Federal Judge OK's Stealing U-Haul's Audience, Is Steaming Open Direct Mail Envelopes and Inserting Competitors Flyers Next?

WASHINGTON, Sept 8, 2003; Peter Kaplan writing for Reuters reported that - A federal judge has rejected a legal challenge by truck and trailer rental company U-Haul to pop-up Internet advertisements, in a ruling that could embolden providers of the ads.

U.S. District Judge Gerald Bruce Lee, in a ruling handed down on Friday, dismissed U-Haul's lawsuit, which sought to ban software by Internet advertising company WhenU that launched rival pop-up ads when customers access U-Haul's Web site.

Lee said the ads don't violate the law because WhenU's software didn't copy or use U-Haul's trademark or copyright material, and because computer users themselves had chosen to download the pop-up software.

"While at first blush this detour in the user's Web search seems like a siphon-off of a business opportunity, the fact is that the computer user consented to this detour when the user downloaded WhenU's computer software from the Internet," Lee said.

Arizona-based U-Haul, a unit of AMERCO Inc., filed the lawsuit against WhenU in October last year in federal court in Alexandria, Virginia, claiming the ads were a violation of its trademarks and copyrights and also violated unfair competition laws.

If other courts reach the same conclusion as Lee, it would remove a potential obstacle for companies like WhenU and Gator Corp., which also offers software that triggers pop-up ads related to Internet addresses a user visits.

The pop-up software comes packaged with free software such as screen savers. It monitors the addresses a user is visiting. When it detects a Web site like U-Haul's, the software may interrupt by displaying an offer from a rival company.

U-Haul's lawsuit sought both monetary damages and an injunction barring the pop-up ads running on its Web sites.

WhenU described Lee's ruling as "very favorable."

"This is a victory for consumer choice - it ultimately protects consumers' right to control what they see on their computer screens," WhenU chief executive Avi Naider said in a statement.

U-Haul issued a statement expressing disappointment about the ruling, but insisting that Web site owners "have the right to display their Web sites without having their sites hidden behind such invasive advertisements.

"We are are currently evaluating our options for appeal," the company's statement says.

Judge Lee acknowledged that pop-up ads are often troublesome and annoying. "Alas, we computer users must endure pop-up advertising along with her ugly brother unsolicited bulk e-mail, 'spam', as a burden of using the Internet," he wrote.