Sean H.

Bartz Uses Typical Tough Talk to Pressure Microsoft, Even as Bing Shows Some Early Zing

Kara, maybe you could ask Ms. Bartz about this cease and desist communications and how much they settled with Valuclick for when they went after Blue Lithium for patent infringement?

April 28, 2009 VIA FEDERAL EXPRESS

Carol Bartz, CEO
Yahoo, Inc.
701 First Avenue
Sunnyvale, CA 94089

RE: Yahoo's Blue Lithium Behavioral Targeting Solution

Dear Ms. Bartz,

We represent Modavox, Inc., which is the owner of U.S. Patent Nos. 6,594,691 and 7,269,636. The former patent is entitled "Method and System for Adding Function to a Web Page" ("the `691 patent") and the latter is entitled "Method and Code Module for Adding Function to a Web Page" ("the `636 patent"). The invention described and claimed by these patents relates to methods and systems for delivery of selected content from a network to a web page visitor. Copies of each patent are attached to this letter.

Following Yahoo's announcement of its acquisition of Blue Lithium in the fall of 2007, Yahoo's announced intent to add Blue Lithium's behavioral targeting solution to Yahoo's behavioral marketing approach to e-advertising caught the attention of our client. Modavox observed that Blue Lithium's technology which Yahoo intended to deploy involved targeting for Internet marketers and Web site publishers by delivery of ads based upon behavioral, contextual and demographic visitor parameters and preferences. Analysis of Web sites affiliated with Blue Lithium revealed that its technology resulted in customized content delivery accomplished in a manner which falls within the scope of one or more claims of each of the `691 and `636 patents.

Our client believes that over the past year Yahoo has deployed Blue Lithium's technology across its ad company platform. Recent investigations by Modavox experts have discovered that this deployment and related integration appears to have been completed and fully deployed earlier this year. Accordingly, Modavox has concluded that Yahoo and its Blue Lithium division are infringing one or more claims of both the `691 and the `636 patent.

Modavox is committed to enforcing its patent rights to achieve just and adequate compensation for its patented technology. We have been authorized, therefore, to inform you that Modavox is willing to grant a license under the patents to achieve a business resolution of this issue. In the absence of a achieving a licensing relationship, however, please understand that if Yahoo does not cease and desist from its apparent infringement of the claims of the above-identified patents appropriate action will be taken by Modavox. Further, Yahoo's continuation of this deployment may also expose it to treble damages under the patent act.

Within two weeks of the date written above, that is by May 18th, please confirm that Yahoo will not continue to employ Blue Lithium's technology across its ad platform, nor otherwise knowingly engage in infringing activity with regard to the respective claims of the `691 and `636 patents. In the alternative, please indicate Yahoo's interest in seeking a license to the identified patents and we will schedule a meeting for that purpose.

Please feel free to discuss any of the above.

Yours sincerely,

David R. Shaub

Enclosures: U.S. Patent 6,594,691
U.S. Patent 7,269,636

cc via e-mail: Mark Severini, CEO, Modavox, Inc.
Shelly Meyers, Chairwoman, Modavox, Inc.
David Rosenbaum, Rosenbaum & Silvert, P.C.

Modavox Bringing a Gun to the Online Advertising Knife Fight

Some of you are really a riot! Something very personal going on here that seems to have nothing to do with Modavox.

Modavox Bringing a Gun to the Online Advertising Knife Fight

Yes, it was called Qualcomm. How did that work out?

Really enjoy your postings finding you to be very sharp. I disagree here however. Appreciate your thoughts nonetheless.


On May 06 04:07 PM Cetin Hakimoglu wrote:

> I don't think so. We've heard this story before.
>
> ----------------------...
> The question remains, is there a gun that could put an end to the
> proverbial knife fight? That gun just may be a company named Modavox
> (seekingalpha.com/symbo...), recently written about
> by Microcap Speculator in his article “Modavox Surges on Favorable
> Patent News."

Modavox Bringing a Gun to the Online Advertising Knife Fight

In addition, as for you not seeing how Modavox could prevail. Perhaps you'd be well served to ask Paul Gupta and Orrick who represent AOL and Tacoda in this matter for over two years now. I'd assume they would serve as a better reference than yourself.

You might ask them why they were unsuccessful in invalidating it with the USPTO which they tried. ask them about the prior art they found. Ask them how with their abundance of resources and modavox's small stature, they have failed at making it go away? You might ask them why they approached Modavox for initial settlement talks?

Perhaps them being intimately involved with the merits of the case against them and Modavox's patents, they could better educate you with respect to who or who may not prevail?

Considering that Modavox just won the recent Markman ruling with respect to claims definitions, I'd suggest you stay tuned.


On May 06 02:08 PM Sean H. wrote:

> Your comments hardly dignifies a response. In fact, your comment
> says much more about you than it does this company. If your so convinced
> of your own thoughts, then I simply I suggest you step up and short
> the stock. Put your money where your mouth is and tell us your doing
> so. If you believe half of what you wrote, that would seem to be
> a reasonable course of action would it not?
>
> So you are aware, the company has never paid a single dime for stock
> promotion in the last 3.5 years since new management took over. Furthermore,
> not a member of management has sold a single share since they took
> over 3.5 years ago. The shares have seen an increase from 25 cents
> to over $4 and not one share sold by management. The patent you cited
> was their first patent awarded in 2002. As you noted, it is broad.It
> was their second patent issued in September 2007 that you would be
> better served to review. For someone so seemingly inteligent, you'd
> be better served to reaearch your facts before commenting or it makes
> your commentary paramount to "garbage in garbage out"
>
> Furthermore, you are so quick to rush to judgement that I wonder
> if your even capable of seeing the forrest through the tree's?did
> you know that Shelly Meyers, ranked the number one fund manager in
> 2002 by Morningstar just took over as Chairwoman. John Devlin, a
> 30 year wall street veteran and brother of billionaire Bob Devlin
> just joined the board and Mark Saverini, founder of the Grammercy
> Group sold to Publicis just came on as CEO. I guess you'd suggest
> these quality individuals had nothing better to do?
>
> Why don't you do all of us a favor and try not and let your emotions
> overun your sense of decency and decorum to others. If you want to
> argue facts and investment merits, then bring it on. If you want
> to attack others with reckless abandon, do it somewhere else. <br/>
>
> Again, put your money where your mouth is my friend. Otherwise your
> lip service is just that, rude, innacurate and emotionally driven
> lipservice pontificated by someone seeking to hear only your own
> voice at the expense of others here.

Modavox Bringing a Gun to the Online Advertising Knife Fight

Your comments hardly dignifies a response. In fact, your comment says much more about you than it does this company. If your so convinced of your own thoughts, then I simply I suggest you step up and short the stock. Put your money where your mouth is and tell us your doing so. If you believe half of what you wrote, that would seem to be a reasonable course of action would it not?

So you are aware, the company has never paid a single dime for stock promotion in the last 3.5 years since new management took over. Furthermore, not a member of management has sold a single share since they took over 3.5 years ago. The shares have seen an increase from 25 cents to over $4 and not one share sold by management. The patent you cited was their first patent awarded in 2002. As you noted, it is broad.It was their second patent issued in September 2007 that you would be better served to review. For someone so seemingly inteligent, you'd be better served to reaearch your facts before commenting or it makes your commentary paramount to "garbage in garbage out"

Furthermore, you are so quick to rush to judgement that I wonder if your even capable of seeing the forrest through the tree's?did you know that Shelly Meyers, ranked the number one fund manager in 2002 by Morningstar just took over as Chairwoman. John Devlin, a 30 year wall street veteran and brother of billionaire Bob Devlin just joined the board and Mark Saverini, founder of the Grammercy Group sold to Publicis just came on as CEO. I guess you'd suggest these quality individuals had nothing better to do?

Why don't you do all of us a favor and try not and let your emotions overun your sense of decency and decorum to others. If you want to argue facts and investment merits, then bring it on. If you want to attack others with reckless abandon, do it somewhere else.

Again, put your money where your mouth is my friend. Otherwise your lip service is just that, rude, innacurate and emotionally driven lipservice pontificated by someone seeking to hear only your own voice at the expense of others here.

Valueclick: Great Business with Tough Competition

Great article! Some interesting additional info on VCLK and their seemingly very valuable patents in another article here yesterday.

Back in June, I wrote an article titled Why AOL’s “Platform A” May Not Make the Grade. The article discussed a series of changes being made by AOL to position itself as the world’s largest and most effective advertising network, building on its industry-leading Advertising.com network and the recent acquisitions of TACODA, Third Screen Media, Lightningcast, Adtech, Quigo and Bebo, collectively purchased for about $1.5 billion dollars (according to a recent interview with Lynda Clarizio, President of Platform A.) This realignment marked the final stage in AOL's transition from an access business to a global, ad-supported web company.

This new entity, Platform A, says it is offering advertisers access to the most sophisticated targeting and measurement tools available in the marketplace across Platform A's unmatched network of third-party sites, as well as AOL's owned and operated sites. According to comScore Media Metrix, Platform A is said to already reach more than 90% of the domestic online audience. Platform A builds on the success of Advertising.com, which operates the largest third-party display network, and integrates behavioral targeting leader TACODA, Third Screen Media, which operates the largest mobile media network, market leading video ad serving platform Lightningcast, and ADTECH's global ad serving platform.

Previously, I pointed out that I believed a possible material weakness existed in Platform A, one that had the potential to impact its entire structural integrity. That weakness is a lawsuit in which Modavox, (MDVX.OB) a small Phoenix Arizona based company, is suing Tacoda for patent infringement. I believe these patents were issued in 2002 (an interesting date as you will note below in relation to Be Free’s purchase by ValueClick (VCLK)) and 2007 respectively. Their issuance calls into question just who owns the behavioral targeting technology Platform A is both leveraging and dependent on for the monetization of its entire business plan.

Despite the suit having been filed prior to the actual closing of the Tacoda acquisition, AOL management apparently dismissed its relevance and proceeded to close the acquisition for a reported $275 million. Could this prove to have been a costly mistake for Time Warner (TWX) shareholders? If it’s proven that this little company does in fact own the patented technology that AOL thought they were buying with the purchase of Tacoda, then one must certainly wonder if this costly mistake could serve as cause for a potential shareholder action? Interestingly enough, in the legal section of Time Warner’s last filing, I saw little to no mention of this issue disclosed within.

Perhaps AOL’s management and Lynda Clarizio aren’t concerned about Modavox’s patent infringement suit? In my last articlem I posed the question “what happens if they lose this suit and can’t use Tacoda technology anymore?” Perhaps they view this as just one isolated suit by a little guy trying to cash in? Don’t be so sure. Enter ValueClick.

According to MediaPost, ValueClick has previously filed and settled lawsuits against Blue Lithium and Revenue Science for patent infringement on the general principles of behavioral targeting. Now, ValueClick has filed a similar infringement lawsuit against Tacoda. The patents at issue, one issued in 1998 and the other 1999, both deal with creating behavioral profiles of web users.

Ian Lee wrote a nice article containing some interesting commentary called “The End of Behavioral Targeting as we know it” Interestingly, he comments that in 2002, ValueClick acquired Be Free in a deal valued at $128 million. Many had long wondered why the high price tag was paid for Be Free hot on the heals of the Internet bust. Six years later, the real reason for the high price tag has become very clear. The real value in Be Free wasn’t its affiliate platform but the two behavioral targeting patents that it holds, the same two patents they are now leveraging against Tacoda.

One must assume ValueClick views these patents as far more valuable today than the $128 million they paid for them six years ago. It’s likely anyone seeking to acquire those same patents now could expect to pay a multiple of their original sales price. Perhaps AOL’s purchase of Tacoda for $275 million might be a good starting point, or the $300 million Yahoo (YHOO) paid for Blue Lithium. Wait, does either of those companies even own any patented technology for behavioral marketing or targeting? Based on ValueClick’s already settling with Blue Lithium and Revenue Science, and both Modavox and ValueClick going after Tacoda, it would appear not.

So ValueClick owns two patents and Modavox owns two patents (with a couple more rumored to be pending), all seemingly critical to the process of behavioral targeting and marketing. According to David Morgan, Founder of Tacoda, behavioral marketing could jump from $700 million last year to about $10 billion in 2013 making the stakes very high. Both companies are currently suing Tacoda, owned by AOL, for patent infringement through the alleged use of their respective patented technology. Are these patents enforceable, they certainly appear to be. Are they valuable, again they appear to be. But what is the difference between the ValueClicks and the Modavox patents? Ah yes, the million dollar question!

To the best of my understanding, ValueClicks patents acquired for $128 million in 2002 are again related to creating behavioral profiles of web users. It would appear they involve the process of gathering data which then may be used to better target the consumer via online advertising. Modavox’s patents on the other hand relate to the customization of content or what you do with the data once acquired.

In other words, when companies like Tacoda and perhaps even ValueClick procure the information, it appears that it’s Modavox’s patented technology which allows the actual advertisement to be tailored to the consumer based on that data. So perhaps ValueClick owns the front end of the behavioral marketing process while Modavox appears to own the back end. This begs the question “what is the all the behavioral data in the world worth if you can’t monetize it through custom tailoring of advertisements?”

It also begs the question if AOL acquired Modavox, would this potentially help them in their suit with ValueClick? Just a few of the question I’d love to ask Mr. Falco and Ms. Clarizio.

As we see a continued proliferation of advertisers shifting their ad spend online, advertisers will continue to seek and demand that their message has a reasonable chance of reaching their intended target audience. Gone are the days when advertisers will accept the old “Spray and Prey” methodology of online advertising. It is valuable patented behavioral technologies like those owned by both Modavox and ValueClick, which facilitate this all important process.

Again, until this important question of just who the rightful owner of this important technology is. I expect Platform A will continue to fail to make the grade.