Gevalia and Atkins settle with L.L. Bean in spyware complaint
One month after filing suit against Atkins Nutritionals Inc. and Gevalia Kaffe over their alleged use of “spyware”-enabled pop-up ads to promote their own products on LLBean.com, Freeport, ME-based Bean says it’s settled with the companies.
Atkins settled on May 24, almost immediately after Bean filed suit against it on May 17, while Gevalia’s settlement was approved by the U.S. District Court in Maine only yesterday. The consent decrees entered into by Atkins and Gevalia prohibit the companies from authorizing ads for their products on the L.L. Bean site. Terms also include the undisclosed payment of damages to L.L. Bean (No. 29 in Internet Retailer’s Top 300 Guide to retailing web sites).
Bean’s May 17 suit also alleges that Nordstrom Inc. (No. 49 in Internet Retailer’s Top 300 Guide ) and J.C. Penney Co. Inc. (No. 13 in Internet Retailer’s Top 300 Guide ) had illegally served their own ads on LLBean.com via pop-up ad technology. Both retailers have opted to litigate the case. "Both Atkins and Gevalia (No. 167 in Internet Retailer’s Top 300 Guide to retailing web sites) took immediate action to resolve our complaint without further litigation," says Mary Lou Kelley, L.L.Bean`s vice president of e-commerce. "This is good news for L.L.Bean and countless consumers who are fed up with spyware-enabled advertising practices that invade personal computers and the privacy of their families. We can`t see why any reputable retailer would choose to litigate in defense of a practice that compromises consumer trust and confidence."
"This is a consumer trust issue, plain and simple," adds Chris McCormick, L.L.Bean`s president and CEO. “L.L.Bean is not the only company with so much at stake here, and this development demonstrates that other retailers are coming to the same conclusion.” J.C. Penney did not return a call regarding the settlement.
However, a spokeswoman for Nordstrom says the Seattle-based retailer does not partner with affiliates that use spyware – pop-up ad-triggering technology that is downloaded by users without the user’s full knowledge. The spokeswoman says that two years ago, Nordstrom did a brief test through its affiliate program with Claria (then called Gator), an online ad network that critics say has been a source of unknown downloads of the ad-triggering software. That test and the relationship with Claria ended in February of 2002 after Nordstrom decided not to pursue the ads.
“We felt it was not an acceptable fit for Nordstrom," the spokeswoman says. “Our defense of the lawsuit should in no way be seen as an endorsement of Claria or that type of adware. To our knowledge, pop-up ads for Nordstrom are not showing up on competitors’ web sites.” The spokeswoman says Nordstrom was “disappointed” it had not been contacted by Bean prior to its filing of the complaint, but that the terms of the proposed settlement were “unacceptable.”
Salt Lake City-based Overstock.com (No. 28 in Internet Retailer’s Top 300 Guide) earlier this month filed a separate complaint against SmartBargains.com (No. 190 in Internet Retailer’s Top 300 Guide) over its alleged use of spyware to serve its own ads on Overstock’s site, which made Overstock the first retailer to evoke Utah’s recently-enacted Spyware Control Act. Overstock has stated its position that using spyware to deliver pop-up ads on other marketers` web sites constitutes “predatory advertising,” and CEO Patrick Bryne has likened such ads to spam.
When contacted at the time, SmartBargains provided a written statement from CEO Carl Rosendorf indicating it was the company’s belief Overstock’s intention in filing the complaint was to avoid competition. “The Gator [now Claria] Advertising and Information Network that is utilized by SmartBargains is a program that consumers download in order to comparison shop on a real-time basis. Several federal court decisions have strongly supported the consumer`s right to access this form of advertising,” Rosendorf said in that statement.
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