Imagine this scenario...

You're CEO of a $16 billion company and you've just given a warm and fuzzy sales pitch to thousands of up and coming Web 2.0 developers, trying to convince them to use your new web services. The presentation goes swimmingly well and you sit down for a congenial chat with a legendary web maven. The next thing you know, you've gone from friendly chat to facing what could possibly turn into a hostile audience, all because you have a little secret...

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As Tim O'Reilly closed his Web 2.0 Q & A session with Jeff Bezos, the folks in the audience were treated to what could be called a "cringe moment" as O'Reilly asked Bezos point blank about the whole Alexa versus Alexaholic (now Statsaholic) controversy.

O'Reilly, being the egalitarian champion of new and disrupting technologies, did the right thing and asked Bezos why a company like Amazon couldn't just embrace Alexaholic and find a way to simply "get along?" 

Bezos seemed to be caught completely off guard by this question and tried to explain Alexa's stand with that age old "intellectual property" and "trademark" line. It was clear that all O'Reilly wanted to see was a shift in Alexa's policies, to be more open with the Web 2.0 community, and to hopefully foster an amicable solution for a service that he really liked and respected. That being Statsaholic. 

However, what no doubt made Bezos so uncomfortable, is that he wasn't really sure what the next question out of O'Reilly's mouth might be, or where he might be going with this topic. Could O'Reilly know what he knew, that only a handful of people were even aware of? That Alexa had filed a lawsuit against Alexaholic and its creator, Ron Hornbaker, on March 26th in a Federal District court?

[Note: The link to download these documents can be found at the end of this piece.]

Who can blame him for being uncomfortable? Here he is sitting in a room full of small developers who depend on open APIs and mashups, and at any moment the crowd could learn what Bezos already knew...that a small Web 2.0 developer, like many in the audience, was about to be legally spanked into oblivion to the tune of hundreds of thousands of dollars. 

Not really the audience you want to have turn on you when your own business strategy relies on the support of these smaller companies.

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Let's step back a little bit for some perspective.

Back in February of 2006, Ron Hornbaker, who was frustrated by how clumsy and clunky Alexa's website was, created a more efficient DHTML and Alexa graph data mashup and dubbed it Alexaholic. As word spread throughout the web community, Alexaholic started to gain a reputation as an excellent tool, and was for many a representation of what Alexa should be like.

Two months or so after the launch, Hornbaker got a call from Geoffery Mack, the Product Manager at Alexa. He felt a bit of dread wondering if he had drawn the ire of the mighty Alexa and even mightier Amazon. Was he about to be shut down? Much to his surprise, Mack was very complimentary of what Hornbaker had put together and went so far as to even give a bit of a backhanded compliment to Alexaholic in their corporate blog, saying:

"Our enhancements may not be as cool as Alexaholic, but they are a significant improvement."

One commenter on the post even went as far as to ask:

"Is there a way (API) to get the info from Alexa in order to create a site similar to Alexaholic?

Does Alexa share this info"

There was no reply.

In the meantime, Alexa continued to make improvements to their site, many of which were seen to be directly copied from Alexaholic.

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Flash forward to March of this year and Alexa's attitude had cooled towards Alexaholic. Trouble in paradise became apparent to many on the web when Alexa filed a URDP complaint with ICANN to get the domain taken away from Hornbaker because it contained the word "alexa" in it. 

Thinking he could resolve this problem with a simple domain name change, Hornbaker changed the site to Statsaholic. This didn't seem to appease Alexa, who began to disrupt Statsaholic services by blocking Alexa graphs from appearing on the site. Not content to simply shut off access to Hornbaker (who admittedly was playing a defiant game of cat and mouse with Alexa), Alexa and Amazon upped the ante by filing a lawsuit against Hornbaker in Northern California District Federal court (Case number - C 07-01715 RS).

At first glance, it does seem that Alexa has a decent case to make when it comes to taking their IP and trademarked materials. However when you read the 43 page complaint, some interesting things pop out and make you wonder if this is really such a cut and dry case of infringement? 

One excerpt in particular that catches my eye is:

"Unfortunately, Mr. Hornbaker has refused to stop trading off the Alexa name. And he has deliberately circumvented every attempt by Alexa to block him from stealing its traffic graphs."

a few lines later we have:

 "Through this lawsuit, Alexa seeks to force Mr. Hornbaker to stop infringing Alexa's trademarks and to stop pirating Alexa proprietary data." 

There are two things I find interesting about these statements. First, thousands upon thousands of websites link to Alexa graphs, which is one reason their site is so popular in the first place. Looking over large sites like O'Reilly and Paul Kedrosky's (who called Alexaholic "marvy") Infectious Greed, I found several "stolen" traffic graphs. Will Alexa now target anyone who places Alexa data in their sites?

However the biggest thing that bothers me about this whole situation is that Alexa gets all of its statistical and proprietary data that it uses for its graphs from volunteers. Millions of people have voluntarily downloaded and installed the Alexa toolbar in their web browser. To quote Alexa's own site:

"Alexa could not exist without the participation of the Alexa Toolbar community. Each member of the community, in addition to getting a useful tool, is giving back. Simply by using the toolbar each member contributes valuable information about the web, how it is used, what is important and what is not. This information is returned to the community as Related Links, Traffic Rankings and more."

So this magnanimous statement of fact that Alexa could not exist without the help of...well essentially us...slaps in the face of common decency when you take into consideration that millions of people who give that data to Alexa, essentially don't have the right to use it, especially if we do it in a way that displeases Alexa, like say, building a better Alexa. This doesn't really foster a sense of goodwill, and makes me wonder: with this attitude, why does anyone give them anything?

Without volunteers, they simply don't exist as a company. As for Amazon, you have a multi-billion dollar company trying to convince smaller companies who are in the business of open APIs and mashups, to use their web services. But it can't sit well with these smaller companies that they could be paying Amazon money and are only one acquisition away from becoming Amazon's next legal target.

More from the court documents:

"1. This is a complaint for an injunction, damages, and other appropriate relief to stop Mr. Hornbaker from:

a) using Alexa's name and trademarks, without permission and in bad faith, to profit from the website linked to the Internet domain name <alexaholic.com>; and

b) stealing Alexa's proprietary data by disregarding the rules for Alexa's Web Services--through which Alexa makes certain proprietary data available in exchange for a fee--and instead simply taking the data and graphs he wants without permission."

According to Hornbaker'a blog, after learning about the URDP filing by Alexa, he switched the domain to Statsaholic, and re-directed Alexaholic to the new domain. He later learned from his attorney that the redirect was a sticking point for Alexa, so he took out the redirect and instead left a web page that simply said:

What bothers me here is that Mr. Hornbaker changed the name of his site from Alexaholic to Statsaholic before this lawsuit was filed, and the simple fact that Alexa is now saying anyone who takes a graph without permission is a thief. Well that makes thousands...perhaps millions of people around the world, thieves.

Another interesting claim in the suit:

"Upon information and belief, Defendent's registration and use of Infringing Domain Name is designed to capitalize on the goodwill associated with the Alexa trademarks"

I would go as far as to say that Alexaholic earned its good will in spite of Alexa. It is clear from numerous postings around the web, that Alexaholic was an outstanding service. In fact, to many people, more useful than Alexa itself.

Then there is this:

"65. Defendants conduct has caused and will continue to cause damage to Alexa and an illicit gain of profit to Defendant, and is causing irreparable harm to Alexa for which there is no adequate remedy under the law."

Excuse me? Little Ron Hornbaker...is causing giant Alexa irreparable harm? And the question that really begs to be asked is that why all of a sudden, over a year later, when Alexa had ample opportunity to address this issue, did they decide to do it now? The simple fact of the matter is that Ron Hornbaker built a better Alexa and as soon as it started to gain traction, and Alexa had already borrowed all the ideas it wanted from Alexaholic, they no longer needed it. Essentially, what Alexa wants from the lawsuit is to take ownership of the Alexaholic domain, stop Ron Hornbaker from accessing their site without written permission, damages which will go well into the hundreds of thousands, pay their legal fees, and crawl into a hole somewhere and never show his head again.

Is this how we work together in this shiny new world of Web 2.0?  Now I know that Alexa will take the position that they have certain intellectual property and a trademark issue. They will claim that people will mistake Statsaholic with Alexa. But the simple fact that we've seen time and time again is that companies that lock themselves behind walls fail, and companies who open their technology in the spirit of cooperation succeed. Can you imagine the state of the internet today if Google had kept all their API's hidden from the world, impossible to access and mashup? What if, as Tim O'Reilly postulated...Google had gone left instead of right? What if instead of saying "cool" when the first mashups started popping up, Google instead called in their lawyers? What would the web look like now if that had happened?

What Alexaholic/Statsaholic did was take a service that many people complained about and made it useful again. Alexa was suffering from a reputation that its data was not a really good reflection of what went on on the web. However, Ron Hornbaker had challenged that idea and actually championed Alexa. In Alexa's own suit they have a screen shot of this text from the Alexaholic Site:

Five Reasons to Like Alexa Traffic Data

Some criticize Alexa traffic data, saying that since it comes only from users with the Alexa toolbar installed, it must be worthless. While making sense on the surface, this line of thinking is misguided. Here are five reasons you should like Alexa:

1. Alexa is currently the best source for free and public comparative Web user traffic data.
2. Newbies with the Alexa Toolbar are not the only source of data. Firefox users with Craig Raw's cool SearchStatus extension should note that their browsing behavior is similarly being phoned-home to Alexa, and included in the statistics you see here.
3. Statistical significance is attainable with only a small subset of the population – ask a pollster or a high school math teacher.
4. Alexa's blazing-fast graph rendering engine absolutely rocks. Think about the mountains of data Alexa is working with on the backend, and all the possible permutations of graph content and size that prevent widespread caching, and I think you'll agree that their engineers brought their A-game to this one.
5. The key is "comparative" traffic data. If you want to know exactly how many page views and visitors your site is getting, get a good webserver log analysis tool. But if you want to quickly compare your site's traffic to your competitors' sites' traffic, Alexa is your friend.

Does this sound like someone to you who wanted to cause Alexa irreparable harm? I'd say it shows a person who wanted to share something great with the world and in fact what Alexaholic did for many people was to change their view of Alexa data. If anything, Ron Hornbaker may have saved Alexa from a lot of continued skepticism. 

What this situation smacks of isn't simply another David and Goliath IP and trademark issue. As Om Malik has pointed out, it is likely we are looking at the end of Web 2.0's Age of Innocence. While Alexa looks on the surface to have a pretty strong case, it is Alexa and really Amazon who loses in the court of public opinion, as it becomes harder and harder to sell your services to people who could likely earn your ire.

In the end there does seem to be a bit of hubris in standing up in front of a crowd of potential customers at a conference about being "open," tell them how great you are, and ask for their money...while you happen to be suing one of them for being better at your business than you are.

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My final thought in all this is simple. Yes, Alexa probably has a very strong case here, and if taken to the logical conclusion, could win, not only shutting down Statsaholic, but also taking out Ron Hornbaker in the process. And this just doesn't sit well with me since Alexa basically asks the world to volunteer data to their services, which they in turn sell back to us. No volunteers, no Alexa. I think when you expect the door to only swing one way, you are asking for a fair amount of bad karma from the Web 2.0 community...and you deserve it.

Read the court filing. 

[Note: I did attempt to contact Amazon, Alexa and Alexa's Attorney to get their response to this lawsuit, but have yet to hear from them]