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Palo Alto, Calif.’s Cooley Godward is going up against the publishing industry in the latest skirmish over intellectual property rights on the Internet. While the firm lost a high-profile case for online music distributor MP3.com — and was subsequently sued by the client over its legal advice — the experience hasn’t deterred Cooley from taking on another thorny dispute. This time around the firm is representing The Gator Corp., a Redwood City, Calif.-based software company that displays pop-up ads when consumers click on particular Web sites. The Washington Post Co., The New York Times Co. and 14 other publishing groups filed suit against Gator in June, claiming that the company’s ads constitute trademark and copyright infringement and unfair competition. U.S. District Court Judge Claude Hilton of the Eastern District of Virginia last month granted the publishers’ request for a preliminary injunction and ordered Gator to halt display of its ads on the publishers’ Web sites. Last week the judge also denied Gator’s request to dismiss the complaint. A pretrial conference is scheduled for Aug. 21, and Cooley attorneys expect the case will go to trial before the end of the year. At issue in Washingtonpost.Newsweek Interactive Co. LLC v. The Gator Corp., 02-909, is whether displaying third-party advertisements over the content of a company’s Web site violates that company’s intellectual property rights. The case could set parameters for what is permissible advertising online. Cooley’s attorneys argue that the publishers are trying to use IP law to keep a competitor off the market. “This group of publishers is looking to extend copyright and trademark law far beyond its rightful boundary,” said Gator attorney Janet Cullum, the head of Cooley Godward’s litigation group. That argument has been raised by other companies — like Napster Inc. and MP3.com — accused of infringing copyright owners’ works on the Internet. But the Gator case involves a new twist on the battle between IP rights and technology. With Gator “no content is copied or used,” said Thomas Friel Jr., a partner at Cooley Godward who is part of Gator’s defense team. The software simply “opens a document on top of another document.” But Terence Ross, a partner in Gibson, Dunn & Crutcher’s Washington, D.C., office who represents the publishers, said Gator is violating copyright law by altering the publishers’ Web pages. The Gator ads are targeted to consumers who install free Gator software that enables them to fill out digital forms automatically. This application is bundled with additional software that monitors the user’s Web activities and generates pop-up ads when the user clicks on particular Web pages. The publishers contend that Gator’s advertising scheme is “designed to divert and lure Internet users from the Web sites they intend to visit to other Web sites owned by Gator Corp.’s advertisers.” For example, they cite a pop-up advertisement for hotjobs.com that appeared on Dow Jones’ CareerJournal.com Web site. Cooley attorneys say a key issue is the right of consumers to control what appears on their desktop. “If consumers take the bargain to get free software they will receive ads periodically from Gator and its advertisers,” Friel said. Ross argued, however, that “it’s not a question of whether Web surfers lose control but whether the owners, investors and creators are going to lose control over their Web sites.” David Hayes, the head of Fenwick & West’s IP group, said the copyright infringement claims would be more difficult to pursue than the trademark claims. The pop-up ads “aren’t literally altering the work” of the Web site owner since the work is under the pop-up ad, Hayes said. But he said he was “intrigued by the trademark claims” since a consumer survey the publishers submitted to the court showed consumers were confused as to the sponsor of the ads. “That could be a problem,” Hayes said. “It’s going to be an interesting fight.” A SERIES OF SUITS The publishers aren’t alone in their outrage over Gator ads. Since its founding in 1998, the company has received cease and desist letters from several companies. Gator responded by filing a series of suits in San Francisco federal court against L.L. Bean Inc., Virtumundo Inc., Drugstore.com Inc., the Interactive Advertising Bureau and others seeking a declaratory judgment that its advertisement program is lawful. The Virtumundo case is pending in San Francisco federal court and the suit against L.L. Bean — dismissed by the federal court on jurisdictional grounds — is on appeal to the 9th U.S. Circuit Court of Appeals. Other cases, including the suit against the Interactive Advertising Bureau, have settled. While these suits were initiated two years ago, the publishers got interested in the issue after The New York Times began using Gator. Ross said the Times did not initially know how Gator operated and when it found out was “shocked and surprised.” “They found they were getting Gatored regularly and talked to other publishers,” Ross said. Cooley’s Cullum scoffed at the notion The New York Times was ignorant about Gator’s system. “I think discovery will reveal the facts there as to what they knew and who knew,” she said. The litigation could help put Gator out of the ad business. In court documents Gator said that several advertisers cancelled their agreements with Gator after the suit was filed, resulting in a loss of $500,000, and that more than $6 million had been lost in potential business. According to the publishers’ complaint, advertisers pay $25,000 or more to have their ads pop up at specific Web addresses. Cooley has handled other high-profile IP cases involving Internet technology over the last two years. In addition to defending MP3.com in a copyright infringement suit brought by a major record label, Cooley also represented eBay Inc. in its successful trespassing suit against Bidder’s Edge, an auction aggregate site that used its Web crawler to access eBay’s Web site. In the MP3.com case, a federal judge in New York ruled two years ago that the company willfully infringed copyrighted music. Six months ago MP3.com filed a malpractice suit against Cooley seeking to recoup the $175 million it has paid out in settlements, judgments and legal fees. The litigation has apparently not affected Cooley’s reputation. “The MP3.com case had no impact on our decision to work with Tom [Friel], Brian [Mitchell], Janet [Cullum] and others,” Gator President and CEO Jeff McFadden said in an e-mail message. “Gator selects lawyers individually based on their expertise and abilities — not based on their affiliations.” Cooley got the case through its ties to Gator chief counsel L. Scott Primak, who previously worked with Friel when the two were at Skjerven Morrill.

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