Two years ago, he was socked by the Federal Trade Commission with deceptive trade practices after his Websites promised free access to adult material. Now, onetime XPics.com mastermind Brian Shuster is looking for profit from something new for him. He owns the patent for "Traffic Management Utility," better known as those pop-up ads and exit traffic signs so familiar on the Internet.
With pop-ups worth about $9.25 billion in 2002 revenues, by his estimate, Shuster wants a big slice of that pie, a slice that could have numerous adult Internet operations as skittish as many seem now to be over recently launched litigation involving streaming audio and video.
How Shuster gets the money, though, will prove the interesting part. MSNBC reported May 6 that Shuster has not yet taken any kind of legal action on behalf of the patent. But he has set up Idea Flood Inc., an intellectual property holding firm, to license revenue from Websites using the pop-ups and other ad technology for which he's applied for patents.
"As the [U.S. Patent and Trademark Office] grants patent after patent covering Internet technologies, a new licensing paradigm is emerging. Companies such as SBC Intellectual Property, with its patent on Web frames, and Acacia, which is now enforcing a patent on video streaming, are ushering a regime whereby core Internet technologies are licensed for about 2 percent of each licensee’s gross revenues," Idea Flood said in a February statement. "In this new paradigm Ideaflood’s patent, covering such a widely infringed core Internet technology, stands to generate substantial licensing revenues from a far-ranging group of infringers."
The pop-ups may drive even faithful Web surfers crazy, but they drive Shuster to the bottom line, even if they haven't yet driven him to litigation. He told MSNBC they account for 20 percent of the revenue for "the two most profitable Internet segments," adult entertainment and online gambling. "Companies that I’ve built used this technology to become $100 million operations," he told the network. "It’s used ubiquitously through this segment of the Internet." It's also used, Shuster continued, by online banking sites when they track exit traffic from secure transaction areas.
Shuster got into the FTC's crosshairs in 2000, when he, XPics.com, and XPics.com partner Mario Carmona, were sued for using pop-up ads, banner ads, and spam to draw surfers to promised free adult images, only to hit those surfers' credit accounts with charges the surfers didn't know they were amassing. The settlement with the FTC included an agreement by Shuster to limit his pop-up usage.
Shuster received ownership of the Traffic Management Utility patent in May 2002, with an Idea Flood release describing him as "an entrepreneur who has used the patented technology to generate hundreds of millions of dollars in the adult content industry, and later with mainstream companies.... Mr. Shuster has assigned the patent to Idea Flood Inc."
In February of this year, Idea Flood seems to have flirted with the idea of selling the Traffic Management Utility patent to a buyer. "The patent has been described as one of the most widely infringed patents ever issued by the U.S. Patent & T rademark Office," Idea Flood said in a Feb. 10 statement. "Parties ranging from well-known Fortune 500 corporations to small online retailers generate an estimated $1.85 billion in combined revenues in 2002 by using methods covered by Idea Flood's exit traffic patent."
Acacia has been pushing to compel numerous adult Internet companies to pay licensing fees for the Digital Media Transmission patent it owns, and a group of those companies have engaged the prestigious patent law firm Fish and Richardson to fight lawsuits filed by Acacia earlier this year.
SBC Intellectual Property also has demanded licensing fees and agreements with a number of Websites using "structured document browsing," which IT World calls "[just] like the technique of using frames to link to other documents on a Website" - and which, IT World said, could impact "hundreds of thousands if not millions" of Websites.
"Several Internet activists, including members of the free software movement, have for years blamed the U.S. Patent and Trademark Office for granting patents on technologies that were already widely used," IT World said in January, advancing an argument taken up to a large extent by Homegrown Video/New Destiny Media and other adult Internet companies, which accuse Acacia of doing much the same thing.
Meanwhile, if you thought the pop-up ads and exit consoles are maddening enough, be advised that Shuster isn't exactly looking to back away entirely from that kind of aggressive marketing. Shuster and Idea Flood have a pending patent application for a program to force you to hear ads on your computer speakers from start to finish, without any way to turn the ad off short of just turning off the speakers.
Why would someone want to develop what amounts to a you're-stuck-with-it technique for Net advertising, if popups on screen already anger as many people as they enriche? Because, the patent application all but acknowledges, with audio advertising a computer user has to launch a streaming audio program for it to play to him. Even if he does launch that program, he can still ignore the ad by just scrolling ahead or stopping the program.
"A need in the industry therefore exists for a way to enable Websites to deliver audio advertisements that cannot be bypassed by the visitor," the patent application continues. "More specifically, the audio advertisements should not require the visitor to perform any action to enable delivery of the audio advertisement, and the visitor should not be able to otherwise control the manner of delivery of the audio advertisement."
