U.S. District Judge Andre Davis said there was insufficient evidence for him to grant a preliminary injunction sought by the Federal Trade Commission. Regulators wanted to stop San Diego-based D-Squared Solutions LLC from selling its ad-blocking software.
"It's not clear to me ... if there's substantial injury to consumers," said Davis, who set a trial for March 8. "The case had the odor of extortion as it was originally prosecuted ... but it certainly doesn't look like extortion to me."
The FTC said D-Squared improperly used a technology built into most versions of Microsoft's Windows operating software to display intrusive messages on computer screens.
The messages offered software to block the same types of ads the company was sending. The FTC said D-Squared unlawfully exploited Microsoft's Windows Messenger Service feature by sending the unwanted ads to Internet users as frequently as once every 10 minutes.
FTC attorney Mona Spivack said D-Squared's advertisements caused "substantial injury" to consumers, citing lost data, crashed computers, frustration, annoyance and harassment.
"They clearly knew that this practice was in fact causing consumers' computers to crash," Spivack said. "The defendant's own marketing material said this."
D-Squared attorney Anthony Dain said the company's owners, Anish Dhingra and Jeffrey Davis, created the pop-ups with the intent of sending only one a day to a consumer's computer.
"It's self-defeating to bombard. It doesn't make sense," Dain said. "Should our clients be shut down from their best marketing tool and from the tool that best serves the customer, whether they're annoyed or not?"
D-Squared attorney Frederick Taylor said the ruling would come as a relief to his clients, who are college students at the University of California, San Diego. He said attorneys would consult with the owners before deciding whether to resume the pop-ups. Neither Dhingra nor Davis was in court Monday.
Windows Messenger Service is unrelated to Microsoft's instant-messaging software that uses the same name. It allows network administrators to display messages on a user's computer screen, such as a warning that a company's Internet connection might be having problems.
But some Internet marketers use the technology to display ads for software and pornography. It takes seven mouse clicks to disable the messenger service; the FTC said typical consumers don't know how to do this.
Karl Albrecht, 41, of Milford, Mich., said his home computer was bombarded with pop-ups from D-Squared when he tried to establish Internet service.
"I think there's a fine line between extortion and advertisement, and this clearly crossed the line," said Albrecht, who complained about the company in an e-mail to The Associated Press. "They're offering to fix the problem they created."
The software, which D-Squared advertised as blocking "these unwanted and illegal pop-up messages forever with the click of a button," costs between $25 and $30.
"The FTC is trying to hoist up warnings for people who they think are taking advantage of the freedom of the Net to misuse it," said David Farber, a professor of computer science and public policy at Carnegie Mellon University. "The message that's being sent out is that if you're going to do this, expect to see us on your doorstep."
By Foster Klug