Two startups settle patent case with ComScore as Moat continues to fight

By Erin Griffith , written on July 2, 2013

From The News Desk

Last August ComScore, a digital media metrics company, launched a patent infringement lawsuit against three ad-tech startups. ComScore used a set of vague patents it had argued were invalid years prior, when competitor Neilsen used them against it in a lawsuit. ComScore won that lawsuit in 2011 and wound up shelling out $7.8 million for seven of the patents.

And what's the good of patents -- valid or not -- if you don't use them? ComScore promptly sued three ad-tech startups: Moat, DoubleVerify, and Integral Ad Science (formerly known as AdSafe), arguing, basically, that ComScore owns the market for ad viewability.

Ad viewability has become increasingly popular as a category of ad-tech as companies demand accountability for the ads they purchase. If an ad hasn't even loaded on a website, advertisers understandably don't want to pay for the impression. ComScore provides this viewability measurement, as do the three funded startups it has sued. So do lots of other players comScore didn't sue, such as Google or Adometry.

Somehow the world has missed this news. Two of the three startups have settled with comScore. 

DoubleVerify settled with comScore on May 23 and agreed to dismiss the company's claims with prejudice and dismiss DoubleVerify's counterclaims without prejudice (meaning they could conceivably be brought against ComScore again in the future). Integral Ad Science settled on May 30. The company sizes of the settlements are not public but comScore may discuss the size of payments it received in its next quarterly earnings calls.

The third company, Moat, continues to fight the lawsuit. Moat believes it has a strong case against comScore thanks to the acquisition of its own vague, old patent from the secondary patent market from a company that no longer does ad-tech called C3i. Basically, the company is responding to the lawsuit in kind.

And Moat has gone a step further, accusing comScore of fraud. ComScore has been lobbying the industry trade group IAB to develop an industry-wide standard for ad viewability, while not disclosing that it has the ability to sue anyone who tries to comply to these standards. Moat is arguing that comScore had an obligation to disclose that it owns patents on viewability and directly benefits from the developing any viewability standard for the industry. From Moat's fraud accusation:

comScore had a duty to disclose any of its patents it asserts relate to or cover the proposed standard to IAB members, including Moat (an Associate IAB Member). On information and belief, comScore never disclosed any of its patents and their alleged applicability to the proposed standard. In so doing, comScore intentionally mislead Moat and the other IAB members by failing to disclose its patents.
I've reached out to IAB seeking comment on whether the group would promote an industry-wide standard that one company owns patents on. I will update if IAB provides a comment.

In March, Moat won a minor victory in that comScore's appeal to dismiss the fraud case was denied. The fraud case isn't necessarily tied to the patent lawsuit but Moat is probably hoping it will undermine comScore's ability to claim infringement by association.

These settlements come at a difficult time for comScore. The publicly traded company is facing a class action privacy lawsuit that could result in tens of millions of plaintiffs. The case, which accuses comScore of collecting and selling personal information -- including social security numbers and credit card numbers -- has been ongoing for two years. ComScore has said the lawsuit is "filled with factual inaccuracies," but the company's request to overturn a lower court's decision was denied in June. Adweek called it the "largest class action privacy lawsuit ever."

We'll continue to watch this little-reported case that's central to how much of the Web makes money as it unfolds.

[Image courtesy _wli]