January 7, 2004 2:45 PM PST

Patent owner stakes claim in Net ad suit

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Just as the online advertising market seems back on track, a patent enforcer with broad rights to Web ad methods wants a cut of the profits.

InternetAd Systems, a recently formed company that aims to commercialize its patent rights, said this week that it plans to seek royalties from various Web sites that use popular online ad formats, including some types of pop-up and pop-under ads.

It has already filed a legal complaint against ESPN, The New York Times Co. and Travelocity.com, charging the companies with infringing on one or all of its four patents related to Internet ads. The civil suit asks for damages of an unspecified amount and a permanent injunction against the parties from using the ad formats. The Northbrook, Ill.-based company filed the lawsuit in the U.S. District Court for the Northern District of Texas in Dallas on Nov. 18.

The patents cover inventions by David Judson, who hired InternetAd Systems to enforce them. They broadly protect methods for interstitial advertising, which are messages that appear in between Web pages. InternetAd Systems believes that the patents also relate to "messages that appear before or behind Web sites," including some pop-up ads, according to Anthony Brown, president of TechSearch, the parent company of InternetAd Systems and the patent enforcer that challenged Intel and lost in the late 1990s.

"We looked at those sites (The New York Times, ESPN and Travelocity)--all highly visible sites--and we determined that there was a good deal of Internet advertising on those sites that would be covered by the patents," Brown said.

"There are many sites that we believe the inventions affect," he said. "We are contacting a number of sites that we believe use the patent technology and asking them for licenses."

TechSearch, which formed InternetAd Systems in recent months to handle the ad patents, was called a "patent troll" by Intel's legal counsel in the 1998 case. It sought about $500 million from Intel for alleged infringement on a patent relating to a defunct effort to develop a Pentium-class chip clone, after it acquired the patents from International Meta Systems (IMS). A California judge ruled that Intel did not infringe on TechSearch's patents.

Brown said TechSearch has had many successes in enforcing other patents, however.

InternetAd Systems did not seek to make licensing agreements from The New York Times, ESPN and Travelocity before pursuing legal action, Brown said, but it is seeking such deals with other Web sites.

According to one Web site operator, who asked to remain anonymous, InternetAd Systems is asking for royalties in the amount of 5 percent of Internet ad sales related to pop-up and pop-under ads.

The InternetAd Systems patents--numbered 5,572,643, 5,737,619, 6,185,586 and 6,457,025--cover "Interstitial Advertising Display System and Method" and "Content Display During Idle Time as a User Waits for Information," according to two of the four patent titles.

Representatives of Travelocity and ESPN said their respective companies do not comment on litigation as a matter of policy. A representative for The New York Times Digital said that its legal counsel is still looking into the matter.


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