Chapter 6C3 - I.P. Protection of Digital Rights in the New Millennium

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.