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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

Pop-up Ad/Spyware - Internet Library of Law and Court Decisions - Updated December 20, 2007

414 F.3d 400 (2d Cir., June 27, 2005)

Reversing the court below, the Second Circuit dismisses trademark infringement claims brought by a mark holder and website operator against a distributor of pop-up ads.  Such claims fail because "as a matter of law, [defendant] WhenU does not 'use' [plaintiff] 1-800's trademarks within the meaning of the Lanham Act, 15 U.S.C. § 1127 when it (1) includes 1-800's website address … in an unpublished directory of terms that trigger delivery of WhenU's contextually relevant advertising to [computer] users; or (2) causes separate, branded pop-up ads to appear on a [computer] user's computer screen either above, below, or along the bottom edge of the 1-800 website window."

The absence of such a use by WhenU of plaintiff's trademarks is fatal to 1-800 Contacts' trademark infringement claims, and mandated reversal of the District Court's grant of preliminary injunctive relief.  The District Court had enjoined WhenU from including the domain name of plaintiff's website in its unpublished directory, or causing pop-up ads to be displayed when that domain name is entered into the URL bar of a web browser, or as a search term.

In reaching this result, the Second Circuit agreed with the decisions of two other district courts - the Eastern District of Virginia in U-Haul Inc. v. Inc., 279 F. Supp. 2d 723 (E.D.Va. 2003) and the Eastern District of Michigan in Wells Fargo & Co., et al. v. Inc., 293 F.Supp.2d 734 (E.D.Mich. 2003) - each of which similarly held that WhenU's activities did not infringe the respective plaintiffs' trademarks because such activities did not constitute the requisite use of the plaintiffs' respective marks.

309 F.Supp.2d 467 (S.D.N.Y., Dec. 22, 2003), reversed in part and remanded, -- F.3d -- (2d. Cir., June 27, 2005)

Finding plaintiff likely to prevail on its claims of trademark infringement, the District court issued a preliminary injunction, enjoining the pop-up advertiser WhenU from delivering ads which are triggered by a consumer's entry of plaintiff's domain name in either his browser or a search engine, or from including plaintiff's domain name in defendant's proprietary directory, which is used to identify the ads to be delivered to consumers.  Defendant WhenU delivered pop-up ads of plaintiff's competitor to computer users when they typed plaintiff's domain name into either their browser or a search engine.  The court found such conduct likely to cause actionable "initial interest confusion" and to allow defendants to divert consumers seeking plaintiff's products to their own offerings, and thereby unfairly profit from plaintiff's goodwill.  Applying the eight factor Polaroid test, the court found that consumers were likely to be confused by defendants' actions, despite the branding of defendant's advertisements as "a WhenU offer."  As such, the court held that plaintiff was likely to prevail on its trademark infringement claims, and enjoined defendants from continuing to use plaintiff's domain name as a trigger for the delivery of advertisements. 

The court also held that plaintiff was unlikely to prevail on its copyright infringement claims, which arose out of the delivery of pop-up advertisements in a "window" which partially covered the 'window' in which plaintiff's site appeared on a consumer's computer screen.  The court found that this conduct neither violated plaintiff's right to display its copyrighted website, nor its right to create derivative works therefrom.  This later ruling was premised on the court's determination that defendant's ads are not sufficiently fixed to constitute an infringing derivative work.

The court's holding on plaintiff's trademark infringement claims is at odds with that reached by two other district courts - the District Court for the Eastern District of Virginia in U-Haul International, Inc. v., 279 F.Supp. 2d 723 (E.D.Va. 2003), and the District Court for the Eastern District of Michigan in Wells Fargo & Co. v. WhenU., 2003 WL 22808692 (E.D. Mich. 2003), each of which refused to issue similar injunctive relief.  As the Southern District of New York court noted, "this Court disagrees with, and is not bound by these findings."

2004 U.S. Dist. Lexis 227788 (D.N.H., October 21, 2004)

Court holds that the FTC is likely to prevail on its claims that defendants violated the Federal Trade Commission Act ("FTCA"), 15 U.S.C. § 45(a)(1).  Defendants were charged with downloading to consumers' computers, without their knowledge or consent, both spyware and adware that delivered pop-up advertisements for anti-spyware software, as well as "exploit code" which altered consumers' home pages, and redirected their browsers to websites selected by defendants.  Apparently, this occurred when consumers visited defendants' websites.  The Court found that this conduct likely ran afoul of the FTCA's prohibition against the use of "unfair or deceptive acts or practices" in commerce.  The Court accordingly issued 'temporary injunctive relief' requiring defendants to remove from their websites the software script that allowed defendants to download this software to consumers' computers without their knowledge.

1:04cv507 (LMB/TCB) (E.D. Va. August 25, 2004)

Court denies motion to dismiss brought by search giants Google and Overture, and allows plaintiff GEICO to proceed with trademark infringement and unfair competition claims arising out of defendants' alleged practice of selling advertising triggered by the entry of plaintiff's trademarks as search terms, which advertisements are displayed in the search results generated by such searches.

354 F.3d 1020 (9th Cir., Jan. 14, 2004)

Reversing the decision of the court below, the Ninth Circuit Court of Appeals denied the motion of defendants Netscape Communications Corp. ("Netscape") and Excite, Inc. ("Excite")  for summary judgment, and allowed plaintiff Playboy Enterprises Inc. ("Playboy") to proceed with trademark infringement and dilution claims brought as a result of defendants' practice of keying banner ads for 'adult' products to plaintiff's trademarks.  Keying is a practice used by the operators of search engines to generate revenue via the sale of banner ads.  For a fee, the search engine operator will display an advertiser's ad along with, and on, a search results page, when a consumer types one of a series of designated terms into the operator's search engine.  In this fashion, defendants keyed the display of their clients' adult-oriented ads to plaintiff's marks.  The Ninth Circuit held that when the advertiser's banner ad is not labeled so as to identify its source, this practice could result in trademark infringement by application of the 'initial interest confusion' doctrine.  The Ninth Circuit accordingly refused to dismiss plaintiff's trademark infringement claims.  The Ninth Circuit further held that issues of fact also precluded the dismissal of plaintiff's dilution claims.

Judge Berzon wrote a concurring opinion, in which he sharply criticized Brookfield Communications, the Ninth Circuit decision from which the 'initial interest confusion' doctrine springs, and the overbroad interpretation he believes it has been given by other jurists. Specifically, Judge Berzon believes that keying clearly labeled ads to plaintiff's marks should not give rise to a trademark infringement claim because the consumer is not confused when he elects to visit the clearly labeled web site of the mark holder's competitor, in lieu of that of the mark holder.

279 F. Supp.2d 723 (E.D. Va., September 5, 2003)

Court grants defendants' motion for summary judgment, and dismisses trademark infringement, copyright infringement and unfair competition claims brought by website owner against distributor of pop-up ads.  Defendants distribute a software program, which causes pop-up ads to be displayed on a user's computer screen in a window that covers all or part of plaintiff's website.  The court held that such conduct does not constitute a use of plaintiff's trademark, a prerequisite to a trademark infringement claim.  Quite the contrary, the display results from the computer user's consensual download of defendants' software, and his ability to control, via the multitasking capabilities of window's operating environment, what appears on his own computer screen.  Similarly, defendants' acts do not infringe plaintiff's copyright in the material that appears on plaintiff's website, because defendants neither display plaintiff's copyrighted materials nor make a derivative work thereof.  Defendants' ads instead appear in a separate window on a user's computer screen, which operates independently of plaintiff's website, and leaves the content appearing thereon untouched.

C.A. No. 02-909-A (E.D. Va., July 12, 2002)

Court issues a preliminary injunction, enjoining defendant Gator Corporation ("Gator") from causing pop-up ads to appear on a user's computer screen at the same time the user is viewing any of the 16 web sites operated by the plaintiff news organizations.  Such ads appear as a result of the operation of Gator's software, which a user has installed on his computer.  Gator's software apparently tracks the user's Internet usage, and delivers ads to his computer that defendant believes will interest the user based on his prior Internet usage  When these ads appear on a user's screen, they partially cover up the web site that also appears there.  Gator did not have plaintiffs' permission to cause ads to appear in this fashion.  The court held that plaintiffs were likely to prevail on their claim that causing pop-up ads to appear in this manner is an infringement of plaintiffs' trademarks, which are found on the web pages the pop-up ads partially cover up.   The court accordingly issued a preliminary injunction enjoining defendant from continuing this activity "on" plaintiffs' sites.

293 F.Supp.2d 734 (E.D. Mich., November 19, 2003)

Court denies website operators' application for a preliminary injunction, and refuses to enjoin defendant, Inc. from delivering advertisements, triggered by a computer user's visit to plaintiffs' sites, that either pop-up or under those sites.  Defendant WhenU delivers such ads via its software applications Save and Save Now!  These applications are typically consensually downloaded by the user to his or her computer as the quid pro quo of his free receipt of another software application.

The Court held that WhenU's delivery of these ads neither infringes the trademarks found on plaintiffs' sites, nor their copyrights in the material thereon.  WhenU's activities - including the use of plaintiffs' marks in a directory which determines the ads a user receives, and the display of ads in windows that partially obscure plaintiffs' websites but do not contain plaintiffs' marks - do not constitute a use of plaintiffs' marks in commerce, a prerequisite to a trademark infringement claim.  Plaintiffs' trademark infringements claims also failed because plaintiffs did not present evidence sufficient to establish that users would likely be confused by WhenU's activities, and conclude that plaintiffs sponsored WhenU's ads.  Rather, the Court held, users with Save and Save Now! installed on their computers are likely to conclude that WhenU is the sponsor of the ads in question, both because the ads so inform the user, and because of their familiarity with such displays.

The Court held that plaintiffs' copyright infringement claims failed because the appearance of WhenU's ads in a window that partially obscures plaintiffs' sites does not constitute the creation of an unauthorized derivative work in violation of plaintiffs' exclusive right to create the same.  Rather, plaintiffs' copyrighted works - the content of their websites - remain unaltered on the servers on which they are hosted, and simply appear simultaneously with WhenU's advertisements in separate windows opened by and with the consent of the user on whose computer screen they appear.  Plaintiffs' copyright infringement claims also failed because any images appearing on a user's screen are simply too transitory to constitute the creation of a work.  As such, WhenU and the users cannot be held to have created a derivative work, and thus cannot be held to have infringed plaintiffs' copyrights.

No. 040907578 (Utah Dist. Ct., June 22, 2004)

Court issues preliminary injunction, enjoining enforcement of Utah's Spyware Control Act, which, inter alia, prohibits the delivery of 'pop-up' ads that obscure any portion of an Internet website, and bars advertisers from downloading programs that deliver ads to a consumer's computer unless the consumer's consent to such download is obtained in the manner specified by the Act.  The Court issued such relief because it found that plaintiff was likely to prevail on its claim that those portions of the Act run afoul of the Commerce Clause of the United States Constitution.

Case No. C07-0807-JCC (W.D. Wash., August 28, 2007)

Court holds that Section 230 of the Communications Decency Act (“CDA”) immunizes distributor of anti-virus and security software from claims of tortuous interference with contract, trade libel and unjust enrichment arising out of its distribution of software that labels plaintiff Zango’s software as malware, and enables a user to block or disable it.  Zango provides consumers free access to online videos, games and music in exchange for their agreement to the display of sponsors’ advertisements.  Notably, the Court holds defendant entitled to such immunity notwithstanding claims that it acted in bad faith when it so labeled plaintiff’s software.  According to the Court, ‘good faith’ is not a prerequisite to immunity under section 230(c)(2)(b) of the CDA.  All that is required is that a provider of an “interactive computer service” take “action  … to enable or make available to … others the technical means to restrict access to” material  “the provider or user considers … objectionable,” a standard defendant met.

The Court also held that it could exercise personal jurisdiction over the non-resident defendant in Washington as a result of its sale of software products to Washington residents which allegedly caused plaintiff injury in the forum.

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