NetZero wins round one in patent suit

Free ISPs slug it out

US ISP NetZero has got a temporary restraining order against rival Juno Online Services as part of their ongoing spat over online ads.

The move, which centres on a patent governing ads or messages shown via a window separate to the browser, is part of a tit for tat legal dispute between the two. Juno sued California-based NetZero, which offers a free ISP service in return for constant ads on users' screens, for patent infringement last year. So NetZero filed a similar suit against Juno on December 26 - saying its floating window, Juno Guide, infringed its patent (which was issued on December 6).

Today's move bans Juno from displaying third party adverts in its ad banner window until March 15. It is still free to use the space to advertise its own services.

NetZero chairman and CEO Mark Goldston issued a warning to other ISPs: "We believe our patent is a powerful proprietary right which will provide us with a competitive advantage in our market... Other ISPs should take note of the court's ruling and carefully consider their use of similar ad banner windows."

New York-based Juno remained upbeat about the ruling - it claimed the advertising in question accounts for less than four per cent of revenues, while it was relieved the court didn't opt for NetZero's original request to stop Juno from engaging in other advertising areas.

"To put this ruling into perspective, about two-thirds of Juno's revenues are currently derived from subscriptions to its billable premium services, while the remaining third comes from various forms of advertising and e-commerce, only a small part of which is based on the floating ad banner shown to users of our free basic service," said Charles Ardai, Juno president and CEO.

Ardai claimed the advertising did not infringe on any valid NetZero patent, and added the ISP would contest the allegations. After mid-March NetZero can ask to extend the restraining order, while a court date has been set for July.

According to Phillip Silverstein, Senior VP and general council of New York-based intellectual property management company General Patent Corp (GPC), the NetZero action is a symptom of the industry - and one that is on the increase.

There were 1,800 patent infringement lawsuits filed in 1996, and in 1999 this number rose 34 per cent to 2,300. Silverstein reckons patent lawsuits saw a big hike in 2000, largely due to "an increasing number of business method patents issuing from the patent office".

"These are going to be a very significant cause of litigation, simply because many of the business methods that are covered by these patents are probably being practiced by other businesses," he said. ®

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