AOL/Time Warner buys TACODA
We are pleased to announce today that AOL/Time Warner has agreed to buy our portfolio company TACODA. As is always the case with a company you have worked with for years, our excitement for the founders and management team about this great outcome is tempered by knowing that we will no longer have the pleasure of working closely with this great team. Though we have watched other entrepreneurs move on (del.icio.us and Feedburner) we are perhaps slightly more wistful about this transaction because of our special relationship with TACODA.
Fred and I were both investors in TACODA prior to the formation of Union Square Ventures. We became convinced while kicking around ideas about the media and marketing business with Dave Morgan in 2002 and 2003 that we were in the midst of a seismic shift that was going to create great opportunities for new businesses. It was the fun we were having working together on TACODA as individual investors that convinced us that we should form Union Square Ventures to go after those opportunities.
But for me, the relationship with TACODA goes back further. I first met Dave Morgan in an elevator in Dallas, Texas in 1995. And to this day it still the only time I have ever been on the receiving end of an actual elevator pitch. The details paint a picture of Dave. He got on the elevator in running clothes. I was headed down to a cocktail party wearing a name badge. He scanned the elevator saw the badge and immediately introduced himself. By the time, we had ridden 12 floors, I knew that he was working on a business to bridge the gap between the media business and the technology business. To be fair, he did not quite finish the pitch in the elevator. But the fact that he had absolutely no qualms about following me into the cocktail party in his running shorts to secure an invitation to present his ideas in more detail back in my office made a real impression on me. Those ideas were the foundation of Dave’s first company Real Media, one of the first and now as part of 24/7-Real Media still one of the largest ad serving platforms.
So when Dave approached me in April of 2001, it was an easy call to support the development of what became TACODA. Dave’s premise was simple. The internet was real. As it became a more important part of the media mix it was going to be possible for the first time to address advertising to people instead of pages. Dave was convinced that as advertisers began to understand the possibilities of this new medium, they would no longer be satisfied with media properties as a proxy for specific audiences, they would demand that their messages be delivered to that audience regardless of where that audience was at the moment. That insight is the foundation of what is now known as behavioral targeting.
Because our relationship with TACODA predated the formation of Union Square Ventures, it is a little hard to say whether TACODA fits the Union Square Ventures investment strategy of whether the USV investment strategy reflects our experience with TACODA. Either way, TACODA is a poster child for all of the key elements of the UNION Square Ventures investment strategy.
- A technology enabled service business - though it started life as a software company, the business took off when they used their software internally to introduce the first behaviorally targeted advertising network in November of 2004.
- Potential to change the structure of markets – the introduction of paid search fundamentally changed the structure of the advertising market, but it can still only reach people who know what they are looking for. Behavioral targeting has the potential to disrupt the display advertising marketing by making it possible to deliver messages to folks who are receptive, but not necessarily actively looking for something.
- Information technology leverage – TACODA is an information technology driven company. They have built the infrastructure to enable them to track hundreds of data points for millions of uses and to be able to organize those users into targetable segments that can be reached on thousands of web sites. That by itself is a technically daunting task but they had to do it in a way that protected the privacy of consumers by ensuring that they do not comingle personally identifiable information. They also had to do it at huge scale without slowing page loads for their partner media sites.
- Data asset – At Union Square Ventures, we look for companies that have a data asset. We think that the most valuable data assets are created when users interact with services on the web. The anonymous data that TACODA collects as users use the web is critical to TACODA’s ability to show more useful relevant ads to consumers but, it is the data TACODA gathers as users interact with those messages that allows TACODA to continuously improve their targeting ability, sustaining their competitive advantage in the market.
TACODA has another asset we value in a young company – a strong management team. Dave Morgan is a people magnet. When he started TACODA, employees he had worked with and customers he had sold two followed him to TACODA. But Dave did not surround himself with people who made him comfortable. He invited me and Fred into the deal early on specifically to keep him focused on creating equity value. Dave brought in Curt Viebranz, an experienced media executive, first as a board member, then as the President of TACODA and then, as the organization grew, he asked Curt to take over the CEO role. Since, joining the company full time Curt, the people and the systems that Curt has put in place have made it possible for the company to continue its rapid growth with a minimum of fuss.
So how do we feel about AOL Time Warner’s acquisition of TACODA? We are of course a little saddened to see the end of this run. TACODA is in a great market with a differentiated and defensible approach. They have a great team who is executing well. There is no question in our mind that they could continue to grow and prosper as an independent company. That said, the combination of TACODA’s seasoned management, technology, database, and experience with behavioral targeting and AOL Time Warner’s reach as a media company and (through Advertising .com) as an ad network, could become the foundation for creating the dominant display ad network on the internet.
So congratulations to Dave, Curt, Mark, Dan, Matt, Gil, and the rest of the team at TACODA, we are convinced that in partnership with AOL Time Warner, you will finish what you started and that a few years from now, people will only vaguely remember that there was once a time in the media business that you had to target pages as a proxy for people.
Good Luck – We will miss you.
July 23, 2007 07:44 PM, By Brad Burnham
Tags: acquisition ads aol behavioraladvertising investment portfolio tacoda thesis timewarner
Comments (29)
Congrats to all of you.
Posted by Mo , July 24, 2007 10:53 AM
Congrats, Dave was one of the reasons Sara and I committed to the Fund. Great result.
Posted by Lindel , July 24, 2007 11:44 AM
Congratulations! You guys are doing great.
Posted by Tom Evslin , July 24, 2007 12:12 PM
Congrats, it was interesting to read about this story and get a feeling of what characteristics make a good company stand out.
Posted by Matt , July 24, 2007 01:42 PM
Wonderful news guys. Happy for you all.
Posted by bijan sabet , July 24, 2007 02:57 PM
Congrats to TACODA. Congrats to USV - you guys are on a roll...
Posted by Chris Fralic , July 24, 2007 09:56 PM
Nice work, guys. A great affirmation of USV's approach and patience. Also, a nice post on your blog!
Posted by Lee Greenhouse , July 25, 2007 12:32 AM
Congrats guys!
After meeting with TACODA in 2006 as a prospective ad buyer, I was somewhat skeptical. At the time, they didnt have any inventory to sell.
But, now that I am on the publishing side, I am increasingly optimistic - anything that increases contextual targeting is a good thing; even if its somewhat of a proxy for a "used-car salesman".
Posted by Jonathan Marcus , July 25, 2007 01:46 AM
You guys are bringing back the spirit of Silicon Alley with a series of NY-based success stories. Well done!
Posted by Ari , July 25, 2007 07:06 PM
Brad was very modest in his post. He was a full co-founder of TACODA. Not only did he participate in funding; he was with me every step of the way in developing startegy, raising money, and running the shop in the first year. And, as you might expect, he recruited Fred to the company and Fred brought the world. Thank you Brad. Thank you Fred. Curt and I could not have done it without you.
Dave Morgan
Posted by Dave Morgan , July 26, 2007 01:28 AM
Congrats on another great outcome!
Posted by Peter Hershberg , July 26, 2007 01:53 PM
Believe VCs when they say they invest in management and believe entrepreneurs when they say pick your VC carefully. As one who has lived in a USV-funded start-up for the past 5 years, I can personally attest to the importance of shared culture, vision and trust. Brad and Fred were extremely supportive through the highs and lows and -- I think I speak for the many employees who knew them personally -- for that we are grateful. We could not have done it without you. Thank you!
Posted by Gil Beyda , July 31, 2007 01:15 PM
Brad and Fred were initmately tied to the business the whole way through, sending notes of congratulations when we landed a big deal or helping us steer resources when several paths presented themselves. The support of our "kind uncles" was a major factor in TACODA's success... that and Dave had a huge vision. I remember the very early days calling on publishers where the entire concept of audience was new. Today clients talk about the flavors of behavioral targeting with ease. It was great fun to be part of this market change. Thanks so much to our supporters.
Posted by Anne Hunter , August 1, 2007 01:04 PM
I really hope some of the congrats here weren't pre-mature in light of last weeks patent infringement lawsuit against Tacoda.
How do all of you Tacoda people feel about this recent news and how will it affect your pending buyout by AOL? Is it true that your company's technology is not patented? Could it be owned by someone else and were you already served with this lawsuit?
Can any of you comment on the potential ramifications and how you intend to address last weeks patent infringement lawsuit? Wouldn't this situation have serious implications if proven true?
Modavox Files Patent Infringement Lawsuit Against Tacoda
Friday August 10, 11:42 am ET
Company Files Lawsuit in U.S. District Court in New York Seeking Injunctive Relief and as yet Unspecified Damages
PHOENIX & NEW YORK--(BUSINESS WIRE)--Modavox, Inc. (OTCBB:MDVX - News), an Internet broadcasting pioneer in the production and syndication of online audio and video, announced today that it has filed a lawsuit against Tacoda, Inc. in the United States District Court for the Southern District of New York (Case No. 07 CV 7088 (McMahon)). In the suit, Modavox asserts its claim that Tacoda is infringing on United States Patent No. 6,594,691, "Method and System for Adding Function to a Web Page," as well as allowed claims from at least one additional patent application. Modavox is seeking injunctive relief and as yet unspecified damages stemming from Tacoda's infringing activities.
This suit against Tacoda is the first step in a potentially wide-reaching campaign designed to enforce Modavox's proprietary rights in its groundbreaking technology and to advance Modavox to its rightful place in the industry. Modavox intends to utilize its increasing business resources to further expand its ongoing analyses of activity within the industry, including identifying additional potential infringers of its expanding patented intellectual property portfolio.
"Modavox's commitment to innovation has yielded highly valuable patented intellectual property. Our management team, in conjunction with Fox Rothschild LLP, made a strategic business decision to design, create and execute a comprehensive plan in support of our patented process and technologies," said David Ide, CEO at Modavox. "We knew that decision would likely include pursuing enforcement through the justice system, and we are confident that the action we have taken today is an appropriate step on behalf of our shareholders and believe it will allow us to begin to reveal the true value of our patented intellectual property."
Nathaniel T. Bradley, Chief Technology & Product Officer at Modavox stated, "Upon review of data produced from our thorough infringement analysis, it's clear to us that Tacoda is infringing on the Modavox patents. Our leading edge technical innovations in customized content delivery have been used by Tacoda, as well as by a growing list of identified infringers, and is foundational to their product lines. The action today by Modavox is paramount to our overall patent enforcement strategy and is the culmination of years of effort; it is a long-awaited milestone for our company."
Dr. Daniel F. Coughlin of Fox Rothschild, who is acting as Modavox's lead counsel in the case stated, "We are confident in both the validity of Modavox's patent assets and the importance of their proprietary technology in this sector of online commerce. This suit clearly should demonstrate both of these points and, at the same time, serve notice on the industry that Modavox intends to take all steps necessary to leverage fully its technology and its intellectual property to further its business goals."
Posted by Hal Parker , August 13, 2007 05:01 AM
The silence to my questions is deafening, perhaps the lack of commentary answers some of my own questions?
"I really hope some of the congrats here weren't pre-mature in light of last weeks patent infringement lawsuit against Tacoda.
How do all of you Tacoda people feel about this recent news and how will it affect your pending buyout by AOL? Is it true that your company's technology is not patented? Could it be owned by someone else and were you already served with this lawsuit?
Can any of you comment on the potential ramifications and how you intend to address last weeks patent infringement lawsuit? Wouldn't this situation have serious implications if proven true?"
Cat have everyone's tongue?
Posted by Hal Parker , August 13, 2007 11:40 PM
Bueller, Bueller?
Unknown Modavox Targets AOL's Tacoda to Cash in on Patent
By Kate Kaye, The ClickZ Network, Aug 14, 2007
Tacoda's pending acquisition by AOL may have been a catalyst for a new patent infringement suit filed against the behavioral targeting firm. Modavox, an online broadcasting media production firm-turned-software provider, has over the past few months sought to identify patent infringement suit targets, of which Tacoda appears to be the first.
Modavox Thursday announced it had filed a suit against Tacoda in US District Court for the Southern District of New York, claiming the behavioral targeting firm has violated its patent on a
"Method and System for Adding Function to a Web Page." The so-called business method patent covers a technology that serves up customized multimedia content and advertising to Web users. Modavox, a public company, was granted the patent in 2003 under its former name, SurfNet Media Group; the patent application was filed in 1999.
"We really were focused on Tacoda a long time ago when they came out with their whole business model," said Modavox CTO and Chief Product Officer Nathaniel Bradley. "Tacoda is one of many potential infringers out there," he added, noting Tacoda competitors such as Revenue Science, AlmondNet and others are also possible lawsuit targets. "It's impossible for us to sue everybody," he said.
Tacoda is reviewing the Modavox complaint, according to Tacoda CEO Curt Viebranz, who said the company does not comment on active litigation.
In May, Modavox hired intellectual property law firm Fox Rothschild, LLP to represent the company in patent enforcement efforts. The tech outfit commissioned the person behind the patent in question, Andrew Burgess, to study potential infringement suit targets in March. Modavox aims to "create revenue around licensing," said Bradley.
Bradley said he believes Tacoda considered Modavox's technology when developing its own behavioral targeting system. "We have a hard time believing…we weren’t part of their due diligence, their thought process, along the way," he said.
Though Bradley stressed Tacoda has been "on our radar" from the "outset," he admitted AOL's recent agreement to purchase Tacoda got the lawsuit ball rolling faster. "With that filing we felt a sense of urgency," he said. AOL agreed to buy Tacoda last month for $275 million to bolster the behavioral targeting capabilities of its Advertising.com ad network and on its own properties. Tacoda launched in 2001 and refers to its technology as patent-pending.
"Industry consolidation gives patent owners larger and deeper pockets to sue…even though financially stronger defendants also increase the odds of better-funded litigation defenses," said marketing tech law pundit Eric Goldman, Assistant Professor at Santa Clara University School of Law.
Last year Modavox was pondering the viability of a patent infringement revenue model, according to a November 2006 SEC filing stating, "We have recently been approached by a third party to discuss whether it is feasible to pursue suspected infringement of our Modavox Central patent. We currently do not know whether infringement has occurred or the conditions, if any, under which we might pursue this suspected infringement."
It appears as though Modavox has been interested in boosting its interactive software industry presence over the past year or so. The company, which opened a new Interactive Media Division facility in Las Vegas in March, purchased Kino Interactive early last year, adding to its rich media delivery capabilities. v"We're a bit of an unknown," Bradley said, adding, "We haven't spent any money on PR or marketing."
The company provides audio and video content and ad delivery services to Gannett's AZCentral.com and Detroit Free Press, among other sites. Coincidentally, Tacoda enabled behavioral ad targeting for Gannett's USAToday site until discontinuing its publisher-side targeting service.
Since the US Patent and Trademark Office began awarding business method patents to the likes of Amazon.com, eBay and Priceline.com, such patent filings have been increasingly subject to controversy. The patents are used for technologies for things like data processing, and even education and training. In 1999, Amazon was awarded a patent for its "1-Click" online transaction system, and soon thereafter it sued Barnesandnoble.com for infringing on the patented system.
Local search site Local.com was awarded a patent last month covering a method for voice and mobile directory assistance. The company said it will look into charging competitors with patent licensing fees.
Expect more efforts to enforce patents, said Goldman. Noting a general increase in patent litigation, he told ClickZ News, "I would anticipate more patent enforcement even without industry consolidation."
Posted by Hal Parker , August 14, 2007 01:22 PM
Silence tells all........
Posted by Hal Parker , August 16, 2007 04:07 PM
All the back slapping and "that a boys" for selling out and now nothing having been called to the carpet based on stealing someone elses technology? Not a word? Come on Dave, you must have something to say??? Perhaps you're too busy trying to rescue that $275 million all of you had probably already been thinking about spending?
Tom wrote earlier, "Congrats, it was interesting to read about this story and get a feeling of what characteristics make a good company stand out."
Good company? Do good company's get sued for patent infringement and steal others technology trying to cash out and sell it as their own??? Just wondering
Posted by Hal Parker , August 20, 2007 11:21 PM
Congrats to Dave and Gil, job well done
Posted by Zach Coelius , August 21, 2007 04:40 PM
"Congrats to Dave and Gil, job well done"
If AOL actually pays $275 million for a company without a single patent covering any proprietary technology and little in revenues while they are simultaneously being sued for patent infringement, it will be more than "job well done" it will be a miracle in my eyes. If ths happens, we will consider promptly selling every share of TWX we own.
I wonder if Morgan and Gil were trying to sell AOL a Honda while telling them it was a Ferrari.
Posted by Frank Toms , August 23, 2007 01:22 AM
It does help when you own the widget…
http://blogs.mediapost.com/spin/?p=1061
PS. Check out who authored this blog. Look familiar? (David Morgan, CEO of Tacoda who is being sued by Modavox for patent infringement) Little did he know when he wrote the article that he'd be sued by the same exact company that essentially owns exactly what he is referencing in his own commentary.
Also, read this article http://www.alleyinsider.com/2007/08/as-flash-video-.html and the related article about the MPEG Licensing Authority: http://www.mpegla.com/avc/.
“On2 does not own the H.264 format, whose patent royalties are administered by a firm called MPEG Licensing Authority.”
“MPEG LA's AVC Patent Portfolio License provides fair, reasonable, nondiscriminatory access to essential AVC/H.264 patents owned by many patent holders as an alternative to negotiating separate licenses.”
“The License enjoys wide marketplace acceptance.”
As you will see, On2 is just one of several companies (1,195 to be exact) who pay a license fee to use the MPEG Codecs in the build-out of their applications… http://www.mpegla.com/m2/m2-licensees.cfm.
My research and opinion is that MPEG Codecs and the Modavox Patent are similar in concept. They both deal with the delivery of data over digital networks. Codecs encode and decode. The Patent detects (decodes) an end user’s information (data) and delivers (encodes) custom data tailored to the end user.
All very interesting....
Posted by John , August 23, 2007 11:51 AM
Bueller....Bueller....Bueller????
Posted by Hal Parker , August 27, 2007 02:58 AM
Deal closes mysteriously with out any financial terms disclosed?
How much is still in escrow for any outstanding possible liability from your patent infringement suit? I heard you guys might not have gotten all your money, is that true? Also, is there any truth to a recent bloggers supposition that you and Henry Blodgett, the disgraced former analyst who is barred from the securities industry might know each other or talked and that may be what prompted his attack on the company suing you for infringement?
Look forward to some response, any response!
Posted by Hal Parker , September 7, 2007 09:54 AM
Comments, thoughts....concerns?
Second Patent Affirms Modavox's Leading-Edge Role in Web Processes Such as User-Based Customization of Online Content
Tuesday September 11, 9:29 am ET
Patent No. 7,269,636 Ratifies Scope of Claims and Further Defines Modavox Breakthrough Inventions
PHOENIX--(BUSINESS WIRE)--Modavox, Inc. (OTCBB:MDVX - News), an Internet broadcasting pioneer in the production and distribution of online audio and video, announced that the U.S. Patent Office today issued U.S. Patent No. 7,269,636. The patent refines the legal definition of Modavox inventions with claims that accurately reflect how the concepts taught by the foundational U.S. Patent No. 6,594,691 "Method and System for Adding Function to a Web Page" are implemented in state-of-the-art delivery infrastructure and delivery practices seen in the marketplace today.
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The new patent leads to a modified complaint filed today asserting the new patent in the infringement case against Tacoda, Inc., pending in the Southern District of New York (Case No. 07-CV-7088).
Modavox CEO, David J. Ide stated, "We've achieved another key identified milestone in the establishment of validity in our patents and the importance of our proprietary technology in our industry. We are pleased with the issuance by the U.S.P.T.O. today of our new patent. Our work for our customers continues to fuel new innovations as we strive as an organization to exceed expectations. Each day, we press forward to capitalize on the opportunities that our technology and position in the market have created and our new patent is just one manifestation of that sizable effort."
"The new patent provides a clearer picture of how state-of-the-art implementations are executed such as the behavioral marketing implementation of Tacoda," said Nathaniel Bradley, Chief Technology & Product officer for Modavox. "Products built upon this patented infrastructure are under constant development and deployment here, and are continually enriched with new innovations. For this reason, we are confident that this, given the required time, will yield even more patents and intellectual property for Modavox. It is important to note the significance of this latest issuance as it is the cornerstone of our patent enforcement strategy and the reason we've begun to take our first actions."
Andy Burgess, Modavox Intellectual Property Consultant, stated, "The 7,269,636 patent delineates an unambiguous threshold for web technologies that allows Modavox to pursue current and future infringement studies unhindered. In addition to Tacoda, we believe additional operations in the behavioral marketing space are infringing and action is being taken through comprehensive infringement analysis and third party verification practices that will provide conclusive actionable data for us moving forward. The 7,269,636 patent also gives an unbiased view as to the ownership of the online vertical market currently occupied by Modavox."
Dr. Daniel F. Coughlin of Fox Rothschild LLP, who is acting as Modavox's lead counsel in the company's intellectual property enforcement and licensing program, stated, "We are all justifiably encouraged by the validation of Modavox's core technology that this patent represents. It is clear that the U.S. Patent Office has recognized the unique importance of Modavox's technology not only in the time frame of its original development, but also in the context of the emerging markets that these patents enable. Modavox's expanding intellectual property places us in an ideal position to seek and gain the industry recognition that the company deserves. More specifically, we are today filing an Amended Complaint asserting the '636 patent in our case recently filed against Tacoda, Inc., pending in the Southern District of New York (Case No. 07-CV-7088). As Tacoda and the rest of the industry will realize, it will not be possible to ignore Modavox's position astride this technology."
About Modavox
Modavox, Inc. (www.modavox.com), a pioneer in internet broadcasting, producing and syndicating online audio and video, offers innovative, effective and comprehensive online tools for reaching targeted niche communities worldwide. Through patented Modavox technology, Modavox delivers content straight to desktops and internet-enabled devices. Modavox provides managed access for live and on-demand Internet Radio Broadcasting, E-learning and Rich Media Advertising.
About Fox Rothschild LLP
Fox Rothschild LLP is a full-service law firm built to serve business leaders. Over the past 100 years, we have grown to 400 lawyers in 14 offices coast to coast. Our clients come to us because we understand their issues, their priorities, and the way they think. We help clients manage risk and make better decisions by offering practical, innovative advice. Effective pursuit and protection of intellectual property requires more than brilliant and thorough legal treatment. Mastery of scientific and technical disciplines is crucial to position a company for success. The firm's lawyers bring diverse perspectives, industry knowledge, and the technical capabilities needed to maximize IP value--for small, mid-sized, or Fortune 100 companies. For more information about Fox Rothschild LLP, please visit www.foxrothschild.com.
Forward-Looking Statements
Posted by Hal Parker , September 11, 2007 10:15 AM
Modavox Continues Threat to Behavioral Firms, Omniture Joins Behavioral Patent Holders
http://blog.clickz.com/
Behavioral targeting tech firms beware: Tacoda's recent bete noire Modavox continues to threaten the behavioral sector with its patent-wielding power. The company, which filed suit against the newly-acquired Tacoda last month, claims its latest patent, awarded today, will give it even more legitimacy in the eyes of the courts.
Essentially, the new patent acts as an addendum to the original which was filed in 1999 and issued in '03. It tacks on more claims in an effort to keep the initial patent up to date and, in this case, actionable in court.
Web analytics, optimization and behavioral targeting tech outfit Omniture also touted its latest behavioral-related patent today. The method patent, awarded on August 21, deals with its behavioral targeting and testing systems for content and ad targeting, as well as revenue yields for performance-based and search engine advertising.
No word yet as to whether Omniture intends to license the technology or sue alleged infringers as a result. The company hasn't yet responded to my requests for comment.
Posted by Kate Kaye on September 11, 5:01 PM
Posted by Hal Parker , September 12, 2007 02:49 AM
Patents Loom in Behavioral Targeting Sector
By Kate Kaye, The ClickZ Network, Sep 12, 2007
http://clickz.com/showPage.html?page=3627004
More behavioral targeting-related tremors rumbled yesterday as optimization firm Omniture and Modavox, which is suing AOL's Tacoda, announced new patents. The Modavox patent, which refines one previously issued by The U.S. Patent Office, has prompted the firm to revise its claims against the newly-acquired Tacoda, and threatens to become a thorn in the side of other behavioral targeting technology firms.
The fact that another behavioral targeting ad network, Blue Lithium, is also set to be scooped up by an online giant -- Yahoo -- raises questions as to whether they'll be Modavox's next lawsuit targets.
The patents and lawsuits in the behavioral targeting arena also bring to the fore concerns about long-controversial business method patents.
Adding to an extensive roster of U.S. and foreign-issued patents, the one awarded Omniture on August 21 deals with its behavioral targeting and testing systems for content and ad targeting, as well as maximizing search and performance-based ad revenue yields. Omniture, which filed for the patent in 2001, offers Web analytics, optimization and on-site behavioral targeting technology.
The company has been caught in the crosshairs of a technology patent suit in the past. Last year Omniture settled out of court with NetRatings, which had filed suits against Omniture and Coremetrics in 2005, claiming the companies were infringing on its patents for computer usage data analysis and reporting. Last year, Coremetrics also settled with NetRatings, now known as Nielsen/NetRatings following a merger with Nielsen.
It's unclear whether Omniture plans to sue or demand licensing fees from alleged patent infringers as a result of the newly-awarded patent. Omniture did not respond to several requests seeking comment for this story.
Teaching an Old Patent New Tricks
Modavox, on the other hand, has its sights set on taking the infringement lawsuit route to exploiting patents it believes relate to behavioral ad targeting. The multimedia production and services firm-turned-software provider has been assessing possible lawsuit targets, and believes its just-issued USPTO patent number 7,269,636 demonstrates a reaffirmation by the patent office of the legitimacy of the earlier patent it extends, thus bolstering its suit against Tacoda.
Daniel Coughlin, lead counsel in Modavox's intellectual property enforcement and licensing efforts and partner with Fox Rothschild LLP, told ClickZ News the new patent is "a straight continuation" of one previously-awarded in 2003 for technology that serves customized multimedia content and ads to Web users. Essentially, the new patent acts as an extension of the original, which was filed in 1999, tacking on additional claims in the hopes of keeping the initial patent up to date and, in this case, actionable in court.
"As [Modavox] trudges through the patent office, they're trying to hone their claims to cover what they see coming down the pike, to keep tailoring it to what else is out there in the market," said Brett Trout, a patent attorney specializing in Internet technologies.
Tacoda would not comment on the suit for this story. AOL agreed to buy the company last month for $275 million to expand the behavioral targeting capabilities of its Advertising.com ad network and on its own properties. Tacoda, which launched in 2001, alludes to its technology as patent-pending.
Modavox has begun dabbling in the online ad industry by opening a new Interactive Media Division facility in March and boosting rich media ad delivery capabilities through its acquisition of Kino Interactive last year. Yet, even though Modavox provides audio and video content and ad delivery services to some Gannett sites and other clients, it remains virtually unknown in the interactive ad industry.
By comparison, Tacoda has always served the online ad sector and was founded by a Web advertising technology veteran, Dave Morgan. He's also the founder of one of the first online ad networks, Real Media, which has since merged to become 24/7 Real Media and was recently acquired by agency holding company WPP.
Tacoda could choose to settle out of court, saving years of legal wrangling with Modavox and lots of money. Of course, the defendant does have the option of enduring a legal battle to fight Modavox in the hopes of invalidating its patent. That's not only likely to be a laborious and lengthy task; it may not be in Tacoda's or AOL's best interest.
"If they win and invalidate [Modavox's] patent, they've kind of won the case for all their competitors as well," said Trout. "It kind of puts AOL at a disadvantage." AOL did not respond to a request for comment regarding the case.
A Method to the Patent Madness
The patents in question are often referred to as business-method patents, as they cover the method by which a business function is performed. The latest patent awarded Modavox is described as a "Method and code module for adding function to a Web page," and expands upon the initial patent for a "Method and System for Adding Function to a Web Page."
cont.
Posted by Hal Parker , September 12, 2007 08:49 PM
So how much money is still in escrow from your Tacoda deal pending resolution of the lawsuit against them???
Your silence speeks volumes!
Posted by Hal Parker , September 16, 2007 01:43 PM
Congrats on the exit!
Were you a co-founder of Tacoda Brad? Fred's post makes it sound like you were...
Posted by Fraser , July 24, 2007 10:30 AM