Beyond halting the alleged infringement of its intellectual property, it would seem that comScore is betting on one of two outcomes: the startups will settle quickly after considering the cost of the potential litigation; or, the startups will participate in a defense that could not only deplete them of valuable cash against a much larger opponent, but distract them from their future product plans. Of course, if the startups do settle quickly, are they hamstrung going forward? UPDATE: Also, as an industry insider points out, if comScore loses this lawsuit, it would invalidate the company's patent infringement strategy and could speak more broadly about the efficacy of software patents for rapidly innovating Internet tools and services businesses.
Not to be lost in the noise here is that Nielsen made an online ad effectiveness acquisition with Vizu earlier this month. If Vizu was still a private, separate company, perhaps it could have been swept up into comScore's patent litigation strategy.
ComScore has been playing [Wall] street-smart hardball with the ad verifiers for at least a year. It acquired ad verification company AdXpose in August 2011 even though the company was considered by some to be the weakest of the three ad verification players. With AdXpose's sales price publicly announced at $22 million (nearly the same amount as the total capital raised by AdXpose in its history), this may have effectively limited the exit potential - and, perhaps, growth potential - for the two larger, better funded companies similar to the way demand-side platform (DSP) Invite Media's acquisition by Google in 2010 for ~$80 million may have hamstrung the exits for other DSPs.
From a piece in March 2011 by paidContent's Joe Mullen, Mullen quoted a Nielsen spokeswoman about their lawsuit against comScore saying "The company has made 'substantial' investments in its intellectual property, adding: 'While we support vigorous competition in the marketplace, that competition must be fair and respect intellectual property rights. Nielsen does not take such matters lightly and only after thorough analysis and consideration did we file this action.'" comScore would likely sing a similar tune today.
Patent litigation - particularly software patents - is increasingly frowned upon by the public Internet as Yahoo! was roundly criticized by a cross-section of opinion leaders when it decided to sue Facebook for alleged, multiple abuses of its patent portfolio under the direction of former Yahoo! CEO Scott Thompson. And yet, public Internet companies still watch and manage their patent interests closely (witness Microsoft/Aol/Facebook in April). The Yahoo!-Facebook patent battle was quickly settled earlier this month towards the end of Yahoo! interim CEO Ross Levinsohn's brief tenure.
Next stop on comScore's patent litigation warpath could be attribution analytics companies that are working on a form of ad effectiveness - companies such as C3 Metrics, Ebay's Clearsaleing, Visual IQ, Adometry, Encore Media Metrics and others. How about Google and Facebook, too?
Breaking Out The Patents
Below, I've included a breakout of which patents are named in these new suits that were part of Nielsen's original complaint against comScore in 2011. Does this make Nielsen a part of this round of litigation? Not by name in the complaints. Read them in their entirety at the bottom.
- DoubleVerify - sued for infringement of 5 patents (complaint uses 2 of the original 5 Nielsen patents)
- AdSafe Media - sued for infringement of 8 patents (4 of original 5 Nielsen patents)
- Moat - sued for infringement of 7 patents (3 of original 5 Nielsen patents)