Claria Defends Advertisers With Lawsuit Against L.L. Bean

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Claria said yesterday that it filed a lawsuit against L.L. Bean, alleging that the cataloger is engaging in anti-competitive practices by filing lawsuits against four of its advertisers.


The suit, filed last week in U.S. District Court in Texas, accuses the Freeport, ME, company of engaging in a "campaign to interfere with Claria's business relationships through sham litigation and disparaging press releases."


Claria is responding to L.L. Bean's lawsuits, filed last month against JC Penney, Gevalia Kaffe, Nordstrom and Atkins Nutritionals. In them, L.L. Bean alleges that each company violated its trademark rights by advertising through Claria's desktop ad program. L.L. Bean also has a pending suit against Claria claiming trademark infringement.


Claria, formerly known as Gator, serves pop-up ads tied to Web browsing behavior. It sells advertisers categories to target, not specific Web sites, and claims its pop-up ads have response rates up to 40 times greater than traditional banner ads. Forty-three million computer users have its ad software, which is bundled with free software like file-sharing program KaZaA.


L.L. Bean calls Claria "spyware" that degrades the consumer's online experience.


"We are not at all surprised that Claria would sue us in response to our efforts to protect our trademark," Mary Lou Kelley, vice president of e-commerce at L.L. Bean, said in a statement.


In its suit, Claria claims that L.L. Bean is pressuring its advertisers because its own litigation with Claria, initiated three years ago, is going badly. It says that Nordstrom and JC Penney have not advertised with Claria in 18 months and that Atkins has never been an advertiser. Claria said Gevalia had never targeted the apparel category, which would trigger pop-up ads when users visit L.L. Bean's Web site.


Rather than fight in court, Atkins settled its dispute with L.L. Bean by entering into a consent decree that it would not use adware. It also paid L.L. Bean an undisclosed sum. While Claria claims Atkins was never an advertiser, the consent decree blames an Atkins licensee for running Claria ads.


L.L. Bean, like other Claria critics, contends that many users are unaware they downloaded Claria's advertising software and think the ads come from the site they are visiting. Claria notes that half of its users uninstall its software within 30 days of downloading it, and that each ad it serves carries labeling that it is from Claria.


In a statement, Claria CEO Jeff McFadden said that he was outraged by L.L. Bean's tactics and that Claria would reimburse any advertiser sued for using its service.


The Redwood City, CA, company is no stranger to legal fights. It has ongoing litigation with at least eight other companies over its ad system, which critics contend amounts to an unfair business practice and violation of trademark and copyright law. Claria settled a trademark case brought by top newspaper publishing companies, including The New York Times Co. and The Washington Post Co.


One former Claria advertiser, eDiets, recently swore off adware after it was sued for trademark infringement by Weight Watchers over its use of desktop advertising software to serve pop-up ads to visitors of WeightWatchers.com.


Claria said the legal claims against advertisers had not hurt its 425-strong advertiser base, which includes Netflix, FTD.com and Orbitz. In April, the company filed for a $150 million IPO. It reported net income of $34.8 million on $90.5 million in sales in 2003.


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