NetRatings, Jupiter to Resume Patent Lawsuit

Web researcher Jupiter Media Metrix will resume its patent-infringement lawsuit against its acquirer and rival company NetRatings, while federal regulators take a second look at the pending marriage.

In a terse statement released Friday evening, the two companies said that questions from antitrust regulators about the two Internet measurement firms’ plans to merge had delayed the approval.

As a result of the Federal Trade Commission’s request for more information, the companies expect the deal to close closer to the end of the first quarter instead of earlier, as they had originally planned.

Although the two companies are going forward with their integration, Jupiter Media Metrix decided it wanted to protect the assets that are at stake in the lawsuit, said Jack Lazar, chief financial officer of NetRatings. “It was (still) a contentious issue when we first decided to get together,” he said. “Frankly, we think the whole lawsuit is frivolous.”

The lawsuit, filed in March of 2001, stems from Alley-based Jupiter’s charges that NetRatings violated its patent for tracking online Web usage. (At the same time, Jupiter filed a similar suit against European metrics firm NetValue.) But in October, Milpitas, Calif.-based NetRatings agreed to purchase Jupiter for $71.2 million in cash and stock, which left the lawsuit in question.

Asked whether litigation from a company it is acquiring was a rocky way to start a corporate marriage, Lazar said the companies were just being realistic about the situation.

“It’s not the first time that two companies that were suing each other were merging at the same time,” he said. “But we’re working together in order to put the best company together for our customers.”

In early December, the FTC requested additional information from the two companies, which Lazar said is typical in merger deals valued at over $50 million. As a result, NetRatings said that the time required to comply with the FTC’s request would require that the companies return to their joint suits to look after their own interests — “so that NetRatings and Jupiter Media Metrix can preserve their respective positions in the patent litigation.”

“We’ve always believed that the case won’t have to go to court,” he said. “We’re still confident about that.”

Jupiter and NetRatings said they would work to respond to the FTC’s request for more information by the original deadline of March 31, 2002. Thirty days after fulfilling the request, and pending FTC approval, the companies would be free to merge, at which point any suits between them would be dropped.

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