The purchase of a company for its intellectual property and assets is common practice in the business world. But sometimes, companies often make a purchase that does not seem to make any sense… at least not in the short term. This was the case for ValueClick purchasing Be Free in 2002 for over $100 million dollars. After the dot com bust, this valuation seemed overly aggressive. Fast forward six years to today and the real reason for the high-priced purchase emerges.
According to MediaPost, ValueClick has previously filed lawsuits against Blue Lithium and Revenue Science for infringing on a patent on the general principles of behavioral targeting. Now, ValueClick has filed a similar infringement lawsuit against Tacoda, a company founded in 2001 and have since been purchased by AOL is considered one of the pioneers of behavioral targeting.
So how can ValueClick file a lawsuit against Tacoda, a leader in the behavioral targeting industry? The issue revolves around two patents.
One patent at issue, the 1998 “Method and Apparatus for Determining Behavioral Profile of a Computer User,” involves creating psychographic profiles of Web users “by recording computer activity and viewing habits.” The second, “Computer Program Apparatus for Determining Behavioral Profile of a Computer User,” issued in 1999, likewise deals with creating behavioral profiles of Web users. Both patents list Thomas Gerace as the inventor. Gerace founded Freedom of Information, Inc., which later became BeFree, Inc. and was acquired by ValueClick for $120 million in 2002. Gerace also is the founder and chief executive of the social networking site Gather.com.
It is clear now why ValueClick purchased Be Free and then shortly closed it’s doors by moving all affiliate marketing clients over to the Commission Junction platform. The real value in Be Free is not its affiliate platform but the two behavioral targeting patents that it holds.
Previous lawsuits against Blue Lithium and Revenue Science have settled. Will AOL (parent company of Tacoda) and ValueClick also manage to reach a settlement for this lawsuit? Report from the street is that Tacoda publishers are being asked to sign a new AOL Platform-A agreement. Is this the end of Tacoda and behavioral targeting as we know it?
Wow, these makes sense. I was not aware that a principle and an apparatus existed for such a process. People can get fined now for anything. Thats why if you are going to have a big company, you better have a lawyer on your payroll.
That’s interesting! Who would have thought of it?
Similarly, it’s hard to predict what’s next after the AOL Platform-A agreement. Maybe we’ll be able to look into that more clearly in a couple of years?