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Pubs Suing Because They Can’t Compete, Gator Says

Those who can, innovate. Those who can’t, sue.

That is Gator Corp.’s assessment of a lawsuit filed last month by The Washington Post Co., The New York Times Co., Dow Jones & Co., Gannett Inc., Condenet Inc., Tribune Interactive Inc., Knight Ridder Digital and three other publishers.

Judge Claude Hilton issued an injunction July 12 in federal court in Alexandria, VA, barring Gator from advertising on 16 Web sites pending resolution of the suit.

The publishers claim that by serving unauthorized pop-ups, Gator infringes on their copyrights and trademarks, depriving them of revenue.

Nonsense, contends Scott Eagle, chief marketing officer at Gator, Redwood City, CA. “This is about competition,” he said.

To support his argument, Eagle referenced a June 24 DM News article announcing the formation of an online ad-sales consortium of major publishers dubbed the At-Work Brand Network. In it, Scot McLernon, executive vice president of sales and marketing at CBS MarketWatch, said Internet advertising’s ability to target was the subject of a lot of hyperbole.

“There is theory and reality,” McLernon said. “Showing a car ad to somebody who is 34 years old, who wants an SUV, who wants to buy it tomorrow and who wants it in red” belongs in the theory category. “The reality is there is reach and frequency.”

CBS MarketWatch is not part of the lawsuit against Gator. The publishers of two other sites in the consortium, NYTimes.com and USAToday.com, are, however.

Eagle claims that what McLernon said is theory is reality for Gator.

“How about reaching a million people who you know definitively are buying a car within the next 30 to 60 days?” Eagle said. “And by the way, [how about] if you know what models or categories of cars – sports cars, SUVs, minivans – and can reach them at any time of day when they’re online and bring them information of the specific car that they’re interested in, in the exact time frame they’re contemplating that decision, in a zero waste environment with an ad that they will absolutely see? That is not the Holy Grail. That is reality. That is what Gator does for 400 advertisers, including car manufacturers.”

Gator’s cornerstone product is a virtual wallet that automatically fills out order forms and speeds shoppers through online checkouts. The wallet is on more than 24 million desktops, according to Gator. Users also can opt into getting offers delivered based on registration information and their behavior.

Eagle said Gator’s ability to deliver offers based on behavior was “a reality that [the publishers] cannot address.”

Not true, according to the plaintiffs’ attorney, Terence Ross, a partner with Gibson, Dunn & Crutcher LLP, Washington.

“What we can’t compete with is their price,” Ross said. “They invest not a single dime in collecting news or other forms of content and then transferring that to a Web environment, which will then attract visitors. Instead, they free-ride off of our investment into those areas of news collection and dissemination.”

Ross said that the publishers’ biggest issue with Gator is the loss of content control.

“What if we were doing a story last October on the Sept. 11 tragedy and … right in the middle of that story about the Sept. 11 tragedy there popped up an ad for a flight training school?” he asked.

Eagle claims that what Ross characterizes as a loss of content control is a key component of users’ experience online.

“The Windows operating system allows lots of things to pop up in separate windows at all times,” he said. “When I’m on any site on the Web, I can get an AOL instant message or a Yahoo news alert. … All of those obscure content, and some of those contain ads. … If these publishers get their way, they will put the use of pop-ups and pop-unders in jeopardy across the Web.”

The lawsuit will reportedly go to trial by the end of the year.

This is not the first time Gator has been in a scuffle over its service. The Interactive Advertising Bureau last year complained that a service called the Companion Pop-Up Banner infringed on the trademark, copyright and intellectual property rights of Web publishers and advertisers. The IAB threatened to take action, but in a pre-emptive move, Gator filed a lawsuit against the IAB. The two settled their differences when Gator killed the Companion Pop-Up Banner service.

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