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

C. Pop-Up Advertising


Introduction to 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, for example, 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, “baby,” “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 end user views a Web page containing the word “book,” a pop-up ad for Barnes & Noble appears, touting its much lower book prices. Of course, because a computer program is responsible for all of this, the results are undiscriminating and sometimes not what the client anticipates. Here is what happened when Folger rented the word “coffee.” For more examples select this link. Despite these occasional setbacks, contextual advertising has been enormously successful because of its greater efficiency in delivering the advertiser's message to potential customers instead of a random selection of the population.

Let's return to the “book” example. You will appreciate that if the Gatored Web page proprietor is Amazon (as in the Gator advertisment at right) it may find this practice objectionable. But does it create copyright infringement liability? That's what the rest of this chapter is about. The way to start to resolve that question is to go to § 106 and go through the clauses one-by-one for possible candidates. As the chapter heading may suggest, § 106(2) may provide the most viable candidate, but no court decision has so held thus far, and one expressly rejects the proposition. No appellate decisions exist yet on copyright and pop-ups and the few disrtict court decisions follow. This is still a cutting-edge copyright law issue. The two questions you want to ask yourself are: (1) Is what Gator and its clients do the preparation of a derivative work (be sure to identify what the work or works in question are for purposes of this analysis)? (2) Is the conduct nonetheless excused by the doctrine of fair use, goven the nature of the underlying work and the derivative use (here, make sure you identify all of the comepting interests at stake)?



This Flash animation is an abbreviated version of a Gator demo for its prospective customers. Gator’s explanation of its business model and operation is available at these links: old, shorter version, later version with mouseovers (business now operating as Gain Publishing), and still later version shortly before business apparently dried up (no more pages) . Further material explaining Gatoring and related practices is found at this link. A CNET story describes some of Gator's name changes to improve its image. A PC Pitstop story describes how Gator a/k/a GAIN gets users to install Gator on their systems – by means of a practice that PC Pitstop terms “drive-by downloading.”

Gator has repeatedly been involved in litigation, but no final decisions on the merits 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, and the Judicial Panel on Multidistrict Litigation transferred nine actions to the U.S. District Court for the Northern District of Georgia for pretrial management. See In re Gator Corp. Software, Trademark and Copyright Litigation, 259 F. Supp. 2d 1378 (J.P.M.D.L., No. MDL-1517, Apr. 22, 2003). The plaintiffs in these cases include Hertz Rent-A-Car, L.L. Bean, Six Continents Hotels, Inter-Continental Hotels, and United Parcel Service. For a story on how Gator used litigation offensively to chill criticism, see Gator's Lawsuit. For a CNET story on this and related litigation, see See you later, anti-Gators?.

The first reported caselaw (Gator was not the defendant) on the practice of Gatoring 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. (The parody of Duchamp's parody of the Mona Lisa was made by the late Prof . Ed Stephan of Western Washington Univ.) 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. Remember not to make your fair use analysis on the basis of the wrong supposed derrivative work. You know that the image at the farthest left is that of the underlying work. Is the next one immediately to the right the image of the derivative work? Why or why not? See the definition of derivative work from § 101.

8. 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. To bring back to life dead (a/k/a broken) links, learn 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.




9. U-Haul appealed to the Fourth Circuit. But the parties agreed to dismiss the appeal on January 14, 2004, on undisclosed terms.


 



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