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Adware companies not breaking law

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Adware companies do not break trademark laws when they use a retailer's Web address to trigger coupons and other ads for rivals' products, a federal appeals court has found.

The 2nd U.S. Circuit Court of Appeals becomes the nation's highest court to rule on a fundamental practice of adware companies that serve up pop-up and other ads based on sites users visit. Lower courts around the country had issued conflicting opinions.

In 1-800 Contacts Inc.'s lawsuit against adware provider WhenU.com Inc., the appeals court likened WhenU's ads to retail stores that place generic competitors next to brand-name products.

Though the case did not directly address consumer frustration over adware, which often gets onto computers without their owners' full knowledge, the court said it viewed WhenU's ads as authorized.

The ruling may not, however, fully apply to many of the trademark disputes involving adware companies or such search companies as Google Inc. that target ads based on search terms, including brand names.

Associated Press

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