What's the deal with the dreaded Big Media patents? Reader "Leagal Beagle" explains why two old patents for the pay-per-click advertising model may upset an entire industry.

In 1996, Knobbe Martens (Microsoft's patent attorneys, generally considered the best of the best) filed for a patent on "A System and Method for Delivering Personalized Advertising Over Interactive Systems", absolutely shot for the moon in terms of claims, and, three years later, got it (5,933,811). They then filed for a follow-on patent and got it, too (6,385,592).

Around that time, the company, Big Media, went under and the patents went dormant. In the meantime, the patents became notorious in patent world because they cover "systems and methods" as opposed to technology. This means that they cover how business is done, instead of the underlying technology. The US is the only major country that allows these patents, but that means that it affects everyone who does business in the US. The World Intellectual Property Organization has cited this specific patent as one they really, really hate.

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Fast forward to 2005.

I'm guessing the Big Media creditors are forcing a sale of the patent to try regain some of their debt. Out of nowhere, the Patent Office revives a long-expired continuance on the 592 patent. This means that whoever owns the patent can file additional claims to what's already there and they could be added to the original.

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This is significant because of what's in the original claims: in our research, in addition to the personalization and customization aspects of the patent, this is the earliest description anywhere of a pay-per-click advertising network. I don't have to tell you that PPC is the basis of the Internet economy, Google, Yahoo!, MSN, the blogosphere, etc., etc., etc. The patent even covers wireless. Now add new, related claims and you have the basis for massive lawsuits.

These patents are listed as prior art by over 200 other patents issued to a who's who of the Fortune 500. Companies like Microsoft, Oracle, IBM, General Electric, and many, many others. All of them are potential targets.

The insolvency lawyers who are handling the mess have hired the top IP marketing firm to handle the sale. These are the guys who sold the Commerce One patents for $15 million. They know everyone and, more importantly, everyone knows them. I have no doubt that every contingency law firm and every investment fund around has been notified. Give the right lawyers enough money and they could tie us all up for years.

No one knows who's bidding or how much. There are almost definitely offshore bidders, as well.

Big Media Patents [eSnips]