Akamai's 703 Patent Should Not Affect Microsoft, Does Not Apply To All Content

One point I think many are missing with regards to the 703 patent is that it only applies to part of Limelight's service offering. While the patent is very broad and potentially could mean more than just CDNs are infringing, think ad networks, web hosting companies etc... the patent only has to do with cached content that is delivered to a browser, which is the key point.

Live streaming, software downloads, application acceleration, delivery to a device etc... are not infringing as they are either not cached or not delivered to a browser. So not everything on Limelight's network is in violation of the 703 patent. I don't know what percentage of Limelight's traffic or revenue is outside of the 703 patent but that would be interesting to know.

As for Microsoft, many are thinking that Microsoft may now be worried since they licensed Limelight's technology. But what exactly did they license? Neither company has ever said. And since the 703 patent is very specific in what it covers, is Microsoft really worried that Akamai is going to come after them for licensing Limelight's technology? Of course not. And based on what exactly Microsoft licensed, it is very possible that it has nothing to do with anything pertaining to the Akamai and Limelight suit. It's all speculation at this point until someone says exactly what Microsoft licensed.

Comments

[Andy J.]

Interesting points. I didn't realize the patent was so broad yet didn't cover certain kinds of content. I think too many blogs are fighting over the ruling and should be focusing on more of the stuff you are talking about.

[grinsandfun]

Dan - this is the same method for embedding streaming objects (HTTP delivery - progressive download) as static objects. (CNAME and prepending URL's)

[Dan Rayburn]

Yes, embedding, into a browser. But if you are not embedding any content into a browser, like software downloads, then it is not covered under the patent.

[John Sparks]

Dan,

This patent issue with Limelight brings to mind the infringement suit that a small Arizona company called Modavox has waged against Tacoda who was bought by AOL. Ironically, they are actually doing business with Limelight.

Some are saying this little company has some incredibly valuable patented IP that covers the monetization of online audiences through online advertising in that their technology specifically covers the process of custom tailoring content to end users based on behavioral data. Their most recent patent was only issued a few months back and supposedly they have another one coming which could further build the scope of infringers. This would complete a pretty nice portfolio of patents, not just a single patent.

I'd have to think it's only a matter of time before one of the big players are going to make a run at them because of the value they would add inside a major portal for the leverage they bring to the table. The licensing opportunities would appear huge at a minimum. I'm sure you saw the recent article where the author speculated that the company could be the next big patent licensor.

http://seekingalpha.com/article/65091-could-modavox-be-the-next-big-patent-licensor

I'd be amazed if AOL simply doesn't just buy them. Tacoda was acquired for $275 million and their platform was apparently constructed and completely built on this small company's technology. Tacoda doesn't even have a patent issued, nor does Blue Lithium or Maven Networks just acquired by Yahoo. Both of those companies are probably infingers too is my guess.

Not only do they own and use their own IP daily in multiple products they brought to the market, but they also own the worlds largest online talk radio network with a supposed 5 million unique users perfectly suited for niche marketing which is exactly what advertsiers want. That audience alone is worth a multiple of the company's current price based on other per unique visitor acqusitions include YouTube, Facebook, MySpace ect.

So you have patented IP, including an advertising platform and 5 million unique users to boot. Do you know if even one of the major players in the online advertising space has a patented advertising platform? I can't name one.

http://biz.yahoo.com/bw/080221/20080221005340.html?.v=1

I know this sounds like a little bit of a sales pitch but I can't believe more haven't figured this out yet. Knowing that you are always ahead of the curve, I was just wondering if you are aware of the company and had any thoughts on their patent portfolio and who would be well served to own them.

Some say the market is a leading indicator, based on interest in the stock over the last couple weeks, maybe some parties are already starting to take notice quietly behind the scenes. I don't think they around by year end as they will be gobbled up.

Love your site and always insightful commentary. You are by far one, if not the brightest and most informed person I listen to regarding this space.

John

[Alon Yardeni]

Hi John, it does sound like a sales pitch do you have any relationship to the company?
BTW it does sound very promising.
Alon

[Eric]

What about prior art? I bet there are companies who have done what Akamai claimed as their patent, way before Akamai introduced their technology.

If said company could prove they were earlier, then they could accuse Akamai of IP theft, render Akamai's patent useless or claim to be the real owner of the patent.

Anyway, if you need patents to protect your business, then you're not on solid ground in the first place. Sure you need to be able to protect your IP but many companies are abusing the patent system right now.

[John Sparks]

Alon,

Good question.

I am absolutely a shareholder in the company. I have been for quite some time for the multitude of reasons mentioned in my initial post. It's why I have done so much homework on the space and others in it.

To Eric, regarding your prior art comment and Akamai's patent. The patent was issued to Akamai which means the USPTO did extensive prior art searches prior to issuing the patent.

It's important to note that when the USPTO issues a patent, it is assumed to be valid.

In the majoroty of patent cases, the defenses claim of a patent being invalid is a tough one. The burden then becomes that they are essentially then taking on the USPTO who issued the patent and shifting the focus from the company who received it, a much tougher adverserial.

[Drew Robertson]

OK maybe MSFT is off the hook. But it sounds like GOOG's YouTube has some exposure. Isn't everything on YT cached and embedded on a browser?

[grinsandfun]

I would not be surprised to see Panther being on their target list - Panther only provides in browser CDN solutions.

The CDN's and Ad networks should all get together on this cause - I'm still not seeing how AKAM pulled this one off.

[Dan Rayburn]

Hi John, yes, I know of the Modavox patents and have been following the suit against AOL but to date, nothing has really taken place. They have not gotten a ruling and to date, they have had no success in enforcing the patents. You say they should be acquired and are worth a lot of money but that is pure speculation. Lots of companies have patents that are not worth anything. Until some rulings come down, it is way too early to say if they look promising or not since we have no idea if the patents are really worth anything. Thanks.

[John Sparks]

Dan, Thank you for your response. You are absolutely right that until that first company acknowledges the value of a company's IP, it is hard to say what it is worth if anything. Fortunately, Modavox is using their technology and not simply trying to enforce patents "patent trolls" like many. As you know, when a company is actually utilizing the technology, damages are typically easier to quantify and typically larger.

Despite having done considerable personal research into the company and its technology, there is always risk until the that first infringer is forced to pay. As you know, once one acknowledges the viability of the technology and the simple fact they are infringing, others tend to follow suit most likely by licensing the technology.

I do believe that may happen here but only time will tell. I am watching the Netratings suit against Tacoda as I hear it may be being settled shortly which would bode well for Modavox's suit. Have you heard anything?

As you know, Netratings suit against them is for the behavioral aspect of Tacoda's technology, the data mining aspect. Modavox's is for the customization of the content to the end users based on that mined data.

Keep up the great work and thanks again.