NextCard, Inc. filed a copyright and trademark infringement suit in U.S. District Court in San Francisco against Providian Financial Corp. for running strikingly similar banner ads.
San Francisco-based NextCard markets its MasterCard and Visa cards only via the Internet. Banner ads link consumers to its Web site, the only place where they can apply for a card. Since its April ’98 startup, NextCard has run banner ads using an animated “ratemeter” to show its low interest rates. NextCard copyrighted the ratemeter in May ’98, and it’s been the primary branding device for its cards.
The July 14 lawsuit alleges that Providian ran a knock-off ad that linked customers to a Providian site for its own Internet-only card, Aria Visa. The lawsuit contends that Providian illegally copied NextCard’s ratemeter in its own ads when introducing Aria Visa in May, and says Providian made unauthorized copies of software files housing ratemeter ads. NextCard also alleges that Providian placed its ad on many of the same sites that NextCard has used. The suit asks for an injunction and damages triple the amount of its losses or Providian’s profits.
“We’ve had a lot of mimicry since our startup, but this was so blatant we felt we had to take action,” says NextCard director of business development Rich Goebel. “We want to say within the Internet community, `You can’t do this kind of thing.'”
Providian refused to pull its ad before the suit, but softened its stance with a July 15 letter to NextCard’s lawyers saying it had planned to pull the ad earlier, Goebel says. However, Providian considers the lawsuit to be “totally without merit, and we intend to defend ourselves vigorously,” according to a July statement by senior vp for e-commerce James Rowe. Providian tested its banner ad for one week in July, one of 20 banners tested, and credits it with less than three percent of visits to www.aria.com, the statement said.
NextCard doesn’t want Providian riding its coattails, but it also doesn’t want consumers to confuse its own cards with Providian’s: At least six class-action suits have been filed against Providian charging securities fraud, for signing up credit-card holders for credit protection plans without authorization and non-compliance with truth-in-lending requirements. Cases are active in New York, California, and Pennsylvania. The San Francisco District Attorney’s Office reportedly began investigating Providian after widespread consumer complaints about alleged deceptive billing practices. Providian statements call those suits “without merit” as well, stating, “Customer satisfaction is Providian’s number one goal.”
NextCard users can personalize cards and customize rewards such as cash back and airline miles. NextCard has signed up 100,000 cardholders and is close to approval on a bank charter so it can issue its own cards. (Cards currently are issued through Heritage Bank of Commerce, San Jose.) Providian’s Aria Visa has similar customizations. Online credit cards are gaining popularity. In July, Juno Online Services announced an exclusive five-year deal to let WingspanBank.com market credit cards and financial services to Juno subscribers. Juno sees it as an added convenience for its seven million e-mail subscribers; WingspanBank.com likes the exclusive access to Juno users.
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