Court Denies Preliminary Injunction, Says Pop-Up Ads for Competitors Likely Don’t Infringe Trademarks and Copyright

WhenU.com, Inc. (“WhenU”) makes software that observes what web sites a consumer visits and what terms he or she searches for on the Internet. Based on those observations, the software presents targeted “pop-up” advertisements on the user’s screen. These advertisements appear as separate windows which contain information about the advertiser’s company or product. In many cases, when a person goes to the website of a particular company, the software will present an advertisement for a competitor of that company.Wells Fargo and Quicken Loans are companies whose web sites trigger WhenU’s software to present an advertisement for competitors. These companies sued WhenU, claiming that WhenU’s pop-up ads constitute both a derivative work infringing plaintiffs’ copyrights and an infringing use of plaintiffs’ trademarks under the Lanham Act. WhenU, in turn, claims that because WhenU does not actually cause the display of data belonging to the plaintiffs, and because WhenU’s pop-up advertisements appear in separate, individually labeled windows, WhenU’s software does not create a derivative work or infringe plaintiffs’ trademarks.

Plaintiffs moved for a preliminary injunction, but the court denied the motion.

In determining whether to issue a preliminary injunction, the court considers four factors: 1) the movant’s likelihood of success on the merits; 2) whether the movant will suffer irreparable harm if the injunction is not issued; 3) whether such an injunction would cause substantial harm to others; and 4) whether the injunction would serve the public interest.

First, the court found that the plaintiffs had not demonstrated a strong likelihood of success on the merits of their trademark claims. Because the plaintiff’s trademarks don’t actually appear in the WhenU ads, the case is different than standard trademark cases, in which the defendant’s advertising identifies their product with a mark similar to that owned by the plaintiff, misleading the consumer as to the source of the product. Here, WhenU’s pop-up ads gave no impression that they were affiliated with the plaintiffs, and instead presented a valid form of comparative advertising. Similarly, the use of the plaintiffs’ trademarks in WhenU’s database was only for the purpose of identifying the consumer’s habits, and not for identifying the source of WhenU’s ads. In addition, the court found that the pop-up ads, contrary to the plaintiffs’ claims, did not actually hinder the consumer’s ability to reach the web sites of their choice.

The court also found that the copyright claims had little likelihood for success on the merits. The combination of the original web page and the pop-up ad did not constitute a derivative work because WhenU’s software doesn’t actually access the plaintiffs’ web sites or display their data. Similarly, simply altering the way the copyrighted content of the plaintiffs’ web sites are displayed did not create a derivative work.

The court then held that the plaintiffs had failed to show that they would suffer any irreparable harm if the injunction was not granted, as evidenced by the fact that they waited 9 months after discovering WhenU’s activities before filing the suit. If the failure to grant an injunction resulted in any harm at all, it would be purely monetary and, should the plaintiffs prevail, would be sufficiently compensable by money damages.

On the other hand, if the court did grant the injunction, WhenU would likely suffer substantial harm. Preventing WhenU from conducting normal business would disrupt established relationship with current customers, and harm potential relationships with other advertisers.

Finally, the court found that the public interest was best served by allowing competition between the plaintiffs and WhenU’s advertisers until the case was settled. Since the plaintiffs’ claims met none of the four conditions for an injunction, the court denied the request.