, IAB Feud Reaches Fever Pitch

The war of words between the Interactive Advertising Bureau and software company Corp. escalated yesterday as launched a pre-emptive strike, saying it filed a federal lawsuit against the IAB to protect its right to use its banner ad covering technology Companion Pop-Up Banner.

“The suit was brought in response to the IAB's unfounded accusations regarding the legality of this new advertising vehicle and their threats of legal action against Gator,” the company said in a statement.

Companion Pop-Up Banner is included in OfferCompanion, software that is bundled with's digital wallet service. Companion Pop-Up Banner serves a banner ad in a separate pop-up window that obscures banners already on a Web site. Users register with, Redwood City, CA, and fill out questionnaires about their likes and preferences so Gator can target relevant ads to them.

In a statement, the IAB had said it would “pursue options on behalf of its members with the appropriate federal agencies.”

IAB president/CEO Robin Webster said that if a publisher sued, the IAB would consider filing an amicus brief with the court stating its objection to's technology. The IAB also is considering filing a complaint with the Federal Trade Commission, she said.

Webster said the IAB had not seen the lawsuit filed by and could not comment directly on it. CEO Jeff McFadden said that he spoke Aug. 24 with Webster to try to reach a compromise. He said Webster was not receptive to his ideas.

“We were a bit surprised the IAB did not come to talk to us and instead chose to make some egregious comments in the press,” he said.

Webster acknowledged that she spoke with McFadden but said he never proffered any compromise and that she extended an olive branch to the company in that conversation.

“I was going to give them enough time to meet with their board on [Aug. 29],” she said. “They are a software company. They should stick to making software.” was launched in June 1999. Its first product, dubbed Gator, was a virtual “smart companion” that automatically fills out order forms and speeds shoppers through online checkouts.

The problem with's current technology, according to the IAB, is that while members may opt in to the company's services, the way the ads are served to those users — by way of pop-ups that appear over a site's ads and content — may infringe on the trademark, copyright and intellectual property rights of Web publishers and advertisers.

The IAB said's services “result in the deception of consumers and advertisers” and that they interfere with the “valid contractual relationships between” Web publishers and their advertisers.

“I'm not sure their customers have permission to get around copyright laws,” Webster said. “I have no issue at all with their other services.”

McFadden said he thinks his company's technology and methods are legal. He noted that when using Companion Pop-Up Banner, relevant ads will pop up about two seconds after the page loads, giving users plenty of time to click on the Web site's original banner.

“[Gator] views both Web site publishers and software publishers as invited guests on the user's computer screen,” he said. “Gator says it respects both relationships: the user sees the site publisher's ad first, and then sees Gator's branded pop-up banner in a separate window that floats over the banner location on the Web page. The consumer can choose not only which advertisement to click, but can also set the time delay, change the pop-up banner window location, or even click to close the pop-up banner window altogether.”

According to Webster,'s tactics combine copyrighted content from Web sites with ads that may not meet the quality and content requirements of the sites to which they are served.

“'s practice of visually altering publishers' content and obscuring the advertisements of unsuspecting advertisers, without notice, substantially interferes with the contractual relationships between Web publishers and advertisers,” she said. “In effect, is falsely implying relationships that do not exist.”

McFadden said that despite the IAB and its members' protests, advertisers are enthusiastic about's services. The company boasts 200 advertisers, he said, and more than 8 million members.

“Our response rates are from 6 [percent] to 26 percent higher than traditional banners,” he said. “Our advertisers are excited about this because it works.” may not be the only such company the IAB has to contend with. San Francisco-based eZula Inc. offers a product called TOPtext, an example of contextual advertising that transforms plain text on a Web site into hyperlinks – all without the site publisher's knowledge.

Microsoft Corp. planned to include a similar technology in its soon-to-be-released operating system WindowsXP but changed its mind after opposition to the technology grew.

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