Adware Patent

Jupiter analyst Gary Price wonders if NetZero has really been granted a patent for adware: NetZero patents…AdWare?
NetZero filed for the patent in April 2000 and, last month, was granted a patent for High volume targeting of advertisements to user of online service

Disclosed is an ad server and local device that interface for selecting advertisements to be viewed by users of an online service based upon user activity. The local device preferably stores a targeted activity list of activity identifiers and associated advertisements in memory, preferably in cache memory. The local device monitors the activity on the local device and compares the activity to the identifiers in the targeted activity list. If the activity matches one of the identifiers, the local device causes one or more advertisements to be played.

Will this lead to patent infringement litigation against Claria and WhenU in addition to copyright and trademark (the IP trifecta)?

Every Gator has its day in court

The 9th Circuit held oral arguments en banc on Wednesday in Gator.com v. L.L. Bean, 02-15035. The 9th Circuit panel decisions is Gator.com v. L.L. Bean, 341 F.3d 1072 (2003).
Here is a background at FindLaw: The Ninth Circuit to Look at Internet Jurisdiction: Does Business Conducted in Cyberspace Satisfy the Requirements of Continuous and Systematic Contact?
Law.com: 9th Circuit Snaps at Gator’s Argument

The en banc arguments were lively, with nine of the 11 judges questioning lawyers about the benefits — and dangers — of allowing Gator.com to sue L.L. Bean Inc. over pop-up advertising that the latter says infringed on its intellectual property.

Joe Gratz: Gator.com v. L.L. Bean

The en banc panel focused more than I expected on the jurisdictional effect of the cease-and-desist letter. On one hand, L.L. Bean lobbed this potentially damaging document into California, and causing damage within the jurisdiction makes jurisdiction proper. On the other hand, all L.L. Bean was doing was enforcing their trademark rights, which they had a legal duty to do; the C&D wasn’t intended to cause any damage, only to ask Gator to stop infringing. Toward the end of the oral argument, L.L. Bean’s attorney (who was doing a great job with a hard case) made the point that they had no other way to tell Gator to stop, so if the court held that sending C&Ds caused personal jurisdiction to attach, every IP owner would be instantly amenable to suit anywhere someone infringed their IP rights, if they told the infringer to stop.

BusinessWeek intro to adware

BusinessWeek is running a feature about adware in its June 28 issue: Guess What — You Asked For Those Pop-Up Ads

Once adware recipients find out what’s going on, many want out. Half of all people that receive Claria’s adware product, for example, uninstall the software within the first month, the company says. This continual attrition forces adware companies to step up the battle for footholds in more computers. Robert Kadar, a former executive director of sales at WhenU, still defends adware as an effective marketing tool, but notes that the adware companies “have internal tension between wanting to be a good corporate citizen and battling high customer turnover.” The latter, he says, “always wins out.” As it now stands, Claria’s Gator program is on 43 million machines, WhenU is on 25 million PCs, and 180solutions reaches 30 million, according to the companies.

Graphics: Adware: Who’s Who and Avoiding Adware
Interviews: Avi Nadler (WhenU CEO) and Ben Edelman (anti-spyware activist)

WhenUtah

A Utah Court heard oral arguments this week in WhenU’s challenge to Utah’s Anti-Spyware Act. AP: New York Company Challenges Utah’s Spyware Law

WhenU.com Inc. claims the law, which took effect last month, is “arbitrary and Draconian” and violates its free-speech rights.
WhenU lawyers told 3rd District Judge Joseph Fratto Jr. on Thursday that regulation of advertising on the Internet is a matter of interstate commerce subject to federal, not state, jurisdiction.

Courtesy of Ben Edelman, more documents in the WhenU v. Utah lawsuit.
Previously: WhenU Challenges Utah Anti-WhenU Law and complete adware coverage.

Adware: Clickwrap Licenses and Informed Consent

Part of an ongoing series. Previously: Part 1: Defining Adware
Quality of Consent to Adware Installation
Both Claria and WhenU are emphatic that they are installed with the consent of their users. WhenU tells its users:

SaveNow was installed on your computer as a module that comes with free software that you downloaded from the Internet. At that time, you accepted a license agreement as part of the download process. It is our strict policy to distribute SaveNow only to users who have accepted the license agreement.

In his discussions with the press, WhenU CEO Avi Nadler emphatically asserts that WhenU software executes on personal computers with the express consent of all of its users.
However, few GAIN or WhenU users are aware that they agreed to have GAIN software display ads on their computers. A survey conducted by PC Pitstop.com finds that only 24.9% of GAIN users and 13.3% of WhenU users are aware that the programs are installed on their systems. A survey of GAIN users, commissioned by the plaintiffs in the consolidated litigation against Claria, finds that only 13.2% of GAIN users believed that they consented to have GAIN show advertisements on their computers. A mere 4.1% of GAIN users believed that they consented to have Claria monitor their web surfing behavior. Only 10.5% of GAIN users and a mere 4% of WhenU users read the license agreement prior to installing the software. Only three percent of GAIN users and 1.6% of WhenU users read the license agreement for longer than five minutes prior to installing the software. WhenU notes that the PC Pitstop surveys are not scientific and should not be considered representative of all of its users. However, this data hardly supports the idea that GAIN or WhenU users have truly offered informed consent before installing the software. Furthermore, visitors to a website like PC Pitstop are likely to be interested in how their computers work and may be more savvy than computer users in general.
Both SaveNow and GAIN present the terms of license agreements and require affirmative assent before installation. SaveNow and GAIN users indicate their consent to install the software by accepting a “clickwrap” license. A clickwrap license appears on a computer screen and a user must accept the license terms before the software will install itself. However, as part of the installation process for both Claria and WhenU software, the clickwrap license appears only as one screen in a multiple-screen series of prompts to which a user must indicate assent. When installing SaveNow, 13 words of WhenU’s 1,224 word license agreement are presented in a small box that occupies less than one quarter of a window in the installer program, tucked away in the lower left-hand corner of that window.1 An installer for GAIN displays only 73 words of Claria’s 6,464 word license agreement.
Read on

(more…)

At Yahoo, Adware ≠ Spyware

Last week, Yahoo! released a toolbar (for Windows Internet Explorer) designed to detect existing installations and prevent future installations of spyware:

Anti-Spy offers consumers a way to identify potentially unwanted software like spyware, then lets consumers decide whether they want to disable/remove, ignore or keep the files that are found. If a user chooses to delete suspect software and later changes their mind, they can restore most such programs.

According to eWeek, Yahoo Plays Favorites with Some Adware

The beta version of the spyware-fighting toolbar add-on, which Yahoo released last week, doesn’t default to detect adware—a category of software in which Yahoo’s paid search division has a financial stake.

Yahoo does not consider WhenU or Claria adware to be spyware. Techdirt reports that “Yahoo’s spyware remover claims these programs are “adware” and will only remove them if you click and extra check box each time you run the program.”
Adware developers differentiate their products from “spyware” based on the fact that adware requires “consent” before installation. For more about the level of consent, see Adware: Clickwrap Licenses and Informed Consent.
Some websites may trigger Internet Explorer to download and install a program with inadequate notice to the computer user. Eric L. Howes describes the details in The Anatomy of a Drive-By Download.
For example, Martin Schwimmer is a knowledgeable and alert computer user, who carefully reads the notices on his computer screen. Yet, Schwimmer still found WhenU inadvertently installed on his system.
In the spectrum of spyware and adware, WhenU’s own software is relatively honest, albeit annoying to uninstall. WhenU also licenses its SaveNow software to other vendors, who are paid to distribute SaveNow (in order increase the number of viewers of its ads.) If WhenU licenses distribution of its software to providers who will bundle it with drive-by downloads, users may find WhenU installed on their computer without consent.
If WhenU fails to screen its bundling partners, and SaveNow can be installed without consent, perhaps anti-spyware tool vendors should consider WhenU to be spyware.
As an aside, after using Internet Explorer on Windows recently, I was struck by how different an experience is web browsing with Safari on a Mac or even Firefox on Windows. Even without adware installed, the IE user sees many more pop-up and pop-under ads. When using a computer infested with adware, ads are constantly popping up on screen, either from a web site or from adware.

Adware special report

Over the next week, in place of regular blogging, while my brain eases out of vacation mode back into info-aggregating mode, I will be posting a series of posts about adware, focusing on legislation and litigation, abridged and adapted from a seminar paper.
Prelude: Pop-ups trigger more lawsuits (5/19)
Part 1: Defining Adware (5/20)
Part 2: Litigation summary
Part 3: Regulatory goals
Part 4: Legislation