Wells Fargo & Co. v. Whenu. Com, Inc.

• Decision Date: 19 November 2003
• Docket Number: No. 03-71906.,03-71906.
• Citation: 293 F.Supp.2d 734
• Parties: WELLS FARGO & CO., et. al., Plaintiffs, v. WHENU.COM, INC., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

293 F.Supp.2d 734

WELLS FARGO & CO., et. al., Plaintiffs, v. WHENU.COM, INC., Defendant.

No. 03-71906.

United States District Court, E.D. Michigan, Southern Division.

November 19, 2003.

COPYRIGHT MATERIAL OMITTED

Jason S. Conti, Honigman, Miller, Bingham Farms, MI, for plaintiffs.

Leonard M. Niehoff, Ann Arbor, MI, Celia G. Barenholtz, Michael D. Paley, Jason M. Koral, Correne S. Kristiansen, Kronish, Lieb, New York City, for defendant.

MEMORANDUM OPINION AND ORDER DENYING PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION

EDMUNDS, District Judge.

INTRODUCTION

Almost everyone who has surfed the Internet on his or her computer has encountered advertisements that pop-up from time to time. While the average Internet user may find the advertisements annoying, the question before the Court is whether they violate trademark or copyright law. Plaintiffs Wells Fargo & Co. and Quicken Loans, Inc. have asked the Court for a preliminary injunction against Defendant WhenU.com, Inc., whose business is Internet contextual advertising. For the reasons stated in this opinion plaintiffs' motion for preliminary injunction is DENIED.

FINDINGS OF FACT

The Parties

1. Plaintiff WFC Holdings Corporation is a corporation incorporated in Delaware with its principal place of business in San Francisco, California. Complaint ¶ 6.

2. Plaintiff Wells Fargo & Company (collectively with WFC Holdings Corporation, "Wells Fargo") is a corporation incorporated in Delaware with its principal place of business in San Francisco, California, and is the parent company of WFC Holdings Corporation. Complaint ¶7.

3. Plaintiff Quicken Loans Inc. ("Quicken Loans") is a corporation incorporated in Michigan with its principal place of business in Livonia, Michigan. Complaint ¶ 9.

4. Plaintiffs Wells Fargo and Quicken Loans operate websites through which certain financial services are offered. Complaint ¶¶ 8, 10.

5. Defendant WhenU.com, Inc. ("WhenU") is a corporation incorporated in Delaware with its principal place of business in New York, New York. Answer ¶ 11.

Plaintiffs' Trademarks and Copyrights

6. The term "Wells Fargo" is a registered trademark of plaintiff Wells Fargo. PX 115. Wells Fargo has also received trademark registration for the logo it uses on its website. PX 117.

7. "QUICKEN LOANS" is a federally registered trademark, U.S. Reg. No. 2,528,282, owned by Intuit Inc. Tr. I (Tazelaar) 77. Intuit granted Quicken Loans an exclusive, nontransferable, non-assignable, perpetual license to the "QUICKEN LOANS" mark. Tr. I (Tazelaar) 77. See also PX 120.¹

8. Both Wells Fargo and Quicken Loans filed for copyright registration of their websites earlier this year. PX 114; PX 119. The copyright office granted registrations to the website "computer program." PX 192; PX 193.

Plaintiffs' Businesses

9. The business of Quicken Loans consists of offering mortgages to customers. Tr. I (Stapp) 71:1-3. Quicken Loans services customer transactions through the Internet via the Quicken Loans website. Tr. I (Stapp) 68:10-15.

10. Quicken Loans customers appear to have some sophistication concerning mortgages. Currently, 85% to 90% of the Quicken Loans business consists of customers seeking to refinance prior mortgages, as opposed to first time home buyers. Tr. I (Stapp) 82:25-83:2, 140:17-141:3. Approximately 40% of these individuals are repeat customers who are already familiar with Quicken Loans, and the process of obtaining mortgages online. Tr. I (Stapp) 83:3-5.

11. Wells Fargo is a financial services company offering customers online access to various financial services and products. Tr. I (Tazelaar) 162:9-15. Many of these services and products are the sort that would likely be used by relatively sophisticated consumers, such as business services, brokerage services, wealth management services, and estate planning. PX 103, ¶ 5. Wells Fargo has offered financial products through the Internet since 1995. Tr. I (Tazelaar) 164:5-7.

12. Wells Fargo has made extensive use of its name and marks in interstate commerce in the United States and throughout the world. See Pls.' Proposed Findings of Fact ¶ 18. The Wells Fargo marks have been associated with the Wells Fargo business since its founding in 1852 and they are distinctive designations of the corporation, its services, and its website. See id. Quicken Loans also has made extensive use of its name and mark in interstate commerce in the United States; and its mark now is associated with the corporation and is a distinctive designation of the corporation, its services and its website. See id. ¶ 23. Wells Fargo and Quicken Loans have expended substantial resources to advertise their products and services, including advertisement on the World Wide Web. See id. ¶¶ 21 & 24. Both entities are widely recognized as industry leaders in their respective areas of service. See id. ¶¶ 19 & 22.

The Business of WhenU

13. WhenU delivers online "contextual marketing" to computers via its proprietary software product, "SaveNow."² Tr. VII (Naider) 19:25-20:5.

14. Contextual marketing technology endeavors to market products and services to consumers who have a demonstrable interest in those products and services. Tr. VII (Naider) 22:23-24:20. 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. Tr. VII (Naider) 23:24-24:20, 27:9-18; DX 501, ¶ 23.³

15. 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. Tr. VII (Naider) 27:19-28:9.

16. WhenU's participating consumers receive contextually relevant advertisements, delivered to their computer screens (also known as "desktops"). These advertisements are selected by SaveNow, based on a proprietary analysis of the consumer's immediate interests, as reflected by the consumer's Internet browsing activity. Tr. VII (Naider) 19:25-20:5; DX 501, ¶¶ 29-36.⁴

17. Since launching its service in approximately early 2001, WhenU has delivered online marketing for more than four hundred advertisers, including such wellknown companies as Bank of America, Citibank, Verizon, JPMorgan Chase, Panasonic, Cingular Wireless, Merck, and ING Bank. Tr. VII (Naider) 32:22-33:8; Tr. VIII (Naider) 47:16-18.

How WhenU Distributes Its Software

18. 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. Tr. VII (Naider) 33:18-35:13.

19. Consumers typically download the "Save" and "SaveNow" software in return for obtaining a free software application. Tr. VII (Naider) 54:7-14. 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. Tr. VII (Naider) 55:11-20. 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. Tr. VII (Naider) 34:8-14. WhenU has also developed its own freeware applications, including an application called "Weathercast," which are bundled with Save software. Tr. VII (Naider) 20:16-18, 30:6-31:4.

20. 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. Tr. VII (Naider) 34:15-22, 54:7-12.

21. WhenU shares the revenue generated from its bundled software with its bundling partners. Tr. VII (Naider) 54:18-24. 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. DX 501, ¶ 37; DX 523, ¶¶ 74-75.

22. SaveNow is also available for download at WhenU's website (DX 501, ¶ 40), at the websites of WhenU's free applications such as www.getweathercast.com (DX 501, ¶ 39), 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. Tr. VII (Naider) 53:7-16; DX 538, ¶ 13; DX 539. 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.

The Download Process and the SaveNow License Agreement

23. 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. Tr. VII (Naider) 57:18-58:22; DX 501, ¶ 38.

24. 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"). Tr. VII (Naider) 61:13-15; DX 501, ¶ 38; DX 510. The License Agreement is presented to the user in a text box with a scroll bar. DX 510. This is the standard way in which license agreements are incorporated into software installations. Tr. VII (Naider) 57:1-17.

25. The License Agreement explains that the...