For years, they were located just around the corner from each other in Wickliffe. IWI Inc. and Nettis Environmental Ltd. sold the same line of dust-suppression equipment to industrial plants. For 15 years, they competed hard, with Nettis always in the lead, led by its ace salesman, Dominic Catanese, who ironically had left IWI in 1984 to work for his uncle, Don Nettis.
But last year, just as IWI finally caught up with — and then overtook — Nettis in that portion of the market on the strength of outbidding its rival on some business with giant General Motors, something unusual happened. Someone evidently decided to play games with the metatags from Nettis’ Web site. Metatags are the all-but-invisible computer coding that employ various key words to drive Internet search engines to particular sites on the World Wide Web.
At Nettis, someone smelled a rat.
In late October, as a Nettis official ran checks on the search engines Snap and Infoseek of the Web site the company had launched in July 1997, it became apparent that Web traffic from Nettis — and as many as 10 other distributors of the same pollution-control systems that Nettis and IWI represented — was somehow being diverted to IWI’s site.
The curious coding meant that when a Web surfer clicked on various portions of Nettis’ site, they were immediately transported to IWI’s site.
“That’s a deceitful way to get inquiries,” says Catanese, who says he’s sure it led to some lost business. “I know for a fact they’ve gotten some jobs outside of their normal geographic area, which is Ohio,” he said in February. “These were jobs where they do not have representatives, and the Internet is a perfect tool for this.”
Nettis notified other dealers whom it suspected were also on the receiving end of misdirected Web traffic. But it didn’t stop there. It marched into federal court in Cleveland, represented by a lawyer from the law firm of former U.S. Attorney Bob Rotatori, and demanded that Federal Judge Lesley Brooks Wells dish out a serving of Draconian punishment: $5,000-a-day fines and the imprisonment of IWI officials responsible for the diversion.
And, it warned, in a further bit saber rattling that sounded almost like name-dropping, perhaps Rotatori’s successors in the local federal prosecutor’s office might be convinced to launch an investigation.
“Given that it involves the evolving technology of the Internet, the U.S. attorney’s office may be interested in nipping such obvious fraud and misconduct in the bud by pursuing multiple criminal charges,” Nettis’ lawyer asserted in legal briefs.
Nettis also sued the company which hosted IWI’s site, Maryland-based Digiweb Inc., but that company was released as a defendant after it evicted IWI from its server.
Attorneys for both sides had to quickly come up to speed on the intricacies of the Internet.
“There are not many reported cases” like this, says IWI’s attorney, James Vail, of the Cleveland law firm of Schneider, Smeltz, Ranney & LaFond. As a firm, he says, “We did have to get smart” about the Internet. Adds his counterpart, Richard Stoper, who represented Nettis: “I have some background in intellectual property cases, but this is the first Internet case I’ve had.”
Nevertheless, he points out, despite the medium’s novelty, the legal issues here are really no different than if IWI were to have misused Nettis’ name in a brochure or a radio ad.
For his part, Nettis’ Catanese was outraged that his company was forced to spend any time or money on this issue at all. Nettis was spending tens of thousands of dollars on attorneys, he said, “just to stop someone from using your name. Now that’s a travesty.”
In December, the judge slapped a temporary restraining order on IWI, and that could have been that. But on Jan. 20th, Nettis decided to see where things stood. In a comprehensive Web search, its consultant found that six of the 386 search engines it checked still contained an improper link between the rival companies. Six days later, after IWI was notified of the situation, it took down its site.
To Nettis, its rival was boldly ignoring a temporary restraining order from a federal judge.
“The first time was ballsy, the second time was stupid, ’cause now they’re in contempt,” Catanese said.
Back to the judge it marched, asking further sanctions. But a careful review of the facts and the timelines in court papers suggest a more complicated story. Due to the vastness of the World Wide Web, and the inexact science of recalling data already uploaded to it, IWI was evidently experiencing difficulty in undoing what it essentially conceded it had done — meddle with its rival’s metatags.
In court filings, IWI was pleading with the judge that that shouldn’t constitute a crime. It maintained that by Nov. 10th, just days after being slapped with the first restraining order, it was in full compliance with the court, “because it was taking energetic and diligent efforts to totally eliminate the IWI/Nettis link.”
Within two days of the order, it argued, IWI had recoded the metatag information properly and uploaded it to the Web. And that had eliminated 98 percent of the misleading links. In an affidavit filed with the judge, IWI’s Jeffrey Iacco, son of President Bob Iacco, testified to “demanding in a letter to [its computer consultant], demanding him to try yet again to eliminate the link between Nettis and IWI on the Internet.” Apparently toward that end, the consultant subsequently used a search engine, Scrubtheweb.
The only problem, Nettis later countered, was that those steps didn’t erase improper links on some of the highest-trafficked sites. The escalating standoff, meanwhile, was making an already tense rivalry almost white-hot. When his former boss and now bitter competitor, IWI’s Bob Iacco, was at the same trade show recently, Catanese wasn’t interested in talking to him at all, let alone broaching the topic of the suit.
“I mean, they got their hand caught in the cookie jar. What’s to discuss?”
Knowing the personalities of his former employer as he did, Catanese was sure that the owner’s two computer-savvy sons, Jeff and Rob, were behind the metatag caper. “The two sons put this together, but the father condoned it,” he says. IWI’s Robert Iacco declined comment. “It’s all in the public record. I think we’ll just leave it at that,” he said.
Despite all the charges and countercharges, when the smoke finally cleared in May, nothing too dramatic had happened. In her final order, the judge ruled that IWI must pay its opponent’s attorney’s fees and costs, and permanently enjoined the company from ever again silently infringing on Nettis’ name. For his part, Dominic Catanese sounded at least mildly bitter about the entire ordeal.
In the end, while it won back the money it had shelled out for attorneys, Nettis hadn’t really gained much, certainly nothing like the $3 million settlement that Playboy Enterprises received last year in a similar case before a Virginia federal court. The Lanham Act, the federal statute under which Nettis sued its rival, (ironically, despite the fact that the Nettis name isn’t trademarked), provides only for attorney’s fees for winners.
The next step, proving monetary damages resulting from the alleged fraud, is a much tougher thing, says Richard Stoper, Nettis’ attorney.
“To prove lost business, it’s difficult to make the link,” he says. “And the cost of doing that [in this case] is probably in excess of what they lost.”
Catanese estimates that Nettis would have had to depose as many as 100 people to prove that it had lost business leads because of the metatag diversion. “It’s a sham
e that we’d have to prove damages before any compensatory award was made.”
The experience has left Catanese with some bittersweet attitudes about the Internet.
“I always felt that the Web was a way of opening yourself up to the competition. There was a risk they would copy you. I think it’s too late at this point to worry about those kinds of things. You need to exploit what you do best, and that’s what we’ve done.”
Despite the headaches of the last several months, he says, “I’m not going to change our philosophy.”