X10 Pops into Bankruptcy

X10, the Seattle-area purveyor of Web cameras that rose to prominence
with the “pop-under” online web advertising segment, has filed for Chapter
11 protection from its creditors in the wake of ongoing litigation.

Formally known as X10 Wireless Technology Inc., the company filed for
bankruptcy protection in U.S. Bankruptcy Court for the Western District of
Washington. The filing was made Tuesday, Oct. 21 — one day prior to a
punitive damages hearing involving a case that x10 lost in a Santa Ana,
Calif., Superior Court.

Earlier this month, a jury hearing the case ordered the tech company to
pay $4.3 million in compensatory damages for allegedly stealing the
proprietary technology and business model of a California-based family-run
business started by Russell, Chris and and Tim Vanderhooks, the
Associated Press reported. That company, Advertisement Banners.com of
Yorba Linda, Calif., is listed as X10’s top creditor, owed more than $3.87
million, according to court papers.

But X10 attorney Ada Ko of Lane Powell Spears Lubersky told the
Seattle Times that the bankruptcy wasn’t a result of the lawsuit but
of overall business. “The lawsuit was just another creditor,” the attorney was quoted as saying.

Other creditors include America Online, Microsoft, Overture, FedEx,
Foxnews.com, Google, eBay and Yahoo!, the bankruptcy filing said.

Neither x10 officials nor its attorneys could be reached for comment by presstime.

X10, which has branched out into software as well as peripherals, was one
of the earliest adopters of pop-up or pop-under ad-serving technology. But
while its aggressive marketing campaign that featured seductive images of
women raised awareness, it also turned off many readers.

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