9th Circuit says settlement moots Gator.com v. LL Bean dispute

Many folks are aware that Gator.com and LL Bean have been duking it out in California over the legality under the Lanham Act and the Copyright Act of Gator.com's practice of signing up web surfers to receive pop-up ads tied to the web sites they were viewing. The district court kicked the case on Bean's pre-answer rule 12(b)(2) motion, holding that there was no personal jurisdiction over Bean in California. While the personal jurisdictional issue was under en banc consideration at the 9th Circuit, the parties settled the substance of their dispute, with Gator.com phasing out its pop-ups when web surfers are on Bean's website, and Bean releasing Gator.com from liability for claims of infringement, etc.

The settlement had a strange wrinkle, however. If Bean were to win the appeal (no personal jurisdiction over Bean), then Gator.com would pay it an additional 10K. If Gator.com were to win (p.j. over Bean in Cal.), then Bean got nothing.

Although it isn't clear to me why the parties wanted to continue to have the appeal heard with such a paltry stake riding on it (precedent?), they nevertheless pressed forward. But the en banc 9th Circuit pressed back, and held that the parties' settlement mooted the case. The court reasoned that the 10K personal jurisdiction was a "side bet" only: the REAL dispute as to whether Gator.com's business practices were legal was fully resolved by the settlement. The court distinguished prior cases where a settlement payment was contingent on the outcome of an appeal by noting that, in such cases, the contingent payment was in essence a liquidated amount for damages claimed in the original dispute. In this dispute, by contrast, said the court, there is no damage claim (because Bean moved to dismiss and won before it answered and counterclaimed?), and the personal jurisdiction argument has nothing to do with the substance of the controversy between the parties.