Rich Media Ad Players Irked, Despite Reprieve

Call it the Cuban missile crisis of rich media advertising. Though it may not be quite as harrowing as that historical event or as dramatic in the telling, one patent conflict has come close to threatening this entire subset of the interactive advertising business.

The danger appears over for now. After saying it would release new versions of its software to comply with a patent ruling, Microsoft shifted gears last week. The software giant now says it will hold off, for now, on issuing a new version of Internet Explorer that would require changes to the code that lets rich media appear in the browser. Though the company’s already lost twice in a courtroom (it’s appealing again), it now feels there’s a good chance the U.S. patent office will swoop in and invalidate the patent in question.

Online publishers and technology firms, many of whom had been scrambling to address the issue, breathed a collective sigh of relief following Redmond’s update. 24/7 Real Media, Bluestreak, Accipiter, Washington Post.Newsweek Interactive and DoubleClick all had staffers developing a work-around for the browser change so their clients could continue to serve Flash and other rich ads uninterrupted.

“It’s fantastic for the industry that it doesn’t happen,” said Brian Handly, CEO of ad management firm Accipiter, which recently updated its platform to address the issue. “There would have been a lot of publishers — particularly smaller ones — that would have been caught off-guard by this.”

But there was a tone of frustration amid the relief expressed by Accipiter and other companies reliant on serving rich media. It takes money and time to implement a technology change such as that threatened by Microsoft in October, they said. And there’s no absolute guarantee this reprieve will be permanent, though Microsoft seems to think it has the patent office on its side.

“We were skeptical that it would come to fruition, but we had to be prepared,” said Handly. “It is irritating that we had to spend time and effort in dealing with this.”

Eric Picard, Bluestreak’s director of product management, shares the sentiment.

“While I’m very happy that this release of IE isn’t going to go live, at least for the moment, I’m irked that we were left in a no-win situation,” he said.

Picard continued, “We could not afford to treat this like it was not going to happen, because if it did happen we were going to be in big trouble and weeks away from a working solution. So we had to build a solution out, even with the possibility that Microsoft would never release their changes.”

Who is to blame for the false alarm? While neither Picard nor Handly would single out any one entity for responsibility, they agree the U.S. Patent and Trademark Office (PTO) ought to be more diligent in considering what patents to issue.

“The patent board has granted some patents in our industry which are extremely generic,” Handly said. “When that happens, it’s hard to know how to go forward with your business.”

This isn’t the first time the office has come under fire for granting an over-broad patent that turned out later to be a case of “prior art.” Critics say a flood of generic patents granted during the Web’s infancy has resulted in dubious legal disputes. Many feel Amazon.com’s suit against Barnes & Noble for the use of its one-click buying “technology” is a good example. Many such patent suits have come back to haunt the industry.

In its defense, the PTO has been overwhelmed in recent years with patent applications that are perhaps difficult to interpret or understand.

In the case of Internet Explorer’s use of ActiveX to serve rich media ads, Microsoft appears confident it will prevail, one way or another. But that’s small consolation to the companies that have invested resources to forestall a business interruption that may never occur.

“This should serve as a wake-up call to the patent board,” said Accipiter’s Handly. “They need to look at the legitimacy of the patent granting process and make sure patents cover product technology that is indeed innovative.”

Said Bluestreak’s Picard: “I would say that broad patents like the Eolas patent tend to weaken business in general, and the Internet industries in particular. Basic functionality that are the building blocks upon which many businesses exist simply shouldn’t be subject to this kind of instability.”