, hope springs eternal.
Hoping to model itself on
Gemstar-TV Guide International
, which has built a tidy business by licensing its intellectual property, the interactive television software company announced Wednesday that it had filed suit against
, claiming patent infringement.
ACTV, which has struggled for more than a decade to bring some sort of interactive television to U.S. households, is hoping to start getting positive cash flow -- not to mention boost its shares -- by licensing its patents to Disney and any other company that synchronizes data transmission with a television or radio broadcast. "We have the core intellectual property. We have the core technologies," says John Penney, the company's newly hired executive vice president.
The interactive TV company's confidence is reminiscent of other new media companies' broad assertions that whole industries are reliant on, and violating, their intellectual property. These include the onetime
Compton's New Media's
claim that it held a patent fundamental to multimedia CD-ROMs,
one-touch ordering patent, and recent statements by
unit AltaVista that it has intellectual property essential to searching for data on the Internet. None of these claims has turned out to be a gravy train, though. An exception to this pattern is Gemstar, which has successfully defended its claims to various intellectual property covering such concepts as onscreen program guides and easy VCR taping.
Specifically, ACTV says ABC is infringing on three of its patents by broadcasting enhanced TV versions of its
Who Wants to Be a Millionaire
game show and football broadcasts. These enhanced TV broadcasts enable viewers to interact with programming, such as quizzes, on their computer, while watching the show on TV in the same room. ACTV, which hasn't specified the damages it seeks in its case, says negotiations to license its patents to Disney have been "cordial but ineffective to date." Although the company's lawsuit names the ABC and ESPN television networks as defendants, it does not name
Disney Internet Group
, the Disney subsidiary that develops the enhanced TV broadcasts with the networks.
"We unconditionally deny that our enhanced TV technology infringes on anyone's patents," says a spokesman for Disney's enhanced TV operations. "Our in-house technical staff developed its own unique technology independently."
Like Larry Bird...
ACTV says its new campaign to enforce its rights, signaled by the ABC lawsuit, puts it on track to start developing Gemstar-like licensing fees. Those fees have Gemstar valued at more than $15 billion, or some 70 times ACTV's recent market capitalization. "Historically, we're probably where Gemstar was three or four years ago before they launched their first suit," says ACTV's new chief intellectual property officer Scott Doyle, previously a partner at the law firm
Dorsey & Whitney
and outside counsel for ACTV.
If ACTV succeeds it will be in contrast to past performance, though. The company reported a loss of $21.4 million in the first nine months of the year on revenue of $5.8 million, compared to a year-ago loss of $19.3 million on revenue of $1.7 million. The company says it has accumulated a deficit of $125.1 million.
Spinning straw into gold on a conference call with analysts Wednesday, ACTV portrayed the last 10 years "in the trenches," as CEO Bill Samuels put it, as an asset, not as a record of failure. "We have taken 10 years to perfect that patent portfolio," Doyle said. "We wanted to make sure we took our time and got it right."
ACTV's shares slipped 66 cents Wednesday, closing at $4.25.