Sponster's patent saga: a David and Goliath struggle over advertising technology.

• Author: Koritz, Alex
• Position: Techknowledge

Roger Little makes his home office on Laird Avenue in Salt Lake City's Sugarhouse district, a Norman Rockwelllike neighborhood with giant oak trees forming canapes over its roads. According to Little, Laird Avenue has caught the attention of movie directors and has made several appearances in films. Full of autumn splendor, it's easy to see why.

Little is a middle-aged, unassuming man but with an air of confidence that speaks to the years he's spent in corporate America. Little's business partner, Jason Bosarge, seems his polar opposite--no suit for him. Bosarges work attire includes jeans, a T-shirt and cool wristbands--a software developer through and through. Together the two formed Sponster, a software company with plans to deliver contextually relevant advertising along with e-mails, instant messaging and text messaging.

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From that home office on Laird Avenue, a David and Goliath saga was launched. For the past seven years, the United States Patent Office has been deciding who owns the patent for the "method and apparatus for adding advertising tag lines to electronic messages." The contestants for the patents ownership: Google and Sponster. Which of the two companies is the rightful owner of the business method for contextually advertising via e-mail, instant messaging and text messaging? In October 2009, Sponster was awarded the patent, immediately putting Google in patent violation for its contextual advertising through the company's Gmail service. This victory for Sponster may turn out to be one of the most important patent rulings in decades.

The Saga Begins

Little and Bosarge formed Sponster in late 2001. The partners recognized the value of online advertising but could see farther than the traditional, and somewhat irritating, banner ads. The idea evolved to include targeted advertising based on the content contained within an email. Contextual advertising was then born.

Way ahead of its time, the idea of contextual advertising got a lot of resistance. "The concept was so far out there some people thought we were crazy," recalls Little. The issue of privacy was one among many issues raised. Consumers did not love the idea of a corporation "peering" into their e-mail. Also Sponster's vision extended well beyond email to include targeted advertising within instant messages from a computer, text messages from a mobile device and Web pages.

However, on June 2, 2003, California-based Google applied for the...