Vision Direct when users had typed in search terms relating to ‘1-800 Contacts’.

In December 2003, Judge Deborah Batts of the Southern District Court of New York granted 1-800 Contacts an injunction, prohibiting WhenU from sending the pop-ups, and requiring that the trademarked terms be removed from its search terms database.

That decision went against a trend of rulings in favour of the pop-up ad company, and has now been overruled.

According to the ruling issued by the Court of Appeals on Monday, WhenU’s targeted delivery of ads does not amount to trademark infringement.

“The fact is that WhenU does not reproduce or display 1-800’s trade marks at all, nor does it cause the trade marks to be displayed to a [computer user],” wrote chief Judge John Walker, giving the opinion of the Court. “Rather, WhenU reproduces 1-800’s website address, which is similar, but not identical, to 1-800’s 1-800 CONTACTS trade mark,” in an inaccessible directory.

The Court distinguished WhenU's conduct from that of its competitors – noting that WhenU brands its ads prominently, does not disclose the proprietary contents of its directory and does not permit advertisers to pay for theirs ads to appear on specific websites.

WhenU’s lawyer, Celia Barenholtz, of the law firm of Kronish Lieb Weiner and Hellman, said:

"The opinion is the most important ruling to date on the subject of targeted internet advertising, and could have broad ramifications for search engines such as Yahoo! and Google that allow advertisers to buy targeted advertising based on brand names of competitors."

Google has been the subject of several suits in Europe and the US over its AdWords service. This allows advertisers to sponsor particular search terms so that, whenever that term is searched for, the advertiser’s link will appear next to the search results.

Google had taken an interest in the WhenU case, filing a statement with the court and urging it to dismiss the trademark claims. ®

Copyright © 2005, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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