A software company at the centre of a growing dispute over the use of pop-up ads has sued the Interactive Advertising Bureau to protect its right to sell ads that can cover those on other Web sites. Gator, based in Redwood City, California, filed a lawsuit late on Monday in California federal court against the IAB to "protect the right to utilise Gator's newest advertising vehicle, the Companion Pop-up Banner." Gator's service delivers pop-ups that can obscure banner ads sold on some Web pages. The IAB, which represents several major content sites that rely on ad revenue, has been sharply critical of Gator's software. In the suit, Gator seeks declaratory relief and punitive damages against the IAB's "malicious disparagement" of Gator's business under the Lanham Act, the Declaratory Judgment Act and California state and common laws. According to the suit, which was filed in the Northern District of California, Gator charges that the IAB "falsely asserted that certain aspects of [its] service are unlawful, unethical and deceptive." Gator also charges the IAB with violating trade libel under California law, disparaging its service and costing the company lost sales. It seeks punitive damages. The move comes amid open disapproval from the IAB about the company's ad-delivery software. As previously reported, IAB chief executive Robin Webster said the group's board of directors is demanding that Gator stop its practice of selling ads designed to intentionally block those sold on its members' Web sites. Webster also said that the IAB is considering pressing the issue with the Federal Trade Commission. IAB spokesman Stu Ginsburg said Tuesday that the organisation had not seen the Gator suit and could not comment on it. For the full version of this story, see CNET News.com. See the E-commerce News Section for the latest headlines. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forum. Let the editors know what you think in the Mailroom. And read other letters.