Patent Litigation Comes To The Interactive TV Sector

Invidi Technologies Corp, a provider of addressable television advertising solutions, filed a patent infringement complaint on May 5, against Visible World and Cablevision.    The complaint (filed in Delaware) states that Cablevision currently provides addressable advertising -- using Visible World's "Connect" product -- to at least 3,000,000 cable subscribers in New York, New Jersey, Connecticut, and parts of Pennsylvania.

According to Techcrunch,  Princeton NJ-based Invidi has raisedapproximately $117 millionsince its launch in the year 2000.  The company counts among its major investors Google Ventures, Menlo Ventures, Motorola, GroupM and DirecTV.

In the complaint, Invidi states that it has developed software that provides multichannel video providers with the capability to increase the efficiency and effectiveness of television advertising and reduce advertisement "waste" by making ads addressable to the household.  In other words, the interactive technology that makes sure cat food lovers should only be getting cat food TV commercials is probably at the core of the lawsuit. 

Invidi in 2010 told Advertising Age that NBC Universal had recently completed a strategic investment in Invidi, and that in a test on the Comcast Baltimore system its addressable ads  "provedtobe 65% moreefficientand 32% moreeffective.".  

An Invidi United States patent is highlighted in the complaint as a key factor in filing the action against both Visible World and Cablevision, primarily because the commercial deployment of the Visible World "Connect" product -- Invidi feels -- is strikingly similar to its technology.  

Invidi is slated to roll out its addressable advertising product to DirecTV's DVR boxes through 2011.  According to a recent article in Multichannel News, DirecTV expects to make an additional $400 million per year in advertising revenue using the Invidi solution.  Invidi has similar deployment agreements with both Dish Network and FIOS.

Visible World, founded in 1999, is headquartered in New York City.   Warren Lee, of venture capital firm Canaan Partners, reported thatVisibleWorldhadraisedatleast $73 MillionbyJuly 2009.   The company lists Comcast, Time Warner, and Viacom among its investors. 

Both Invidi and Visible World share at least one mutual investor and both have, or are, trialing with Google.

After close to two decades of false starts it appears a future revenue stream for interactive TV companies -- especially in light of TiVo's $500 million judgment against Echostar --  might be by way of the judicial system.  Although expectations should still be tempered, since the core revenue for the interactive industry sector, derived from licensing fees, will still take years to potentially grow into a multibillion-dollar revenue stream -- solely driven by how efficient advertising actually becomes.   

With BCM, Inc. (formerly Backchannelmedia) having already rolled out its "Clickable TV" solution to WSFA, WCOV, and Knology in the Montgomery, Alabama market, we are presented with additional evidence that broadcasters are also involved in the interactive television sector. 

New revenue streams are needed in order defray the capital expenses related to broadcasters' mobile DTV technology deployments.  This probably means most broadcasters will implement a collection of interactive advertising  applications, all linked to the emergence of tangible footprints for mobile and EBIF.   

This Invidi complaint was eye-opening for me, as it frames the interactive TV sector in a favorable light by documenting  an industry (in addition to Canoe Ventures' efforts)  that is preparing for multiple deployments, and one that has already created a growing library of intellectual property.  Setting aside the merits of this -- to be determined -- Invidi claim,  I bet we'll find Visible World also might have a few important patents tucked away.

Note:  The author is also the founder of BCM, Inc. which is mentioned in this commentary.

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