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Court: Pop-ups burden of using Net

A federal judge gives the OK for a software maker to deliver ads that pop up over Web sites, including those owned by the advertiser's rivals. The judge also bemoans the irritating nature of pop-ups.

A federal judge has given the OK for a software maker to deliver ads that pop up over Web sites, including those owned by rivals of the advertiser.

A judge in the U.S. District Court for the Eastern District of Virginia granted on Friday a motion for summary judgment in favor of WhenU, a distributor of free advertising software, in its case against moving company U-Haul International. U-Haul had charged WhenU with trademark and copyright violations, among other complaints, as a result of pop-ups for competing movers appearing atop U-Haul's Web pages.

"The fact is that the computer user consented to this detour when the user downloaded WhenU's computer software," the judge's summary read. "While pop-up advertising may crowd out the U-Haul advertisement screen through a separate window, this act is not trademark or copyright infringement, or unfair competition."

In July, the court issued an early dismissal of U-Haul's charges. The full opinion was filed Friday. In it, the court also dismissed other claims, including charges of violation of the Virginia Business Conspiracy Act.

The court's ruling is a first in a controversial sector of online advertising, and it could influence lawsuits involving a better-known ad-software, or "adware," company, Gator, which, like WhenU.com, develops an Internet "helper" application that often comes bundled with popular free software such as peer-to-peer applications. When downloaded, the programs from Gator and WhenU serve pop-up and pop-under ads to people at various times while they're surfing the Web or when they visit specific sites. Gator's software has landed it in court against The Washington Post, catalog retailer L.L. Bean and hotel chain Extended Stay America.

In February, Gator settled a case brought by the Post, The New York Times, Dow Jones and other media companies, and its other lawsuits have been consolidated and will be decided by the Judicial Panel on Multidistrict Litigation in Washington, D.C.

Both WhenU and Gator have argued that their ad-sales and delivery tactics are legal, because consumers agree to receive the ads when they download and install the software. They've also argued that it comes down to consumers owning their own desktops, which are inherently built to support many applications with multiple windows.

U.S. District Judge Gerald Bruce Lee agreed with WhenU's argument but also acknowledged the burden of annoying pop-ups.

"WhenU's pop-up advertisement software resides in individual computers as a result of the invitation of and consent of the individual computer user, and, thus, the advertisements do not use, alter or interfere with U-Haul's trademarks or copyrights," Lee wrote in his opinion. "Alas, we computer users must endure pop-up advertising along with her ugly brother 'spam' as a burden of using the Internet."

Avi Naider, WhenU's CEO, said he was pleased with the opinion and said it "establishes that consumers can have applications on their desktop that present them with point-of-sale alternatives."

WhenU's legal counsel would not comment on the case. The company still faces lawsuits from Overstock.com, Wells Fargo and 1-800-Contacts. TigerDirect withdrew its lawsuit against the company last week, according to Naider.

Tom Prefling, a U-Haul spokesman, said the company is disappointed with Judge Lee's decision and that it is evaluating its options for appeal.

"U-Haul has long believed that unwanted pop-up ads such as those provided by WhenU are the scourge of the Internet for both businesses and consumers, and that Web site owners have the right to display their Web sites without having their sites hidden behind such invasive advertisements," Prefling wrote in an e-mail.

WhenU makes software that tracks the movement of Web surfers and serves up targeted ads when they're apt to make a purchase, i.e., an ad for travel site Priceline.com might appear while a surfer is visiting Travelocity.com. The software is bundled with other popular downloads such as peer-to-peer software Kazaa and BearShare or weather applications, which consumers use for free by agreeing to receive occasional ads. About 30 million Net users have WhenU's software on their desktops.

The company, which is based in New York and has about 50 employees, says it is different from its more controversial brethren Gator, because it does not track personally identifiable data. It examines information from the desktop--keywords, URLs and search terms currently in use on the consumer's browser--to deliver relevant ads. It claims more than 400 advertisers, including American Express, Ford and Microsoft.

According to Gator's Web site, "no personal information is collected simply because you view or use any of the Web sites."