Tag Archives: patent trolls

Hats Off to the ANA, Patent Trolls Beware

14 Aug

patent infringement defenseAdvertisers now have a viable tool to assist in protecting their organizations against some of the costs associated with defending themselves against frivolous patent troll law suits.

The Association of National Advertisers (ANA) working in conjunction with Nationwide Insurance’s Scottsdale Insurance division recently unveiled a unique new product called the “ANA Patent Infringement Defense.” According to the ANA, their membership will have two insurance options to select from, “a $500,000 plan and a $1 million plan” which advertisers can access at a “cost between $10,000 and $20,000 per year.”

This innovative approach will allow advertisers to offset a portion of their legal expenses in defending themselves in federal court or in arguing their cases before the Patent Trial and Appeal Board.

Over the course of the last few years, both advertisers and their agency partners have been targeted by patent trolls who have taken action on those entities’ utilization of technology applications ranging from location finders to QR codes. The cost to the industry has been steep, resulting in millions of dollars in claims and legal expenses for both advertisers and agencies.

In addition to the benefits derived from this new insurance coverage, it will also allow advertisers more comfort when negotiating client/ agency agreements containing contractual indemnification against patent infringement actions. This is sometimes a contentious point during negotiations since it is very difficult to assess and pre-assign responsibility for potential expenses and damages in battling such claims to any one party.

We believe that the leadership exhibited by the ANA on this important issue has been exceptional from the onset. This includes the education of its members, effective lobbying of federal regulators and now with the introduction of the ANA Patent Infringement Defense product being offered. As the noted American businessman, Harold Geneen once said:

Leadership is practiced not so much in words as in attitude and in actions.”

Hopefully, the 4As can leverage the good work that has been accomplished by the ANA in this area to introduce a similar approach, extending this same type of protection to its agency members.

Money Must Grow on Trees

21 May

digital mediaIronically, shortly on the heals of the Association of National Advertiser’s (ANA)  “Agency Financial Management” conference where the ANA presented survey results suggesting that for every dollar spent on digital advertising, only fifty-five cents made it through to the publisher comes the following announcement from PwC and the Internet Advertising Bureau; 

“Internet advertising revenues hit $42.8 billion in FY 2013, up 17% from $36.6 billion in 2012.  Internet ads brought in 7% more than broadcast TV ads.” 

Confused?  Wait.  Given the rise in programmatic buying within the digital marketplace (up 43.4% according to eMarketer), consider the following finding from another recent ANA survey conducted with Forrester; 

Of the client-side marketers surveyed for the study on the topic of programmatic buying, “29% said they’ve heard the term, but don’t have a clear understanding of it” and 12% said they were “completely unaware of programmatic buying.” 

In light of the lack of transparency, limited marketer understanding of this space and no uniform measurement standards, the continued double-digit growth of digital media certainly seems an oddity.  In fact, it is difficult to come up with a sound rationale to support the share of advertising spend represented by digital at this stage of the media’s development.  The term “potential” comes to mind, but the lofty spend levels for digital are more likely being driven by marketers’ fear of “being left at the station.”  Unchecked, this trend poses serious reputational and financial consequences for marketers.  In the words of M.W. Harrison; 

“The waste of money cures itself, for soon there is no more to waste.” 

That said if the desire to spend heavily on digital media is burning a hole in marketers’ proverbial pockets, perhaps it makes sense to focus on improving the transparency and controls surrounding the financial stewardship of an advertisers investment in digital.  

A good place to start from an accountability enhancement perspective is with a sound master services agreement between the client organization and its digital agency partners (which likely includes most of an advertiser’s agency network).  The integration of contract language and reporting requirements governing the agency’s use of affiliate organizations such as trading desks and offshore digital production hubs, agency staffing, media delivery verification and I.P. infringement indemnification should be viewed as integral controls in an age of patent trolls and media arbitrage.  Unfortunately, in our agency contract compliance practice, it is not atypical to find that legacy agreements or lapsed agreements are in place, creating an element of risk and uncertainty. 

Additionally, advertisers may want to consider the use of independent contract compliance and performance monitoring consultant that can work with their marketing teams to provide training and insights along while improving the transparency surrounding the organization’s digital media spend.  Without some layer of financial protection and performance vouching, it is difficult to categorize the money being allocated to digital advertising as anything more than discretionary spending.




Intellectual Property Protection: How to Protect Your Firm from Trolls

21 Jan

intellectual infringement protectionRecently we published an article on patent and copyright trolls and the recent legislative changes and legal decisions which have had a favorable impact on advertisers and their agency partners.

We received a tremendous amount of feedback from our readers on the topic, along with the question; “What specifically can we do to protect ourselves from copy and or patent infringement trolls?”  Given the level of interest regarding this subject, we wanted to share our thoughts on measures which advertisers can take to assist in mitigating the risks emanating from law suits brought by non-practicing entities.

By way of background, Advertising Audit & Risk Management (AARM) works exclusively with advertisers in the area of advertising agency contract compliance and performance auditing.  As part of the contract review portion of the audit, we provide counsel on opportunities for advertisers to enhance contract language to incorporate the latest in terms of legal and financial safeguards to protect their interests.  Needless to say, intellectual property infringement protection has been a growing area of concern for our clientele and one of the items on which we provide guidance.

The challenge as it relates to copyright and patent trolls or non-producing, patent enforcing entities is multi-faceted.  On the surface, the answer to this dilemma is pretty straightforward:

  1. Carry Intellectual Property Infringement Insurance.
  2. Ask your agency to conduct “Clearance Searches” to identify where digital work could pose infringement risks.
  3. Require your agencies (particularly digital/ mobile agencies) to carry the same or similar insurance (i.e. patent defense insurance policy)… be sure to provide guidance on terms:
    1. Is the vendor required to indemnify? Indemnify and defend?
    2. What is being indemnified? (damages, attorney fees, injunctions, lost business)
    3. Specify your desired role, exposure limits in a defense should action be brought.
  4. Require your agencies to indemnify you.

In reality however, the aforementioned actions can be expensive (i.e. a “clearance search” can cost $25,000 to $50,000), are not necessarily foolproof and represent serious client-agency contract/ relationship challenges when it comes to the issue of indemnification.

As an example, the American Association of Advertising Agencies (4A’s) recommends that; “Agencies make clear in their client agreements that clients assume all risks associated with patent infringement.”  On the flip side of the ledger, some advertisers, particularly larger organizations, force their agencies to contractually indemnify them… whether the agency has the financial means to do so or not.

This raises the question; “How can we break the logjam when it comes to indemnification protection?”  Clearly the answer to this question includes open, constructive dialog between both parties and their legal counsel.  After all, both advertiser and agency have a shared interest in minimizing the risks associated with frivolous, expensive lawsuits brought by trolls.

For client-side procurement professionals, the most logical approach to resolving this issue with the organization’s agency partners lies in negotiating a middle-ground based upon the notion of “mutuality” or a “proportional and equitable” sharing of risks and costs.  Experience would suggest that negotiations over this matter are more protracted and time consuming than other aspects of a client-agency agreement.  This is understandable given the risks to both parties and the cost and complexity of the potential remedies.

As long as advertisers negotiate from a position of strength and fairness, they can bridge the gap with their agency partners and reach agreement on this important legal construct.


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