Unknown Modavox Targets AOL’s Tacoda to Cash in on Patent

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.”

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