Ticketmaster and Microsoft Settle Linking Dispute

February 15, 1999

Ticketmaster and Microsoft Settle Linking Dispute

By BOB TEDESCHI
icketmaster Corp. has settled its closely-watched lawsuit against the Microsoft Corp., the chief executive of Ticketmaster Online-CitySearch said Thursday, with the ticketing giant prevailing in the dispute over whether one Web site can freely link to pages deep within another site.
According to Charles Conn, Ticketmaster Online's chief executive, Microsoft agreed not to link from its Sidewalk city guides to pages deep within the Ticketmaster site. Instead, the guides will point visitors interested in purchasing tickets to the ticketing service's home page.

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Tom Pilla, a Microsoft spokesman, said the settlement terms included a non-disclosure agreement. But Conn said that in the settlement, Microsoft "agreed not to do that kind of deep linking anymore. So they can link, but not to deep pages."
The case was expected to establish a legal precedent regarding the intellectual property rights of Internet companies, as no similar lawsuit has been fully resolved in court. But as a result of the settlement, Web publishers will remain without legal guidelines on the practice of so-called "deep linking."
The distinction is important, as commercial sites such as Ticketmaster Online often generate substantial revenue by selling advertising on their front pages, typically the most highly-visited pages of any site. In early 1997, Microsoft had created links from its Seattle Sidewalk site to pages within the Ticketmaster Online site, meaning that users could potentially buy tickets without even noticing that they had left the Microsoft site.
Ticketmaster filed suit on April 28, 1997 in the U.S. District Court for the Central District of California, arguing that Microsoft had "pilfered" its content and therefore diluted its value. At the time it filed suit, Ticketmaster had recently signed an agreement with CitySearch, which, like Microsoft's Sidewalk guides, provides local news and information about merchants and entertainment in various cities. Through the agreement, CitySearch essentially paid Ticketmaster for the right to do what Microsoft was doing for free. Ticketmaster's online division merged with CitySearch in September; the company is a subsidiary of USA Networks.
Microsoft, meanwhile, argued that Ticketmaster's stance breached an unwritten Internet code, whereby any Web site operator has the right to link to anyone else's site. In addition, Microsoft offered a defense based on its stated First Amendement right to publish public information. The outcome of the case was eagerly awaited by Internet and First Amendment scholars, as no legal precedent existed in this area.
But with the settlement, filed in court on January 22, those looking for guidance were dismayed. "I'm sure it's in the best interest of the parties, but for the purpose of providing meaningful guidance to the Internet community, this is the worst news I've heard all day," Jeffrey Kuester, an Internet law specialist and a partner in the Atlanta law firm Thomas, Kayden, Horstemeyer & Risley, said when told of the settlement.
"We were hoping to hear some good, broad, general language from the court," Kuester said. "Now, do we know if deep linking is bad? Is linking to a main home page O.K.? Is it just not O.K. to link? We don't know."
In the wake of the settlement, Microsoft has reverted to a policy of offering links to Ticketmaster Online's home page for Sidewalk users who want to buy tickets. According to Martin Samson, a partner with the law firm Phillips Nizer in New York, it is a "rational" outcome.
"There's definitely merit to Ticketmaster's position," Samson said. "If I've got three nuggets of real value on my site, and they drive ad revenue, I should be allowed to say that you've got to come through my front door to see them."
Pilla, of Microsoft, declined to comment on the case, aside from saying that the parties reached "mutually agreeable terms. But I don't know why they're talking about it, since part of the agreement was to not talk about it."
One person familiar with the agreement, who spoke on condition of anonymity, said the suit "ran out of steam" when Fredric Rosen sold his interest in Ticketmaster to Barry Diller, chairman and chief executive of USA Networks. "Barry Diller wasn't particularly interested in pursuing the case," the source said.
"At the same time," the source said, "Microsoft's priorities with the Sidewalk sites changed. They were more of a buying guide, with less of an emphasis on editorial content like links to entertainment. So the players changed and the priorities changed, and we all basically shook hands and walked away."
Meanwhile, Conn, of Ticketmaster Online-CitySearch, said the company's relationship with Microsoft "is cordial now. They're good people. We're pleased to have it behind us."

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Microsoft Corp.
Ticketmaster Online-CitySearch
Sidewalk
Seattle Sidewalk

Bob Tedeschi at tedeschi@nytimes.com welcomes your comments and suggestions.

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