Chapter 6: Copyright Protection Against
Derivative-Work Versons of Computer
Programs and Web Pages —
Fair Use — Reverse Engineering

C. Framing and Pop-Ups


Preliminary Note

Framing is a method of presentation in a Web page that breaks the screen up into multiple windows. Each window contains a separate HTML file, for example, a Web page from a different Web site that is fetched by automatically hyperlinking to it.

Proprietors of copyright in framed pages have at times contended that framing their Web pages constituted copyright infringement of their copyrights. The problem with basing the theory of copyright infringement on a reproduction or distribution of copies by the accused infringer is that the latter does not directly reproduce or distribute any copy of the original Web page.

The accused infringer simply writes the URL of the original Web page into the HTML code for the accused infringer's own Web page, associated with code appropriate for referencing that URL. Then, the ultimate user's browser reads the code and transfers to the user's screen display the screen display associated with the URL. That is, the user's browser reads the HTML code and itself fetches the original Web page and its copyright-protected content, and displays it.

The fact that the complaining copyright owner put its material up on a Web page on the Internet, at least by implication inviting all comers to view it, has been an obstacle to theories of indirect infringement or contributory infringement. For contributory infringement to exist, there must be a direct infringer (here, the end user). But the end user is considered to be free from infringement liability because of an equitable estoppel or implied license. In effect, the court says, "The plaintiff asked for it and therefore will not be heard to complain."

This Web site contains several demonstrations of framing, written in a way to give you an idea why copyright owners have been resentful about framing.

There is very little case law on framing so far. Most cases have been settled without adjudication. Typically, the defendants in such cases were poorly funded or startup companies not in a position to litigate against well funded plaintiffs; the course of least resistance was to agree to the plaintiff's demands. The Ninth Circuit's first opinion in the Arriba Soft case addressed what it termed framing as an unauthorized public performance. But the court was simply misdescribing deep linking or inline linking. That part of the opinion was later withdrawn. The following case, Futuredontics, was inconclusive.

Links are provided here to an unfriendly exchange of views over framing between Jones Day, counsel for Starbucks, and representatives of a Website known as Backwash.



Futuredontics Inc. v. Applied Anagramics Inc.
U.S. District Court Central District of California
45 U.S.P.Q.2D (BNA) 2005

 
 

Iframing

The advent of Iframing (inline framing) has made framing much easier to code in HTML and may lead to further disputes over framing. The <iframe> command in HTML permits a user to code a frame of another Web page as easily as coding an inline image. The basic code for an iframe is (using the HTML code for the Futuredontics case, iframed above):

<iframe src="http://www.law.gwu.edu/facweb/claw/futured.htm"
align=left width=720" height="400" [some omissions] > </iframe>

A tutorial on iframing is available on the Internet. For a discussion of how iframing can be used to import one Web page into another, see the notional Dilbert iframe page. Consider whether this kind of unconsented-to use of another's Web page is the unauthorized preparation of a derivative work. Is it a reproduction or distribution of a copy? Is it an unauthorized public performance or display (Kelly's theory in the Arriba Soft case)?

The paradigm of framing or iframing is to exploit the content of the original, copyright-protected page by reducing its width (if it is a whole Web page) and placing it in a window on the end user's screen next to one or more windows containing material of the framer. At least metaphorically, this is similar to the fact pattern of the Mirage and Annie Lee cases.

Pop-Up Ads

The next topic in this chapter is pop-up advertising. Its paradigm is to superimpose additional material in a small window on top of, and thus obscuring, part of the content of the original, copyright-protected Web page. Doing that requires some cooperation (perhaps unintended) from the end user. Typically, the pop-up advertising company gives away free some kind of program that users install on their personal computers. In one case, the program was an ad-blocker. Gator is the most well known pop-up advertising company, and this has given rise to the term “Gatoring” to describe the practice. The installation program for the given-away program includes an additional program, which we may term the Gatoring program. Sometimes the installation program warns about the Gatoring program in small print and provides an opt-out box to check. Sometimes there is no warning. Sometimes the end user cannot install the given-away program without agreeing to accept the Gatoring program (opts in).

The business model for Gatoring is that of so-called contextual advertising. Contextual advertising attempts to get viewers to change the focus of their attention from one Web site to another when the first Web page contains a word or phrase (the keyword) indicating a particular subject (the context). That the viewer is viewing a Web page containing the phrase “mortgage loan,” makes it likely that the viewer is interested in mortgage loans. Therefore, this viewer is much more likely a prospective customer than the average Internet user. Such a viewer is a better than average target, by at least an order of magnitude, for an advertiser-seller of mortgage loans. Gatoring is only one form of contextual advertising. Users of search engines typically find advertising material placed on their search results pages that relate to the word used in the search.

Once it is installed the Gatoring program operates as follows: When the user goes to (views) any Web page, the program looks for predetermined words or phrases (for example, “loan” or “car”). If the Web page currently being viewed has the predetermined word or phrase on it, the Gatoring program puts up a pop-up ad related in some way to the word. For example, suppose that Barnes & Noble is a client of Gator or some other pop-up advertising company. Barnes & Noble might have contracted for the word “book.” Then, if the user views a Web page containing the word “book,” a pop-up ad for Barnes & Noble appears, advertising its great book prices. You will appreciate that if the Web page proprietor is Amazon it may find this objectionable. But is it a copyright infringement?

Gator's own explanation of its business model and operation is available at these links: old, shorter version and current, more elaborate version with Javascript demos. Further material explaining Gatoring is found in the following iframe:

 
 
Gator has repeatedly been involved in litigation, but no decisions have been reported. Every case appears to have been settled. The Washington Post and several other publishers secured an injunction against Gator, in the Eastern District of Virginia (Alexandria). The court (Hilton, J.) published no opinion; the case was appealed to the Fourth Circuit (see Gator's appeal brief); but the case was settled in 2003 and the details of the settlement were not published. Presumably, the defendant simply agreed not to Gator the plaintiffs' Web sites, while continuing to Gator any other third-party sites. Other suits against Gator are pending.

The only reported caselaw on the practice of Gatoring, as of the present date, follows.

U-Haul International, Inc. v. WhenU.com, Inc.
United States District Court
279 F. Supp. 2d 723 (E.D. Va. 2003)

Lee, District Judge

This matter is before the Court on the Plaintiff U-Haul International, Inc.'s, ("U-Haul") and the Defendants WhenU.com, Inc.'s, ("WhenU") and Avi Naider's motions for summary judgment on all remaining counts of the First Amended Complaint.

For a 2005 demo of WhenU, select this link. When done, use the BACK button at the upper left of the screen to return to this page.
This case involves pop-up advertising and Plaintiff U-Haul's claim that Defendant WhenU's pop-up advertising infringes upon U-Haul's trademark, constitutes copyright infringement, and amounts to unfair competition. U-Haul complains that WhenU's pop-up advertisements, which crowd the computer user's screen and block out U-Haul's website display, in effect, infringe on U-Haul's registered trademark and alter U-Haul's copyrighted advertisements. The issue presented is whether WhenU's computer software, which presents pop-up advertising when the individual computer user searches for goods and services on the Internet, is a form of trademark or copyright infringement or unfair competition. Because the computer software at issue does not copy or use U-Haul's trademark or copyright material the Court concludes that WhenU's pop-up advertising does not constitute trademark or copyright infringement or unfair competition; therefore, the Court grants WhenU's motion for summary judgment.

The Court acknowledges that this case is an attempt by a trademark owner and copyright holder to limit annoying pop-up advertising from blotting out its website on the individual computer user's screen. The average computer user who conducts a web search for the U-Haul website would expect the U-Haul website to appear on their computer screen; however, in this case, the computer screen fills with the advertisement of e U-Haul competitor. The user must then click and close the pop-up advertisement window in order to get to their destination, the U-Haul website. 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. In other words, the user deliberately or unwittingly downloaded the pop-up advertisement software. The foregoing explanation makes it clear that under the circumstances, while pop-up advertising may crowd out the U-Haul's advertisement screen through a separate window, this act is not trademark or copyright infringement, or unfair competition.

Computer users, like this trial judge, may wonder what we have done to warrant the punishment of seizure of our computer screens by pop-up advertisements for secret web cameras, insurance, travel values, and fad diets. Did we unwittingly sign up for incessant advertisements that require us to click, click, and click again in order to return to our Internet work? The Court, in this opinion, attempts to answer this question; we have invited these pop-up advertisements by downloading free screen savers and other free software from the internet.

Despite U-Haul's plea, the Court, upon review of the applicable law, concludes that, while pop-up advertisements seize the user's computer screen with a window of advertisement, blocking out the object of your search and your document, requiring you to click several times to clear your computer screen, these advertisements do not consist trademark or copyright infringement, or unfair competition. WhenU's pop-up advertisement software resides in individual computers as a result of the invitation and consent of the individual computer user, and, thus, the advertisements do not use, alter or interfere with U-Haul's trademarks and copyrights. Alas, we computer users must endure pop-up advertising along with her ugly brother unsolicited bulk email, “spam", as a burden of using the Internet.

I. Background

WhenU.com, Inc., and Avi Naider (collectively “WhenU") distribute a downloadable software program called “SaveNow” that is generally bundled for distribution with other software programs. For example, the pop-up advertisement software is found in many web-based “free” screensaver programs downloaded by individual computer users. Once a user accepts the license agreement, the SaveNow software is delivered and installed on the user's computer. Using a directory of commonly used search phrases, commonly visited web addresses, and various keyword algorithms, the SaveNow program scans the user's Internet activity to determine whether any of the terms, web addresses, or content match the information in the directory. If the program finds a match, it identifies an associated product or service category. The SaveNow program then determines whether the user's computer should receive a pop-up advertisement that is selected at random from WhenU's clients which match the category of the user's activity. The program will then display a pop-up advertisement on the user's computer screen; this pop-up ad will generally appear in front of all the windows the user may have open at the time. Once the pop-up ad is displayed, the user must either move the mouse and click the ad closed or use the keystrokes “Alt-F4” to close the ad.

To maintain its business, WhenU sells advertising space and opportunities to merchants that want to take advantage of the SaveNow software. However, WhenU does not sell individual web addresses to its advertising clients and does not guarantee to any advertiser that its ad will be shown when a consumer visits a particular website.

On October 2, 2002, U-Haul filed a nine-count complaint alleging various violations under the Lanham Trademark Act, copyright infringement, misappropriation, interference with a prospective business advantage, unjust enrichment, and violations of the Virginia Conspiracy Act. On March 28, 2003, U-Haul and Defendants WhenU and Avi Naider filed motions for summary judgment. Thereafter, on June 6, U-Haul filed a motion to vacate the trial date and to have the matter resolved through the parties' previously filed motions for summary judgment. On June 24, 2003, the Court entered an Order granting WhenU's and Avi Naider's motion for summary judgment on Counts IV and vacating the trial date. This Memorandum Order addresses the parties' cross motions for summary judgment, and the subsequent dismissal of all remaining counts.

II. Discussion

The Defendants are entitled to summary judgment as to the trademark-related claims because Plaintiff are unable to establish how the Defendants' pop-up advertisements “used” Plaintiff's trademarks as their own in violation of the Lanham Act. Defendants are further entitled to summary judgment on the Plaintiff's claims of copyright violations because Plaintiff fails to demonstrate how the Defendants' pop-up advertisements impeded the Plaintiff's exclusive rights under the copyright laws. Furthermore, the Court dismisses all remaining counts (VI-IX) without prejudice.

1. Trademark Infringement, Unfair Competition, and Trademark Dilution

The Court grants Defendants' motion for sugary judgment on Plaintiff's trademark claims because Plaintiff fails to show how a pop-up advertisement appearing in a separate window on an individual's computer obstructing U-Haul's advertisement is a “use” of U-Haul's trademarks in commerce. A fundamental prerequisite for claims of trademark infringement pursuant to 15 U.S.C. 1114 and of unfair competition pursuant to 15 U.S.C. 1125(a) is proof that the defendant used one of the plaintiff's protected marks in commerce. As discussed below, WhenU's pop-up advertisements do not constitute “use in commerce” of U-Haul's trademarks for four reasons.

First, U-Haul relies on the premise that WhenU's pop-up ads are framed by the U-Haul website; in other words, the argument is that WhenU's ads appear as a single visual presentation as part of U-Haul's website. This position, however, is untenable. When a WhenU ad appears on a user's computer screen, it opens in a WhenU-branded window that is separate and distinct from the window in which the U-Haul website appears. It is important to note that in the Microsoft Windows environment, each program that the user launches generally appears on a separate window on the user's computer screen. In addition, the computer user may have multiple windows open at once; and in many instances, a separate window may pop-up on the user's screen notifying the user of an event: incoming e-mail, completion of a task by the computer, an appointment, etc.

Second, “use” is not established merely because trademarks are simultaneously visible to a consumer. Such comparative advertising does not violate trademark law, even when the advertising makes use of a competitor's trademark. Thus, the appearance of WhenU's ads on a user's computer screen at the same time as the U-Haul web page is a result of how applications operate in the Windows environment and does not consist “use” pursuant to the Lanham Act.

Third, WhenU's inclusion of the U-Haul uniform resource locator ("URL") and “U-Haul” in its directory incorporated into the SaveNow program does not constitute “use” under the Lanham Act. U-Haul fails to adduce any evidence that WhenU uses U-Haul's trademarks to identify the source of its goods or services. WhenU does not place the U-Haul trademarks in commerce; the SaveNow program merely uses the U-Haul URL and “U-Haul” Likewise in the instant case, WhenU's incorporation of U-Haul's URL and “U-Haul” in the SaveNow program is not a trademark use because WhenU merely uses the marks for the “pure machine-linking function” and in no way advertises or promotes U-Haul's web address or any other U-Haul trademark.

Fourth, WhenU's pop-up scheme does not interfere with the use of U-Haul's web site by its customers and dealers because the SaveNow program does not interact with U-Haul's computer servers or systems and the SaveNow program is a user-installed program where the user has made a conscious decision to install the program. The SaveNow program does not hinder or impede Internet users from accessing U-Haul's web site in such a manner that WhenU “uses” U-Haul's trademarks. The SaveNow program resides within the user's computer and does not interact or communicate with U-Haul's website, its computer servers, or its computer systems. Further, the SaveNow program does not change the underlying appearance of the U-Haul website. In addition, the SaveNow program is installed by the computer user who can decline to accept the licensing agreement or decline to download the program. Thus, the user controls the computer display the moment the WhenU ad pops up, and the user may also have other programs with pop-up windows notifying the user of an event within the computer system. The SaveNow program is, therefore, no different than an e-mail system that pops a window up when the registered user receives a new e-mail message.

In sum, U-haul fails to establish that WhenU uses U-Haul's trademarks in commerce in violation of the Lanham Act because (1) WhenU's pop-up window is separate and distinct from U-Haul's web site, (2) WhenU does not advertise or promote U-Haul's trademarks through the use of U-Haul's URL or “U-Haul” in its SaveNow directory, and (3) the SaveNow program does not hinder or impede Internet users from accessing U-Haul's web site in such a manner that WhenU “uses” U-Haul's trademarks. Therefore, WhenU is entitled to summary judgment on U-Haul's claims of trademark infringement and unfair competition.

To prevail on a claim for trademark dilution, U-Haul must prove, among other things, WhenU's use of the marks. For the reasons stated above, U-Haul is unable to show that WhenU was using U-Haul's marks as defined in the Lanham Act. Thus, WhenU is entitled to judgment as a matter of law on U-Haul's claim of trademark dilution.

2. Copyright Infringement and Contributory Copyright

Because WhenU's pop-up advertising software does not copy U-Haul's work and a pop-up advertisement is not a derivative of a copyrighted work, the Court grants Defendants' motion for summary judgment as to Plaintiff's copyright claims. To establish copyright infringement, a plaintiff must prove (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original. Feist. The term “copying” is interpreted broadly and encompasses the infringing of any of the copyright owner's five exclusive rights. U-Haul contends that only two of the exclusive rights of a copyright owner are at issue in this case: the exclusive right to display and the exclusive right to prepare derivative works. Each claim is discussed in turn.

To “display” a work means “to show a copy of it, either directly or by means of film, slide, television image, or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images nonsequentially.” 17 U.S.C. 101. In order to infringe on U-Haul's right to “display", WhenU would have to show U-Haul's copyrighted works. U-Haul contends that the SaveNow program presents the user with an altered U-Haul Web page when an advertisement pops-up in front of the U-Haul Web page. However, U-Haul's argument is inapposite. First, the SaveNow does not alter U-Haul's Web page in any manner. As discussed previously, the SaveNow program displays the pop-up ad in a separate window from the U-Haul Web page. The SaveNow window has no physical relationship to the window in which the U-Haul Web page might appear. It is undisputed that the U-Haul window remains unaltered, even when it is behind the SaveNow window. This is no different that when a notice generated by the user's computer system pops-up in front of all of the windows the user may have open at the time; e.g., incoming e-mail. Ultimately, it is the computer user who controls how windows are displayed on the computer desktop.

Second, WhenU does not show users the U-Haul website through its SaveNow program. The user is the one who calls up the U-Haul website, not the SaveNow program. The SaveNow program merely interacts with the user's computer to assess whether an advertisement is appropriate. Further, WhenU shows the computer user its own advertisements, not U-Haul's copyrighted material.

U-Haul further contends that New York Times Co. v. Tasini, 533 U.S. 483, 499 (2001), supports its contention that its copyrighted work is displayed to the user in a manner different that intended by the copyright owner. However, U-Haul's reliance on Tasini is misplaced. In Tasini, the Supreme Court held that the reproduction of articles from newspapers in electronic databases, such as LEXIS/NEXIS, violated the rights of the authors. In Tasini, the owners of the electronic databases actually reproduced the authors' works; however, in this case, WhenU does not reproduce any of U-Haul's copyrighted material in its pop-up ads. Thus, Tasini is irrelevant to the facts at issue in this case, as the Court has concluded that WhenU has not displayed any of U-Haul's copyrighted material through its pop-up ads.

U-Haul also maintains that, by modifying the U-Haul web site, WhenU creates derivative works under the Copyright Act, 17 U.S.C. 101. A “derivative work” is a work “based upon one or more pre-existing works” which consists of “editorial revisions, annotation, elaborations, or other modifications.” 17 U.S.C. 101. U-Haul contends that WhenU has added promotional messages to its copyrighted Web pages, much like the defendant in National Bank of Commerce v. Shaklee Corp, 503 F. Supp. 533, 544 (W.D. Tex. 1980), added promotional messages to copyrighted pages of plaintiff's book. U-Haul's argument rests on the premise that the SaveNow software retrieves the U-Haul Web page, places its own advertisement on that Web page, and displays it to the user. Furthermore, once the user closes the pop-up advertisement, U-Maul implies, the SaveNow software then causes the U-Haul Web page to be displayed to the user without the pop-up ad. U-Haul's argument is both contrary to the law and the undisputed facts.

First, “[i]n order for a work to qualify as a derivative work it must be independently copyrightable.” Woods v. Bourne, 60 F.3d 978, 990 (2d Cir. 1995). See Lewis Galoob Toys, Inc. v. Nintendo of America, Inc., 964 F.2d 965, 967-69 (9th Cir. 1996) ("A derivative work must incorporate a protected work in some concrete or permanent form."). The WhenU window is a distinct occurrence from the U-Haul Web page. Also, the appearance of a WhenU advertisement on the user's computer screen at the same time as a U-Haul web page is a transitory occurrence that may not be exactly duplicated in that or another user's computer.

Second, the Windows environment permits a user to open multiple applications and windows at the same time, with the different windows overlapping one another. WhenU's ad is merely another window on the user's computer desktop. The pop-up ad may modify the user's computer display; however, this modification does not consist copyright infringement. To conclude otherwise is untenable in light of the fact that the user is the one who controls how items are displayed on the computer, and computer users would infringe copyrighted works any time they opened a window in front of a copyrighted Web page that is simultaneously open in a separate window on their computer screens. This conclusion is contrary to both law and fact. See Annie Lee v. A.R.T. Co., 125 F.3d 580, 582 (7th Cir. 1997) (stating that if mounting artwork constituted the unauthorized creation of a derivative work, the court would be making criminals out of art collectors). Thus, the Court concludes that WhenU does not create derivative works through its pop-up ad scheme. Therefore, WhenU is entitled to summary judgment on U-Haul's claim of copyright infringement. To make a prima facie case for contributory copyright infringement there must actually be direct infringement. Finding that U-Haul's claim of copyright infringement fails, the Court concludes that U-Haul's claim for contributory copyright infringement fails for the same reasons.

Notes

1. The court says that 106(2) is not violated because “the appearance of a WhenU advertisement on the user's computer screen at the same time as a U-Haul web page is a transitory occurrence that may not be exactly duplicated in that or another user's computer.” How does that square with the wording of 106(2)? The legislative history indicates that Congress used the word “prepare” and omitted the word “copy” in 106(2) because it wanted to protect ephemeral works such as choreographic routines and dumb shows.

2. The court stated:

The pop-up ad may modify the user's computer display; however, this modification does not consist copyright infringement. To conclude otherwise is untenable in light of the fact that the user is the one who controls how items are displayed on the computer, and computer users would infringe copyrighted works any time they opened a window in front of a copyrighted Web page that is simultaneously open in a separate window on their computer screens.

a. Is there any way to distinguish between opening a pop-up as a result of gatoring and opening a pop-up that says, “You have e-mail waiting”?

b. Assume, arguendo, that accepting U-Haul's theory requires concluding, along the way, that users are infringers every time they choose to "open[ ] a window in front of a copyrighted Web page that is simultaneously open in a separate window on their computer screens." Does copyright law require a copyright owner to sue every infringer, or can it select its defendants as it likes? Is the court's argument against derivative-work liability sound?

3. Could some kind of restrictive licensing notice on U-Haul's Web page effectively authorize users (visitors to the Web page) to view the Web page and have some kinds of pop-up (such as “You have e-mail waiting”) but not others (such as gatoring)? Would the notice necessarily be legally ineffective? What if the notice simply bans all preparation of derivative works, transient or permanent, and the copyright owner just fails to enforce the copyright against end users? Is that a waiver of rights against WhenU and Gator?

4. The court emphasized the element of user volition. That is, the user wittingly or unwittingly chose to set in motion the chain of events leading to the pop-up windows appearing on the user's screen. Why does the complicity of the user relieve WhenU of liability? Is it automatic? Is there any way for the owner of copyright in the Web page to prevent the conduct of the user from immunizing WhenU from infringement (or contributory infringement) liability for WhenU's acts?

5. Is what WhenU does to U-Haul's Web site transformative? Assume that Leonardo still lives and has a life plus many years copyright in his Mona Lisa, but he is so unwise as to put his work up on a Web site. WhenU decides to iframe it to the Web sites of various clients (such as McDonald's and Jim Beam), where layers are superimposed on it as shown in the accompanying image. Does Leonardo have a good case under 106(2) against any of the guilty parties?

6. Let's consider the test for transformativeness and fair use suggested in the preceding section of this chapter in the notes to the Arriba Soft case. Let's apply the test to what WhenU did to U-Haul and Leonardo, respectively. Is trade actually or potentially diverted from the copyright owner to WhenU's client? Probably yes, for U-Haul, since that is the point of comparative advertising. Does the use provide the public with a new and valuable function? Contextual advertising has as its target consumers already looking on the Web for the advertised goods, perhaps actively in search of them. Its claim of a much higher "hit" rate, perhaps ten times normal, suggests that targets of contextual advertising gain benefits; efficiency in bringing sellers and potential buyers together probably benefits both of them. Is the benefit of the kind that copyright law seeks to promote? Unclear, but should that be necessary as long as there is a significant benefit? For Leonardo, there is no diversion and there is uncertain public benefit (except of the kind parody provides, as in Two Live Crew). So, should it be Leonardo wins and U-Haul loses? Does applying the test, given the outcomes that you perceive, tend to support or undermine the test?

7. For more information about WhenU, visit its Web page. For the full decision (the trademark material is considerably edited here), select this link. For news stories about the decision, see the links shown below.


 
8. A second lawsuit against UWhen led to the following opinion, denying preliminary injunctive relief to two plaintiff web site proprietors. The opinion's findings of fact present a detailed explanation of the technology used for this form of advertising. (Only the copyright material is presented. The trademark material has mostly been edited out.)


 

Wells Fargo & Co. v. WhenU.com, Inc.
United States District Court
293 F. Supp. 734 (E.D. Mich. 2003)
2003 WL 22808692 (E.D. Mich. Nov. 19, 2003)
http://www.mied.uscourts.gov/_opinions/Edmundspdf/NGE03cv71906WhenU.pdf

MEMORANDUM OPINION AND ORDER DENYING
PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION


INTRODUCTION

Almost everyone who has surfed the Internet on his or her computer has encountered advertisements that pop-up from time to time. While the average Internet user may find the advertisements annoying, the question before the Court is whether they violate trademark or copyright law. Plaintiffs Wells Fargo & Co. and Quicken Loans, Inc. have asked the Court for a preliminary injunction against Defendant WhenU.com, Inc., whose business is Internet contextual advertising. For the reasons stated in this opinion, plaintiffs' motion for preliminary injunction is DENIED.

FINDINGS OF FACT

Wells Fargo is a financial services company offering customers online access to various financial services and products. Wells Fargo has offered financial products through the Internet since 1995.

WhenU delivers online ''contextual marketing" to computers via its proprietary software product, ''SaveNow." Contextual marketing technology endeavors to market products and services to consumers who have a demonstrable interest in those products and services. Traditionally, contextual marketing has been conducted by assembling large databases containing a wide variety of personal information about individual potential customers and their past purchasing behavior. WhenU's proprietary software allows WhenU to deliver contextually relevant advertising at the moment the consumer demonstrates an interest in the product or service, without any knowledge of the consumer's past history or personal characteristics. WhenU's participating consumers receive contextually relevant advertisements, delivered to their computer screens (also known as ''desktops").

SaveNow also makes available to participating consumers ''dollars off," ''percentage off" and other savings coupons for products and services at hundreds of online retail merchants. Such a coupon might remind a consumer, for example, of a free shipping offer that is available by using a particular product code when purchasing the product. A team of WhenU content researchers tests and updates these offers on a daily basis. The coupons offered by SaveNow afford participating consumers the opportunity to make significant savings while shopping online.

WhenU offers its software under two brand names: ''Save'' and ''SaveNow.'' The two applications are identical in function; they differ only in their identifying descriptions and method of distribution.

Consumers typically download the ''Save'' and ''SaveNow'' software in return for obtaining a free software application. In some cases, consumers are offered a choice between paying for a ''premium'' version of the desired application, or obtaining the desired application for free, but bundled with Save. For example, the Bearshare software application is marketed to consumers in two forms: a premium version that costs $19.95 to download, and a free version that comes bundled with Save. WhenU has also developed its own freeware applications, including an application called ''Weathercast,'' which are bundled with Save software.

The SaveNow software is also typically obtained as part of a ''bundle'' with another software program, such as the popular Living Coral or Living Waterfall screen savers, but the user is not obligated to keep SaveNow in order to use the free software.

WhenU shares the revenue generated from its bundled software with its bundling partners. The bundling of revenue-generating, advertising software (''adware'') with free software programs (''freeware'') is a common practice. Many software companies rely on the revenue generated by advertising software in order to offer freeware for free and to provide service and support for their freeware programs.

SaveNow is also available for download at WhenU's website, at the websites of WhenU's free applications such as www.getweathercast.com, and at certain third-party websites via a software download prompt screen that offers a user surfing the Internet the opportunity to download, for example, Weathercast and Save. Although many users claim not to be aware that SaveNow has been loaded on to their computer, the Court finds that some user assent is required before SaveNow is downloaded. The fact that assent may be in the form of a reflexive agreement required for some other bundled program does not negate the fact that the computer user must affirmatively ask for or agree to the download.

Although there are variations in the SaveNow download process, depending upon the other applications that the computer user is installing, certain key features of the download remain constant. For example, during the installation process, the consumer always receives a notice stating that SaveNow is part of the download, and explaining how SaveNow functions.

Regardless of the method of distribution, to proceed with the installation of SaveNow, the consumer must affirmatively accept a license agreement for SaveNow (the ''License Agreement''). The License Agreement is presented to the user in a text box with a scroll bar. This is the standard way in which license agreements are incorporated into software installations.

The License Agreement explains that the software generates contextually relevant advertisements and coupons, utilizing ''pop-up'' and various other formats. The software cannot be installed unless the consumer affirmatively accepts the terms of the License Agreement.

Plaintiffs' computer expert Benjamin Edelman testified about how he obtained WhenU's software via a software download prompt screen at a website called Lyricsdownload.com, using the phrase ''drive by download'' to describe this method of distribution. On cross-examination, Mr. Edelman conceded that the software download prompt screen offers the user the opportunity to read the License Agreement and tells the user that accepting the software is deemed to be an assent to its terms. Mr. Edelman also conceded that the distribution of software via a download prompt screen is a common practice, and is used by a variety of distributors for a variety of different purposes.

Consumers can uninstall WhenU's software from their computers if they no longer wish to have it. Once uninstalled, the software will cease to operate or show advertisements or coupons on the consumer's computer.

When a user removes or ''uninstalls'' a program bundled with Save, the Save software is automatically uninstalled along with it. The Save software supports the associated program and cannot be uninstalled without also uninstalling that associated program. SaveNow can be uninstalled separately from any freeware program with which it was downloaded.

Since 1996, millions of computer users have become regular users of the Internet and the World Wide Web. The Internet is a network of millions of interconnected computers, through which text, images and sounds are transported and displayed by an application called the World Wide Web (the "Web").

Much of the information on the Web is stored in the form of "web pages," which can be accessed through a computer connected to the Internet (available through commercial Internet service providers or "ISPs"), and viewed on a PC user's computer screen using a computer program called a "browser," such as Microsoft Internet Explorer or Netscape Navigator. Web pages are only perceivable by the user by viewing them on the computer screen through the use of a browser. "Websites" are locations on the World Wide Web containing a collection of web pages, much like pages of a book. The 3-dimensional metaphor of the computer screen as a "desktop" is often used to discuss the display of text and images on a user's computer screen.

The computer screen is composed of a series of picture elements (called "pixels"). Pixels are arranged in a single layer of horizontal and vertical rows that form a grid on the computer screen. The particular color of each individual pixel which, taken together, make up the image displayed on the 2-dimensional computer screen, is determined by instructions received from the underlying computer program.

A series of events must transpire in order for a user to view a web page via an Internet browser on his or her computer screen. First, the remote server on which the computer code for a particular website is maintained sends the code to the user's web browser. Second, the PC's browser then reads the code to determine how each pixel that makes up the computer screen should illuminate in order to create the specific on-screen display for that particular website. Third, the PC's browser then conveys specific instructions to the Windows operating system, which, in turn, will send these instructions to the PC's video card. These instructions are stored in the video memory frame buffer portion of the PC's video card. Finally, the video card, thereupon, causes each pixel on the computer screen to illuminate so as to create the specific 2-dimensional on-screen display of the website.

WhenU's software is designed to operate within the Windows computer operating system, popularized by Microsoft. Windows is the most widely distributed software application ever written, currently in use by roughly 95% of computer users.

In the Windows operating system, the computer ''desktop'' functions as a multi-tasking environment in which numerous software ''applications,'' such as spreadsheets, word processing programs, Internet browsing software, e-mail software and instant messaging software, may all run simultaneously. This graphical computer ''desktop'' was intentionally designed to represent what a user would experience when using an actual physical desktop, with virtual replicas of file folders, text, files, spreadsheets, calendars, rolodexes, and so on. The computer desktop thus gives the user the impression of operating in a three dimensional space in which items can be moved on top of and underneath each other. Accordingly, while a display on a computer screen is literally two dimensional, it can properly be viewed as a three dimensional presentation as a matter of user perception.

When a user opens a software application, it is launched in what is known as a ''window,'' a box on the user's desktop within which all of the functions of that application are displayed and operate. A window can be enlarged or ''maximized'' to fill the entire computer screen, or reduced to take up a smaller area. Over the past two decades, operating a computer by manipulating overlapping windows has become a familiar process to personal computer users everywhere.

To access the Internet in the Windows environment, a user must establish a connection to the Internet, either over a telephone modem or some other form of Internet connection. Once such a connection has been established, the user will typically launch a software application known as a ''browser,'' such as Internet Explorer or Netscape. A user can have multiple browser windows open simultaneously. When launched by the user, the browser, like any other Windows-based software application, opens in a new window. Within this window, the user interacts with the browser to access various websites on the Internet.

The user can directly access data contained in a particular website by entering the website's address (or ''URL'') into the address box in any such open browser window. Alternatively, the user may search for websites of interest by utilizing a search engine, such as Yahoo! or Google, and then access those websites by clicking on the resulting links displayed as listings. A user may also reach a particular website by clicking on a ''hyperlink'' embedded in the text or graphics of a webpage.

When a user attempts to access a webpage, the server hosting the webpage sends information in the form of a file back to the user's browser program. That file consists simply of lines of text written in Hypertext Markup Language or ''HTML.'' The browser then interprets the HTML code file, and taking that information in conjunction with the user's own browser settings, requests that the Microsoft Windows operating system open a window to display the webpage. The operating system, in turn, takes all that information from the browser, combines it with information concerning the user's hardware configuration and the competing claims of other software programs, and then displays content in a window.

The HTML code identifies various elements that help determine how the webpage will ultimately be rendered on a computer user's screen, but it does not provide an actual pixel-by-pixel mapping for rendering the webpage. A wide variety of other factors will have a significant effect on the ultimate appearance of the webpage on the user's screen, including the user's ability to customize the browser's settings.

The Windows environment permits a user to have multiple browser windows open simultaneously, each displaying a different webpage. As with other applications open on a user's desktop, each separate browser window can be opened or closed, minimized or maximized, and moved around the screen. The user can select which window appears in front of which other windows at any given time, in much the same way as a person can re-order a stack of papers on his or her desk.

There are many applications that a user can run while browsing the Internet that cause additional windows to appear automatically in front of an open browser window. For example, a user may be viewing a webpage (e.g., cnn.com), when the user's electronic mail or instant-messaging software (e.g., Microsoft Outlook or AOL Instant Messenger) launches a message in front of the browser window that the user is viewing.

Users have ultimate control over what programs run on their computers, when they are run, and what they are commanded to do. The user owns and controls the computer and the computer display, including the pixels that generate that display.

Advertisements shown by WhenU software are set up by WhenU's Advertising Operations team. The Advertising Operations Team receives creative copy from an advertiser, places the ad on a WhenU server, then ''maps'' the advertisement using an ad set-up table. Each advertisement is assigned a name and a variety of parameters such as size, priority, and frequency. The Advertising Operations Team ''maps'' the ad by determining the various categories in the Directory (such as ''Air Travel'') and keyword algorithms that will trigger the appearance of the advertisement, subject to priority and frequency limitations.

When the Advertisement Operations Team is done, the data is automatically recorded into the proprietary WhenU Directory (the ''Directory''). The Directory is delivered to and saved on the consumer's desktop when the consumer installs the software, and optimized and updated on a daily basis. As of July 1, 2003, the Directory contained approximately 32,000 URLs and URL fragments, 29,000 search terms and 1,200 keyword algorithms. The Directory categorizes these elements into various categories in much the same way as a local Yellow Pages indexes businesses into categories. These categories are the ''heart'' of WhenU's system for delivering advertisements.

As a participating consumer browses the Internet, the SaveNow software studies the user's browsing activity and compares it against the elements contained in the Directory. Simultaneously, the SaveNow software determines whether: (a) any of those elements are associated with a category in the Directory, and (b) whether those categories are associated with particular advertisements. If the software finds a match, it identifies the associated product or service category, determines whether appropriate ads are available to be displayed, and, if so, selects an ad based on the system's priority rules, subject to internal frequency limitations.

Web addresses and search terms are included in the WhenU Directory solely as an indicator of a consumer's interest. For example, the www.wellsfargo.com web address is included in the ''finance.mortgage'' category of the WhenU Directory in order to identify consumers who are potentially interested in mortgages. Thus, if a consumer were to enter into the address box in an open browser window or conduct a search using a search engine by typing in the words ''Wells Fargo,'' SaveNow would detect that activity and scan the proprietary directory for a match to a WhenU category such as ''finance.mortgage.''

The SaveNow software might also determine that the consumer is interested in a particular category of products or services if it found certain combinations of words (''keyword algorithms'') in the content of the webpage visited. For example, if a participating consumer accessed a webpage that contained two occurrences of the word ''buying,'' two occurrences of the word ''home'' and four occurrences of the word ''mortgage,'' the SaveNow software might determine that the consumer was interested in the ''finance.mortgage'' category.

Under WhenU's category system, any given ad will ultimately be mapped to scores of discrete elements (i.e., URLs, search terms, key word algorithms) that are related topically. Thus, WhenU advertisements do not specifically target individual websites such as Wells Fargo and Quicken Loans. For example, Mr. Edelman implied in his original declaration that an advertisement for ''GetSmart'' was specifically targeted at the Quicken Loans homepage. In fact, the complete mapping of that ad in the Directory reveals that it is mapped to 13 separate categories, each of which represents many URLs and search terms. The URL for the Quicken Loans homepage is only one of over hundreds, if not thousands, of URLs that could trigger this ad via the category system.

WhenUsells advertising to advertisers on the basis of sales categories, which are grouped into certain product and service categories. These sales categories are broader than the categories used for mapping advertisements. Although the sales categories are made public for marketing purposes, the categories used to map ads are known only to the WhenU Advertising Operations Team, and are not disclosed or in any way promoted to WhenU's advertisers, in-house sales team, or independent sales agents.

WhenU does not guarantee advertisers that their advertisements will appear when participating consumers access content from a particular website. WhenU guarantees only that advertisements will be shown to consumers who appear interested in a particular product or service sales category.

In sum, WhenU does not target specific websites either in its software or in selling its services to advertisers. Rather, WhenU's advertisements are displayed according to the product category in which the consumer is interested and limited by factors such as the number of advertisements the consumer has already seen. Thus, it is the user's actions on his or her desktop that ultimately determine whether that consumer will see a particular advertisement.

The advertisements and coupons that SaveNow delivers to a participating consumer's desktop appear in a window (the ''WhenU Window'') which is separate and distinct from any other window already open on the desktop.

SaveNow advertisements take various formats, such as: (1) a small format ''pop-up'' window that typically appears flush to the bottom right-hand corner of the consumer's desktop; (2) a larger ''pop-under'' window that appears behind some or all of the browser windows that the consumer is viewing; (3) a horizontal ''panoramic'' window that runs along the bottom of the user's computer screen. Regardless of the format used, the WhenU Window is a distinct, separate window unique to the SaveNow application.

Many SaveNow advertisements — approximately 50% of the total — are pop-under ads. WhenU's pop-under ads are designed not to be displayed to the user until after the user closes or minimizes the browser window containing the webpage that the user was viewing when the ad was triggered by the SaveNow software. Thus, unless manipulated by the user, a SaveNow pop-under ad triggered by a Wells Fargo or Quicken Loans URL will not be displayed on the user's screen at the same time as the webpage with that URL.

SaveNow pop-up ads appear as a small box in the bottom right hand corner of the user's computer screen. Depending on the site visited, the browser size, and the user's screen resolution configuration, a SaveNow pop-up ad may or may not appear in front of content in the underlying website.

If the underlying webpage (or any other underlying windows, such as a Word document) is clicked on after the pop-up format advertisement is displayed, the pop-up will no longer appear at the front of the screen. At any time a user may make any form of SaveNow advertisement disappear permanently by clicking on the ''X'' box at the top right hand corner of the ad. The ''X'' box is a standard feature of the Windows operating system and Internet users are generally familiar with its function.

The WhenU Window is labeled as such. All SaveNow advertisements contain a notice stating: ''This is a WhenU offer and is not sponsored or displayed by the website you are visiting. When the consumer clicks on the word ''More...,'' a dialog box opens that contains information about SaveNow and a direct link to the ''Frequently Asked Questions'' page of WhenU's website.

SaveNow does not automatically cause any advertiser's webpage to be displayed on a user's desktop. After the WhenU advertisement is displayed, the user can elect to access the advertiser's website by clicking on the WhenU Window. The user also can elect not to access the advertiser's webpage, and can easily close the WhenU window or minimize it for later viewing.

Plaintiffs take the position that SaveNow advertisements appear ''on'' the plaintiffs' websites. Such usage misconstrues the technical reality of the Internet. A ''website'' is a series of related webpages, whose program code is located in separate, distinct servers controlled by the owners of the website. At that point, there is no connection between the individual user's computer and the website.

Having caused the computer to display a page from one website, the user may request the computer to simultaneously display a page from a different website. The user will then have pages from two different websites on his desktop. If the user has called the second website page up in a new browser window, it will appear in front of the page from the first website. However, as discussed above, the user can easily size his browser windows to cause pages from both websites to appear on his screen, in windows that overlap or not, as the user chooses. Nothing that an individual does in the window displaying one website interferes with data transmitted to or from another website. Likewise, nothing that an individual does in a window displaying a different application (e.g., a word processing or instant messenger program) interferes with data transmitted to or from a website which the user has accessed. A website resides on its own servers where it is protected from tampering by ''firewalls'' and other Internet security procedures.

SaveNow interacts only with the web servers of WhenU or WhenU's advertisers. It has nothing to do with plaintiffs' web servers. As plaintiffs' own expert acknowledged, SaveNow cannot and does not access the servers where plaintiffs' websites are physically located.

Defendant's SaveNow software has no physical relationship to any other software application that may be open on a user's desktop, including, but not limited to, windows in which images associated with plaintiffs' websites are displayed. The fact that a window containing a SaveNow ad and the windows in which plaintiffs' websites may be displayed may be visually stacked on top of each other on the user's screen is purely a function of a computer's graphical interface which is designed to make a computer ''desktop'' look and act like a real desk.

SaveNow does not transmit, display or reproduce images of plaintiffs' websites. All SaveNow does is display an image of an advertisement which contains a link to a site designated by the advertiser. The participating consumer may access that site, if the consumer chooses, by clicking on the link embedded in the advertisement.

Plaintiffs contend that because the appearance of a SaveNow advertisement alters the current content of video memory, plaintiffs' webpages are ''modified'' whenever a SaveNow ad appears while a user is also displaying one of their webpages. The Court rejects this contention. Once a computer browser renders a webpage on a window, a copy of the HTML code file associated with that webpage is saved into the computer's general random access memory or ''RAM.'' The RAM copy of the HTML file is used to help the computer instantly redisplay the webpage image in the event that some other window has subsequently obscured all or part of the webpage image. The appearance of a SaveNow ad does not interfere with the storage of another webpage's HTML code in RAM memory or erase another webpage's HTML code.

In addition to ordinary RAM memory, a computer maintains a temporary form of memory called video memory that forms part of the computer's display system. The video memory simply contains a pixel-by-pixel ''snapshot'' of whatever happens to be displayed on a computer screen at any given instant.

Plaintiffs contend that because the appearance of a SaveNow advertisement alters the current content of video memory, plaintiffs' webpages are ''modified'' every time a SaveNow ad appears while a user is also displaying one of their webpages. However, these pixels are part of the user's physical computer, and are not part of any webpage that the user might happen to be viewing at the time. Further, because the pixel display is the means by which any image on a computer screen is generated, whenever the display changes, there is a corresponding change in the content of video memory. Video memory is modified when a user opens a new application, receives an instant message, or uses his mouse to move the cursor across the screen. As long as a user is actively using the computer, the content of video memory is altered and updated every 1/70th of a second. Accordingly, the alteration of video memory is an ephemeral occurrence, and does not constitute a modification of the plaintiffs' webpages.

The Court rejects the contention that SaveNow ''frames'' plaintiffs' websites. Framing occurs when one webpage displays the content of another webpage within its own borders. If the outer window is moved, the framed page moves with it simultaneously; if the outer window is closed or minimized, the framed page closes or minimizes as well. The purpose of framing is to create a single seamless presentation that integrates the content of the two webpages into what appears to be single webpage.

SaveNow ads appear in entirely separate windows that can be moved independently without moving any other webpage, and can be closed without closing or in any way affecting any other webpage. Hence, SaveNow ads do not ''frame'' and are not ''framed by'' any other window, such as the window in which one of plaintiffs' webpages might be displayed.

Plaintiffs assert that a WhenU ad displayed on a computer screen at the same time as a consumer is viewing a page from one of their websites is inherently confusing to the consumer who, according to plaintiffs, believes it emanates from the plaintiffs' websites. However, plaintiffs have not presented any evidence of actual consumer confusion.

Entry of a preliminary injunction would seriously harm WhenU. A court opinion casting doubt on the legality of WhenU's core business model would result in the loss of many of WhenU's largest advertisers, costing WhenU millions of dollars in lost revenue. Because of the long planning cycles involved in the advertising business, this damage could not be recouped even if WhenU eventually prevailed on the merits.

Harm to WhenU would harm the public as well. WhenU benefits participating consumers by improving access to relevant, useful and money-saving information about products and services that interest them. WhenU's advertisements increase the choices available to consumers and thereby promote competition. A preliminary injunction could also chill the efforts of other companies seeking to develop forms of ''push technology'' -- technology that delivers information to the desktop without need for consumers to make an active request each time they see the information.

CONCLUSIONS OF LAW

Plaintiffs Have Not Shown Strong Likelihood of Success
on the Merits of Their Copyright Claim of Infringement
of Their Right to Prepare Derivative Works

Plaintiffs claim that WhenU violates their exclusive right to prepare ''derivative works.'' To prevail on this claim, plaintiffs would have to show that WhenU has incorporated the plaintiffs' websites into a new work. 17 U.S.C. 101 (defining derivative work as ''[a] work based on one or more preexisting works'' that is ''recast, transformed or adapted''). Plaintiffs have not made the necessary showing as to WhenU because WhenU merely provides a software product to computer users. The SaveNow software does not access plaintiffs' websites; therefore, it does not incorporate them into a new work. Accordingly, plaintiffs' claim that the defendant violates their right to create derivative works can only be understood as a contributory copyright infringement theory.

Moreover, SaveNow users do not infringe plaintiffs' right to prepare derivative works because consumers who cause the display of WhenU advertisements or coupons on their screens do not alter plaintiffs' websites. Plaintiffs' websites reside on separate servers. The WhenU Window has no physical relationship to plaintiffs' websites, and does not modify the content displayed in any other open window. Even if the presence of an overlapping window could be said to change the appearance of the underlying window on a computer screen, the mere alteration of the manner in which an individual consumer's computer displays the content sent by plaintiffs' websites does not create a ''derivative work.'' Lewis Galoob Toys v. Nintendo of Am., 780 F. Supp. 1283, 1291 (N.D. Cal. 1991) (indicating that ''the consumer may experiment with the product and create new variations of play, for personal enjoyment, without creating a derivative work''), aff'd, 964 F.2d 965 (9th Cir. 1992).

New York Times Co., Inc. v. Tasini, 533 U.S. 483 (2001), does not hold to the contrary. Unlike the publisher in Tasini, WhenU is not copying or making additions to or deletions from plaintiffs' actual copyrighted works. Contrary to plaintiffs' claim, WhenU has not added anything to plaintiffs' web pages. If one were able to look at the HTML code of plaintiffs' sites, one would not see any changes as a result of WhenU's advertisements. In this respect, the effect of WhenU's advertisements on plaintiffs' sites is more akin to the effect of a video game accessory in Lewis Galoob Toys. See also U-Haul v. UWhen, 279 F. Supp. 2d at 730 (Tasini not applicable where no reproduction of plaintiff's work occurs).

In Lewis Galoob Toys, the seller of a video game accessory known as the ''Game Genie" filed an action seeking a declaratory judgment that it was not violating or contributing to the violation of the defendant's video game copyrights. The defendant, Nintendo, markets and sells a home video game hardware system known as the Nintendo Entertainment System (''NES'') and compatible video game cartridges. The plaintiff markets and sells the Game Genie, which fits between the NES control desk and compatible video game cartridges and allows players to temporarily alter certain attributes of video games. Nintendo argued that the attachment of the Game Genie to its copyrighted works created a derivative work.

The district court rejected Nintendo's argument, finding that a consumer utilizing the Game Genie for noncommercial, private enjoyment ''neither generates a fixed transferable copy of the work, nor exhibits or performs the work for commercial gain.'' The court explained,

[I]inherent in the concept of a ''derivative work'' is the ability for that work to exist on its own, fixed and transferable from the original work . . . [o]nce the Game Genie and its attached game cartridge are disconnected from the NES, or the power is turned off, those changes disappear and the video game reverts to its original form.

WhenU's conduct affects plaintiffs' sites in a comparable manner. It only temporarily changes the way the sites are viewed by consumers. As soon as the advertisements are ''disconnected'' — that is closed or minimized — plaintiffs' sites revert to their original form. If anything, WhenU's advertisements modify their sites far less that the Game Genie altered users' NES video game experience.

The Court also finds irrelevant a series of cases cited by plaintiffs in which copyrighted material was not merely altered, but also publicly re-transmitted in the altered form. See, e.g., WGN Cont'l Broad. Co. v. United Video, Inc., 693 F.2d 622 (7th Cir. 1982) (re-broadcast of television program with integrated text deleted); Gilliam v. Am. Broadcasting Cos., Inc., 538 F.2d 14 (2d Cir. 1976) (public television broadcast of edited work); Nat'l Bank of Commerce v. Shaklee Corp., 503 F. Supp. 533 (W.D. Tex. 1980) (distribution of books with addition of unauthorized advertising materials). In marked contrast, plaintiffs here do not allege any general or public re-transmission of the alleged derivative work by computer users.

Plaintiffs base their allegations of copyright violation on the assertion that, because WhenU ads modify the pixels on a computer user's on-screen display, this modification creates a ''derivative work.'' The Court finds this argument unpersuasive in light of plaintiffs' expert's admission that pixels form part of the hardware of a computer and are owned and controlled by the computer user who chooses what to display on the screen. Plaintiffs do not have any property interest in the content of a user's pixels, much less a copyright interest.

Further, in order for a work to qualify as a derivative work, it must be independently copyrightable. Woods v. Bourne Co., 60 F.3d 978, 990 (2d Cir. 1995). To be independently copyrightable, it must be ''fixed'' — that is, it must be ''sufficiently permanent or stable to permit it to be . . . reproduced.'' See 17 U.S.C. 101, 102; Medforms, Inc. v. Healthcare Mgmt. Solutions, Inc., 290 F.3d 98, 107 (2d Cir. 2002). See also Lewis Galoob Toys, 964 F.2d at 967 (noting that ''[a] derivative work must incorporate a protected work in some concrete or permanent form''); Micro Star v. Formgen, Inc., 154 F.3d 1107, 1111 n.4 (9th Cir. 1998) (noting, by way of example, that covering a television screen with pink cellophane, while modifying the appearance of the copyrighted programs, would not create a derivative work ''because it does not incorporate the modified image in any permanent or concrete form'').

The pixels on a computer screen are updated every 1/70th of a second. The alteration of pixels is therefore far too transitory an occurrence to form a basis for a copyright violation. The appearance of a WhenU advertisement on a consumer's computer screen at the same time as one of the plaintiffs' web pages is also a transitory occurrence that might never be duplicated exactly on that or another person's computer screen. U-Haul, 279 F. Supp. 2d at 731. Accordingly, the WhenU advertisement does not create a work that is sufficiently permanent to be independently copyrightable, and hence does not create a derivative work. Since SaveNow users do not infringe the plaintiffs' right to prepare derivative works, WhenU is not liable for contributory infringement. See Matthew Bender & Co. v. West Pub., 158 F. 3d 693, 706-07 (2d Cir. 1998).

Irreparable Injury and Other Factors

In this matter, plaintiffs have not demonstrated irreparable or even substantial injury. Although they argue that WhenU is ''free-riding'' on their reputation and goodwill, to the extent plaintiffs could demonstrate that WhenU took advantage of their marks to benefit itself without compensation, plaintiffs' injury would be purely monetary in nature, and compensable by paying damages for the alleged unjust enrichment.

Issuance of a preliminary injunction would significantly harm WhenU's business. Injunctive relief would disrupt WhenU's established relationships with advertisers and harm WhenU's ability to obtain new advertisers. Moreover, the harm to WhenU would not only include the loss of client business that would take years to regain, but also the potential, permanent loss of talented and specially trained staff. Issuance of a preliminary injunction would also cause harm to WhenU advertisers, who would lose the ability to have their competitive offers delivered to potential customers by SaveNow simply because those customers view content from the plaintiffs' websites.

Granting an injunction to protect plaintiffs from the rigors of competition also threatens the integrity of the competitive process. Plaintiffs' objection to WhenU's advertising is that it presents customers with alternative choices for procuring the services offered by plaintiffs, increasing the chance that prospective customers will entertain more attractive offers. Federal policy has long favored such comparative advertising and disfavored restrictions on such advertising.

The Court concludes that, based on the evidence presented, a preliminary injunction will cause significant harm to defendant, defendant's clients and users, and the general public. Denying the motion will not damage plaintiffs other than in a manner compensable by an award of monetary damages in the event plaintiffs eventually prevail on the merits. Accordingly, the Court finds that the balance of the equities weighs against granting plaintiffs' motion.

CONCLUSION

Based on all of the foregoing, Plaintiffs' motion for preliminary injunction is DENIED.

November 19, 2003


Notes

l. For news stories about the Wells Fargo decision, see the links shown below in the iframe. To bring back to life dead (a/k/a broken) links, lean to use the Wayback Machine at Archive.Net. Put the URL of the dead link into the window and click on the Take Me Back button.



 
2. See the iframe below for still another WhenU decision, 1-800 Contacts v. WhenU. This one gives considerable technical detail about how the WhenU system operates.





 



3. The Wells Fargo court stated:

Plaintiffs base their allegations of copyright violation on the assertion that, because WhenU ads modify the pixels on a computer user's on-screen display, this modification creates a ''derivative work.'' The Court finds this argument unpersuasive in light of plaintiffs' expert's admission that pixels form part of the hardware of a computer and are owned and controlled by the computer user who chooses what to display on the screen. Plaintiffs do not have any property interest in the content of a user's pixels, much less a copyright interest.

In what sense does an end user own the pixels on her computer's screen display? How significant is pixel ownership in determining whether a derivative work is created?

Link to next section of chapter - Reverse Engineering
 
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