Pop-under ads may hit publisher wallets

ExitExchange, an ad-technology provider that is claiming rights to the invention dating back to 2000, had its patent application published by the U.S. Patent Office last week. The filing broadly covers any systematic delivery of a window launched after another, including those on devices such as cell phones. If its application is approved, ExitExchange will have rights to collect royalties on the use of pop-under ads.

That would be a direct hit to the pocketbooks of Web publishers such as NYTimes.com and ad networks such as DoubleClick, which have adopted the imposing ad format, among many other types, to better lure marketers during a tough economy. Yahoo, for example, started running pop-under ads last year amid concerns about its weakening online advertising revenue.

Pop-unders have become a kind of calling card for companies such as X10, a seller of tiny surveillance cameras, and travel site Orbitz because they can blanket the Internet with promotions at a cheaper price than direct mail. The ads are also thought to get higher response from consumers than standard display ads on Web sites.

Some ad industry executives are quick to point out that claiming rights to the invention may be a tall order, given the history of experimentation in online advertising. But patent experts say the ephemeral nature of the Internet could make it a cinch to pass the Patent Office's approval process.

Greg Aharonian, who publishes the Internet Patent News Service and works with law firms to vet patent claims, said that anyone who wants to debunk ExitExchange's application would have to find a technology or reference to the practice before 2000, or what's called prior art. This might be tricky, he said, because the descriptions for inventions or practices often change.

A Web site operator of an adult site, for example, may have used pop-under advertising prior to 2000, but the technology may not have been documented. Someone would have to find reference to such a practice in an article or journal to undermine the patent claim.

Such a daunting task is the primary reason many patent applications go unchallenged and are easily approved by the Patent Office, which only has a couple hours to review each application before making a decision, Aharonian said. Critics say this has caused a great number of patents to be passed that are based on simple, commonsense ideas that merely capitalize on the system. A child, with the help of his patent attorney father, recently seized on a patent for swinging sideways on a playground swing, for example.

"A lot of these ideas are indeed stupid, and if you have some manner of time you can find something to kill it," Aharonian said. "In fields like software, there is an abundance of prior art. But if the examiners don't have the time then they'll have to issue it."

A "more polite" ad
Andrew Vilcauskas, founder and CEO of ExitExchange, said he thought of the idea while owning and operating an Oregon-based Internet service provider in the late '90s. He said he saw several complaints from ISP customers about pop-up advertising, or ads that launch over a Web page. This gave him the idea to create a "more polite" form of advertising, which would be triggered once the Web surfer was done viewing a page. He said testing for this form of marketing began in 1998 and his company ExitExchange launched the ads in 2000.

ExitExchange has a network of about 40,000 publishers that display pop-under ads, Vilcauskas said.

"The importance of this is that pop-unders have become the flagship offering of the major portals," he said. "Our ultimate hope is that we would bring our licensees to all agree to a standard for behavior for these ads that would be palatable for the surfers out there."

FastClick, another pop-under technology provider founded in April 2000, started running the ads in October of the same year. The company has an ad network of about 4,000 publishers running the promotions.

Dave Gross, CEO of FastClick, said the company is looking into the patent claim but would not comment further.

New York Times Digital said it could not comment on the patent application. It did say that it had not heard of ExitExchange and was not aware of the application. DoubleClick and Yahoo could not be immediately reached for comment.

According to its patent application, ExitExchange is claiming rights on pop-under advertising since May 2000. Specifically, the invention "is directed to a post-session advertising system that may be used in media such as computers, personal digital assistants, telephones, televisions, radios and similar devices," according to the filing.

"A viewer initiates a load-triggering event and in response, a post-session platform is opened to display a post-session display in the background of the media," the filing reads.

Preparing to make them pay
Karen Oster, patent attorney for ExitExchange, said the company is confident that no one can claim prior art on the invention.

"All these people that are infringing--if the patent is approved the way it was published, then they would be liable for a reasonable royalty from the date at which they had actual notice of the published patent application," Oster said.

The back payments would be required by a relatively new law, the American Inventor's Protection Act, which was enacted in November 1999 and came into effect the following year. It allows for the publication of inventors' patent applications, a common practice in foreign countries, and it grants rights to the approved patent going back to the time its application was published.

This means that if the patent is approved, which could take anywhere from a year to several years, companies regularly delivering pop-unders, including DoubleClick and NYTimes.com, would need to pay royalties on the ads from the time the patent was published, Feb. 14, 2002.

Still, marketing technology companies may have a strong incentive to find a prior instance of pop-under advertising.

"That's what it's going to come down to: the claim on that one window popping up after another," Aharonian said.