Juno Sues NetZero, Qualcomm

Juno Online Services, Inc. Thursday
filed suit in a Delaware federal court seeking unspecified damages and an
injunction against NetZero, Inc. and
Qualcomm Inc. for infringement of an
advertising streaming patent held by Juno.

NetZero (NASDAQ:NZRO) is
a leading provider free Internet access in the U.S. built on an advertiser
supported business model. In April Qualcomm
(NASDAQ:QCOM)
invested $144 million in NetZero, taking a 10 percent ownership stake in
the firm. Qualcomm is the publisher of the Eudora e-mail software currently
being distributed by NetZero.

This suit is just the latest in the patent wars brewing over technology for
delivering advertising on the Internet. For the last few months, ad giant
DoubleClick Inc. has been trading patent infringement lawsuits with rivals 24/7 Media Inc. and
L90, in disputes over
ad serving systems. So far, nothing has been resolved in those cases.

At issue in the latest lawsuit is U.S. Patent No. 5,809,242, one of several
patents held by Juno (NASDAQ:JWEB)
since 1998 which protects its proprietary technology enabling
advertisements to be displayed to an Internet user while offline.

The technology expands Juno’s revenue opportunity while minimizing the
company’s telecommunications costs by allowing it to display advertising to
Web access subscribers even while they read and write e-mail offline,
rather than only while they are connected to the Internet.

In its suit Juno asserts that NetZero and Qualcomm are infringing its
patent by producing, distributing, and encouraging the use of software that
unlawfully implements Juno’s patented offline architecture. Qualcomm’s
latest version of Eudora 4.3 e-mail software released earlier this year
includes a setting called “sponsor mode” that enables ads to be displayed
while the user reads and writes e-mail.

The software also enables users to read and write e-mail offline, and
continues to show advertisements when users do so. NetZero has begun
distributing the new version of Eudora and encouraging its subscribers to
use it. Juno is seeking monetary damages as well as a permanent injunction
prohibiting future infringement of the patent.

Richard Buchband, Juno senior vice president and general counsel said it
would act decisively to enforce its patent rights.

“The technology we’ve invented benefits us greatly and could benefit
others,” Buchband said. “But we’re not going to let other companies use it
for free.”

With more than 3 million active subscribers in the month of March, Juno
believes that the value realizable by NetZero and other potential licensees
of Juno’s technology over the lifetime of the patent could be substantial.

Both NetZero and Qualcomm refused to comment on the suit.