Juno Sues NetZero, Qualcomm

Juno Online Services, Inc. Thursday filed suit in a Delaware federal court seeking unspecified damages and an injunction against NetZero, Inc. and Qualcomm Inc. for infringement of an advertising streaming patent held by Juno.

NetZero (NASDAQ:NZRO) is a leading provider free Internet access in the U.S. built on an advertiser supported business model. In April Qualcomm (NASDAQ:QCOM) invested $144 million in NetZero, taking a 10 percent ownership stake in the firm. Qualcomm is the publisher of the Eudora email software currently being distributed by NetZero.

This suit is just the latest in the patent wars brewing over technology for delivering advertising on the Internet. For the last few months, ad giant DoubleClick Inc. has been trading patent infringement lawsuits with rivals 24/7 Media Inc. and L90, in disputes over ad serving systems. So far, nothing has been resolved in those cases.

At issue in the latest lawsuit is U.S. Patent No. 5,809,242, one of several patents held by Juno (NASDAQ:JWEB) since 1998 which protects its proprietary technology enabling advertisements to be displayed to an Internet user while offline.

The technology expands Juno’s revenue opportunity while minimizing the company’s telecommunications costs by allowing it to display advertising to Web access subscribers even while they read and write email offline, rather than only while they are connected to the Internet.

In its suit Juno asserts that NetZero and Qualcomm are infringing its patent by producing, distributing, and encouraging the use of software that unlawfully implements Juno’s patented offline architecture. Qualcomm’s latest version of Eudora 4.3 email software released earlier this year includes a setting called “sponsor mode” that enables ads to be displayed while the user reads and writes email.

The software also enables users to read and write email offline, and continues to show advertisements when users do so. NetZero has begun distributing the new version of Eudora and encouraging its subscribers to use it. Juno is seeking monetary damages as well as a permanent injunction prohibiting future infringement of the patent.

Richard Buchband, Juno senior vice president and general counsel said it would act decisively to enforce its patent rights.

“The technology we’ve invented benefits us greatly and could benefit others,” Buchband said. “But we’re not going to let other companies use it for free.”

With more than 3 million active subscribers in the month of March, Juno believes that the value realizable by NetZero and other potential licensees of Juno’s technology over the lifetime of the patent could be substantial.

Both NetZero and Qualcomm refused to comment on the suit.

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