Unauthorized pop-up ads are unfair, court affirms

The Cologne Regional Court of First Instance has issued a preliminary injunction prohibiting pop-up and pop-under advertisements from appearing on a website without the permission of the website owner (Case 31 O 145/04, March 12 2004).

Companies such as Claria (formerly Gator) and WhenU distribute adware (also called spyware), which is software that monitors users' online behaviour in order to deliver ads that pop up on their computer screens when specific websites are opened. The users sometimes do not even know that the adware is operating because these products are offered together with other programs.

In the case at hand, Claria distributed and installed such software so that each time users accessed the website of car rental company Hertz, ads for Hertz's competitors and other businesses would pop up. Hertz filed an action with the Cologne Regional Court of First Instance on the grounds that the ads, which it had not authorized, constituted unfair competition.

The court issued an interim injunction ordering Claria to stop placing software-controlled ads on to Hertz's website for as long as it had no permission from Hertz to use such software. In accordance with German procedure, the court did not give detailed reasons for its decision, but stated that Claria's practice:

• was damaging to Hertz;
  
  
• exploited Hertz's good reputation; and
  
  
• tried to divert Hertz's customers towards advertisers affiliated with Claria.

This, the court found, was sufficient to conclude that Claria's actions were in conflict with fair trade practices pursuant to Paragraph 1 of the German Unfair Competition Act.

The decision is in line with other German rulings, in particular T v Dr R. In that case, every time users tried to exit a particular website, new pop-up windows would open. The Dusseldorf Regional Court of First Instance took the view that this was an act of unfair competition and issued an order preventing the defendant from continuing the practice (Case 2a O 186/02, March 26 2003).

The Hertz ruling is also in line with a similar decision of the US District Court for the Southern District of New York where the judge granted a preliminary injunction against Claria's competitor WhenU preventing it from delivering pop-up ads (see WhenU floored by pop-up ad u-turn). Although the case was decided pursuant to trademark law, it used the same reasoning (ie, the abuse of the plaintiff's goodwill and reputation) as applied by the German courts under unfair competition law.

For a more detailed discussion of the legal problems relating to pop-up ads, see Law on pop-up ads remains unclear.

No statements were available to confirm whether the decision of the Cologne court is final or has been appealed by Claria.

Carsten Albrecht, Lovells, Hamburg