Clips May 7, 2003

[Lillie Coney <lillie.coney@xxxxxxx>]

Clips May 7, 2003

ARTICLES

Nanotech funding on House fast track
Plan offered for recycling obsolete computers
Pentagon Surveillance Plan Is Described as Less Invasive
Russian government pledges piracy crackdown
Kiosk Passes the Collection Plate  
Army tech adaptable for homeland
Group works on e-forms standards 
Daniels resigns as OMB director 
EarthLink to Offer Anti-Spam E-Mail System 
Verizon rate cut could launch broadband price war
The prince of pop-up ads 
 
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Mercury News Washington Bureau
Nanotech funding on House fast track
By Jim Puzzanghera
May 7, 2003

WASHINGTON - The House of Representatives is poised to make a large commitment today to a tiny technology that could have a big impact in Silicon Valley and throughout the U.S. economy in years to come.

The Nanotechnology Research and Development Act authorizes $2.135 billion in federal research money over the next three years for a burgeoning field with the potential to revolutionize everything from medicine to industrial manufacturing to the limits of computer memory. With strong White House backing and wide bipartisan support, the legislation is expected to easily pass the House today and is on a fast track to pass the Senate in the coming weeks.

Nanotechnology, which involves manipulating matter at the level of individual atoms, already has produced stain-resistant fibers used in khaki pants and super-strong, lightweight ``nanocomposite'' materials used in running boards on some sport-utility vehicles.

Researchers are working on more far-reaching uses, such as dramatically reducing the cost of computer power while increasing its speed. In the next decade, the technology could allow the storage of the entire collection of the Library of Congress on a device the size of a sugar cube, or the development of computer circuits so small that thousands could fit on the end of a human hair.

`Vast' potential

``The potential for this technology is so immense and vast, it probably exceeds anyone's imagination,'' said Rep. Mike Honda, D-San Jose, the lead Democratic sponsor of the bipartisan legislation. ``It's going to be a big shot in the arm for the economy.''

Silicon Valley is one of several regions of the country that are developing into nanotechnology research hubs, along with Southern California, Boston and Chicago. Hewlett-Packard and Intel are among the major companies doing research in the field, Stanford University is a significant player among academic institutions, and NASA's Ames Research Center in Mountain View is home to the federal government's largest nanotechnology center.

The amount of federal money, which will mostly flow to universities for basic research, is significant, experts in the field said. But perhaps more important is that the legislation shows a strong national commitment to nanotechnology as the United States battles Japan and the European Union for leadership in developing what some tout as a more revolutionary technology than the Internet.

``I think it is the future of technology across the board,'' said Phil Bond, U.S. undersecretary of commerce for technology. ``Once you get down to the atomic level, you're touching everything. It's terribly important for American leadership in the technology age that we lead in this space, and I think we will.''

Nanotechnology is named for the minute scale in which the field operates -- the level of a nanometer, which is one-billionth of a meter or 100,000 times narrower than the width of a human hair. By manipulating the properties of matter at such an elementary level, the possibility exists to do amazing things, like create materials 100 times stronger than steel at a fraction of the weight or make microscopic computers.

Like the development of electronics, nanotechnology has the potential to change manufacturing and other processes across a wide range of industries, said Mark Modzelewski, executive director of the NanoBusiness Alliance, an industry trade organization.

``Anything that's made will eventually use nanoscience properties,'' he said.

Like biotech, the technology is heavily dependent on government research funding because of the sophisticated science involved and large capital costs for equipment.

``You don't tinker in your garage with your home electron microscope,'' said Steve Jurvetson, managing director of Draper Fisher Jurvetson, a Redwood City venture capital firm that has invested in 14 nanotechnology start-up companies.

`Multiplier effect'

Scott Cooper, manager of technology policy for Hewlett-Packard, said increased federal funding and a strong national commitment could do for nanotechnology what it did for biotechnology about a decade ago. Money flowing into research universities could help attract graduate students who then go on to form their own companies in the field.

``Federal research has a multiplier effect,'' Cooper said.

The nanotechnology legislation in Congress is an outgrowth of the National Nanotechnology Initiative started by former President Clinton in 2000 and expanded by President Bush. Bush's proposed 2004 budget includes $849 million for nanotechnology research, which is part of the $2.135 billion that Congress is expected to authorize.

The largest chunk of the 2004 funding, $249 million, would go to the National Science Foundation, which gives grants to universities and research institutions. The second-largest amount, $222 million, would go to the Defense Department, which envisions an important role for nanotechnology in developing tiny sensors to protect soldiers against biological and chemical attacks.
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Mercury News
Plan offered for recycling obsolete computers
By Ann E. Marimow
May 7, 2003

SACRAMENTO - State Sen. Byron Sher unveiled a road map to compromise Tuesday that could bolster efforts to require electronics manufacturers to collect and recycle obsolete computers.

The proposal, which amends his hotly debated e-waste bill, could mean curbside pickup or drop-off points at retail stores for outdated computer monitors and televisions that contain hazardous materials.

Hewlett-Packard and environmental groups have been working with the Palo Alto Democrat to find common ground on how to dispose of electronic waste that contains toxics such as lead and mercury.

HP spokesman Gary Fazzino said the company is 75 percent to 80 percent in agreement with Sher.

And environmental groups welcomed what they called a ``producer responsibility'' approach.

Other manufacturers were still reviewing the proposal. But Margaret Bruce of the Silicon Valley Manufacturers Group said, ``California companies understand they have a significant role to play in having consumer electronic devices recycled.''

Sher's proposal is intended to address Gov. Gray Davis' veto of similar legislation in September. Davis left the door open for Sher to try again, saying in his veto message, ``We should compel industry to solve this problem.''

Last year's bill would have imposed an upfront $10 fee on consumers at retail stores to create a recycling program managed by the state's Integrated Waste Management Board.

Under the new proposal, companies would have to develop collection and recycling programs. Out-of-state companies would also have to show compliance to do business in California. Manufacturers would have the flexibility to contract with retail stores or local governments to set up collection sites or regional drop-off points -- or pay a fee to cover the cost of recycling.

``Our goal is to work with the senator and the governor to craft legislation that can be enacted into law in the coming weeks and months,'' said Davis Isaacs, a policy director for HP, which first announced it would work with Sher in November.

But there are still some areas of disagreement. Local government officials have been overwhelmed by the rising cost of disposing e-waste that is banned from California landfills.

Sher's bill -- SB 20 -- calls for manufacturers to deal with collection, while HP wants local government to share in the collection phase.

``We think there is an appropriate role for local government to engage in some collection,'' Isaacs added.
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New York Times
Pentagon Surveillance Plan Is Described as Less Invasive
By ADAM CLYMER
May 7, 2003

WASHINGTON, May 6  A top Pentagon research official told Congress today that a program intended to forestall terrorism by tapping computer databases  but curbed by legislation this winter because of privacy fears  would not look into Americans' financial or health records.

Instead, the official said the program, the Total Information Awareness program, would rely mostly on information already held by the government, especially by law enforcement and intelligence agencies.

The Pentagon official, Dr. Tony Tether, director of the Defense Advanced Research Projects Agency, also known as Darpa, told a House Government Reform subcommittee that "we are not developing a system to profile the American public."

Dr. Tether offered a vision of the program that sounded much less threatening than the description given last year by John M. Poindexter, the retired admiral who is in charge of the project.

Mr. Poindexter told a California audience then that "we must become much more efficient and more clever in the way we find new sources of data, mine information from the new and old, make it available for analysis, convert it to knowledge and create actionable options." He described a system that could tap into Internet mail, culling records, credit card and banking transactions and travel documents.

Dr. Tether said he hoped that the agency's impending report on the project, due on May 20, would calm public and Congressional fears.

In February, legislation prohibiting deployment of the system said that research could not continue after May 20 unless the agency provided Congress a detailed description of the project, from its spending plans to its impact on privacy and civil liberties to its likelihood of trapping terrorists.

Today, under friendly questioning by Representative Adam H. Putnam, a Florida Republican who is the subcommittee's chairman, Dr. Tether said the main area of private data that might be useful in anticipating terrorist attacks would be transportation records, since terrorists had to travel.

Saying "I'm trying to help you guys a little with your p.r. problem," Mr. Putnam invited Dr. Tether to swear that the agency was not "contemplating" using credit card, library or video-rental information. Dr. Tether said he could see no value in any such data, but he could not swear that no consultant hired by the agency was not "contemplating" the value.

Dr. Tether said the system was intended to devise "attack scenarios" based on past terrorist attacks or intelligence about plans. 

He offered two examples. If the concern was a truck bomb, he said, one question to be posed was, "Are there foreign visitors to the United States who are staying in urban areas, buying large amounts of fertilizer and renting trucks?"

Or, he said, if the system had been in place, it could have considered the threat posed by a 1995 report from the Philippines that terrorists were considering using airplanes as bombs to destroy landmarks like the World Trade Center.

Hypothesizing about how that would be accomplished, he said, a review of that report would suggest that terrorists would have to learn how to fly large planes, without focusing on how to land them. That issue might have triggered more attention to F.B.I. concerns in Phoenix in 2001 about foreigners taking flying lessons, he said.

Dr. Tether argued that from the outset of the Total Information Awareness project, Darpa had been aware of the need to protect privacy. One essential element was concern by different agencies that sources of their information be kept secret. "Historically," he said "agencies have been reluctant to share intelligence data for fear of exposing their sources and methods."

But he also said his agency intended the tools it developed "to be only used in a manner that complies with the Privacy Act." 

Dr. Teher said that, "We knew that the American public and their elected officials must have confidence that their liberties will not be violated before they would accept this kind of technology."
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Government Computer News
05/06/03 
AT&T will keep running Medicare network 
By William Jackson 
AT&T Government Solutions has received a $76.6 million contract to continue managing the data network supporting the Medicare and Medicaid programs for the next four years. 

The contract is a follow-on to an earlier one held by the Vienna, Va., company. That deal expired in March. This time, the Health and Human Services Department awarded the contract through a modification to the company?s General Services Administration FTS 2001 contract. 

The Medicare Data Communications Network is a WAN linking HHS Centers for Medicare and Medicaid Services headquarters in Baltimore with state Medicaid agencies, regional offices, call centers and outside contractors. It also supports remote dial access for more than 75,000 users and provides Internet access. 

In addition to managing the network, AT&T Government Solutions will host the www.medicare.gov and www.cms.hhs.gov Web sites at company data centers in northern Virginia and San Diego. The company also will provide an extranet and intranet for the HHS agency.
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IDG News Service
Russian government pledges piracy crackdown
Michael Mainville
May 06, 2003, 13:20

MOSCOW - Facing increasing pressure to crack down on software, music and video piracy, the Russian government pledged Tuesday to take tougher action to protect intellectual property rights.

For the complete story see: http://www.idg.net/ic_1313179_9675_1-5124.html
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Wired News
Kiosk Passes the Collection Plate  
02:00 AM May. 07, 2003 PT

Will that church donation be cash or credit? Parishioners may soon have a choice if they're short of loose change to plunk into the collection plate. 

A Roman Catholic diocese in Louisiana is testing a new Canadian technology that allows for "e-tithing." It will provide a tax receipt for the donation, along with a prayer.

The interactive kiosks are made by PlannedLegacy, a Winnipeg, Manitoba, company. 

The kiosks accept donations in cash, by check or from a credit card. They also provide prayer schedules and coordinate volunteers for ministry activities such as helping the poor. 

The Diocese of Baton Rouge will place one kiosk in development director Mark Blanchard's office as a pilot project over the next year. "It's not like we're just sticking this near the altar,'' Blanchard said. "There are no plans for that at this point." 

Blanchard downplayed the kiosk's ability to accept donations. He said he believes the unit is best used to spread information about the church and its programs. At first, the diocese will load the kiosk with material on its stewardship programs and tie it into the church's website. 

"It would be very difficult for us right now to place this thing in an open area,'' Blanchard said. "It's not what we're after." 

He raised the issue of whether the church should allow credit-card usage. "The amount of debt with the average family in America is a big problem," Blanchard said. 

Marshall Posner, CEO of PlannedLegacy, said the kiosks are meant to augment collection plates in churches and that the technology could help stabilize donations by setting up a recurring monthly debit charge, for instance, on parishioners' credit cards. 

PlannedLegacy also can customize receipts so they provide some inspiration along with the financial information. A database of prayers lets the kiosk spit out a variety of appropriate sayings for different times of year, according to Posner. 

"I think you'll see this as a growing trend in churches and even synagogues and other places of this nature,'' Posner said. 

He said the kiosks will help make church finances more accountable, cutting down on the potential for internal theft from collection plates. 

The kiosk is customized for the Baton Rouge diocese -- its yellow-and-blue coat of arms is nicely visible on the side of the machine. That unit costs $50,000, but Posner said the price varies according to the customization. A Lutheran request for an e-tithing unit might require different functions, for instance. 

If and when the kiosk makes it way into the church proper, will some people deem the interactive technology crass? Posner said undoubtedly some will find the machines offensive, but at the same time he believes the technology has its place in the church. 

"I wouldn't stick it up ... next to the altar,'' he said. "But certainly in a front lobby, in a congregating area. In the Diocese of Los Angeles, which is significantly larger than Baton Rouge, there's a Starbucks." 

Blanchard pointed out that a number of alternatives already exist to the Sunday collection plate, including automatic monthly debits from parishioners' accounts with bank drafts and envelope collection. Blanchard said the Baton Rouge diocese has one of the best centralized databases in the country to track the use of the weekly envelope collection. 

Even though the kiosks already have been saddled with the phrase "e-tithing,'' Blanchard said his diocese does not preach "tithing,'' which is traditionally defined as the tenth part of goods or income paid in support of the church. "I think the average Catholic family is giving about one to one-and-a-half percent,'' he said. 

If the kiosks become more widespread, Boston's Fundraising Solutions, a partner with PlannedLegacy in placing the machines, might take a portion of the donations as its fee. 

Blanchard said that would not be a problem -- the company would be providing a service. 

While his church is taking "baby steps" to introduce the technology, Blanchard said he believes the kiosks may represent the future. He pointed out that 70 percent of Catholic households have access to the Internet. 

"We're becoming a Web-based society and we have to acknowledge that," he said.
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Federal Computer Week
Army tech adaptable for homeland
BY Dan Caterinicchia 
May 6, 2003

The Army has identified numerous technologies that can be used to support the nation's first responders, according to one service leader.

Gen. Paul Kern, commander of Army Materiel Command, outlined eight solutions that could be used by federal, state and local agencies responding to a natural disaster, terrorist attack or other contingency. He was speaking today at the Armed Forces Communications and Electronics Association's TechNet International conference in Washington, D.C.

The solutions he cited include:

* Adapting the Land Warrior technology, which features a 12.5-pound wearable ensemble of equipment and software. The gear includes elements of wireless communications, weapon-mounted sensors, Global Positioning System-based navigation and computers that integrate soldiers into a networked fighting team.

* A mobile command post command and control (C2) unit.

* Secure, wireless local-area networks.

* Position location, or blue force tracking, in buildings and wider areas.

* Emergency notification with feedback.

* National emergency support center "push packages" (emergency caches of medical supplies).

* Fixed and mobile communications gateways.

* Re-supply and training.

Kern described an innovative solution that officials in Iowa used to connect local, state, federal and defense communities by adapting an existing network used by the state's schools.

Furthermore, the Army is using the Defense Information System Network, the Army Guard Network and the Army Reserve Network to enable its worldwide units to communicate and share information, Kern said.
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Government Computer News
05/07/03 
Group works on e-forms standards 
By Patricia Daukantas 

A new team of government and industry officials will spend the next five months evaluating standards for electronic forms, a CIO Council member said yesterday. 

The E-Forms for E-Government project was one of several pilots that involve Extensible Markup Language and Web services updated by Brand L. Niemann at the annual FedWeb conference in Arlington, Va. Niemann, an Environmental Protection Agency computer scientist, heads the CIO Council?s XML Web Services Working Group. 

The e-forms group, which held its first meeting in March, is studying the strengths and weaknesses of various forms technologies and will recommend a core set of standards for federal use. The project?s participants will design several online prototypes and will publish white papers on the technologies they try. 

About 40 government and industry representatives have joined the E-Forms for E-Government effort, Niemann said. The group plans to deliver an interim report in June and a final report in October. 

Rick Rogers, chief executive officer of Fenestra Technologies Corp. of Germantown, Md., is the team leader of the project, which has a home page at www.fenestra.com/eforms. 

At the conference, Rogers demonstrated the Generalized Instrument Design System, an e-forms application that his company developed for the Census Bureau?s Economic Census Program [see story at www.gcn.com/21_7/tech-report/18251-1.html]. 

Niemann also said XML Collaborator, an information design tool that was one of six incubator projects sponsored by the XML Web Services Working Group, is ready for operational status. 

Blue Oxide Technologies LLC of Charles Town, W.Va., developed the tool, and the company will soon unveil a public Web site demonstrating the tool, Niemann said. 

FedWeb continues today at the Arlington campus of George Mason University.
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Government Computer News
05/06/03 
Daniels resigns as OMB director 
By Jason Miller 

Mitchell E. Daniels Jr. announced today that he will step down as Office of Management and Budget director in 30 days. 

Daniels likely will run for governor of Indiana but will not announce his plans until later this summer, according to published reports. An OMB spokesman said no successor has been named. 

Daniels was a major force behind President Bush?s Management Agenda and paid close attention to how agencies requested and spent IT funds. He advocated better business cases for IT investments and clamped down on agency redundant technology spending by issuing four letters authorizing OMB?s power under the Clinger-Cohen Act. 

OMB still is without a deputy director for management as Clay Johnson, Bush?s nominee, has not been confirmed by the Senate. 

?The president tremendously appreciates Mitch?s service to our country,? White House spokesman Ari Fleischer said at the daily press briefing. ?The president views Mitch as a very strong manager, a very able leader and a wise steward of tax dollars.?
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Washington Post
EarthLink to Offer Anti-Spam E-Mail System 
'Challenge-Response' Technology Rejects Messages Unless Senders Are Cleared by Recipients 
By Jonathan Krim
Wednesday, May 7, 2003; Page E01 

A system that backers claim will eliminate e-mail spam is about to be deployed by a major Internet service provider, giving a boost to an emerging technology that if widely adopted would change how people communicate online.

Atlanta-based EarthLink Inc., the country's third-largest provider of for-pay e-mail accounts, will roll out test versions of the system for its 5 million subscribers this month. 

Known as "challenge-response" technology, the system thwarts the ability of spammers to reach their intended audience with millions of automatically generated e-mails. When someone sends an e-mail to a challenge-response user, he or she gets an e-mail back asking to verify that the sender is a live person.

Once the sender does that by replicating a word or picture displayed on the screen, the original e-mail is allowed through. The system automatically recognizes future e-mails from the same sender, so the verification needs only to be performed once. Without the verification, the e-mail is not delivered. 

Some experts see problems with the technology and doubt that consumers will warm to a process that adds another step to e-mail delivery. The technology is available from a handful of small vendors for a fee, but the customer base is small.

EarthLink is betting that customers will put up with a little extra effort in order to stem the tide of unsolicited messages pushing diet fads, get-rich schemes and pornography.

Like arch rivals America Online Inc., Microsoft Corp. and Yahoo Inc., EarthLink has spent millions of dollars developing software to block spam. But spammers have found ways to defeat them and spam accounts for 40 percent of all e-mail.

"The limitations on filters are truly very daunting," said James Anderson, EarthLink's vice president of product development. Even as filters improve, users must constantly adjust them so that they don't block messages they want to receive, he said.

The challenge-response system will be optional and free for EarthLink subscribers, Anderson said. It will allow users to automatically clear the e-mail addresses of friends, family members and other associates in their electronic address books, so those people would not receive the challenge e-mail.

Executives at EarthLink's three top competitors, who recently formed a coalition to combat spam, said they are evaluating challenge-response technology. Yahoo and Microsoft's MSN and Hotmail networks already employ challenge-response when someone seeks to open an e-mail account. 

Yahoo also recently started using a variation of the system when an account holder is sending high volumes of mail, to crack down on spammers using Yahoo accounts.

America Online spokesman Nicholas J. Graham said that for now, AOL is concerned about putting too many burdens on users and that the technology is "not a one-size-fits-all panacea." 

In addition to requiring senders to verify themselves, users would have to use special e-mail addresses when registering to purchase goods online, because vendors often send sales confirmation notices by computer. The special addresses are designed to route such messages to a user's regular in-box.

The new system could slow delivery of some e-mail. For instance, a sender might walk away from his or her computer after sending an initial message, not noticing until hours later that a challenge had come back.

Phil Goldman, chief executive of Mailblocks Inc., a Silicon Valley start-up that provides a challenge-response service, said people will quickly get over those hurdles.

"It's about social habits," said Goldman, a former Microsoft executive whose service launched a month ago. "When the rotary telephone first came out, people said, 'You mean I have to dial seven numbers?' "

Goldman said developers of the Mailblocks system own patents on the challenge-response technology. His company already is seeking to enforce its two patents against another small provider of the technology, Spam Arrest LLC of Seattle.

Brian Cartmell, manager at Spam Arrest, said his company is vigorously contesting the Mailblocks claim. He said Spam Arrest, which has been operating since April 2002, has "many thousands" of customers but he declined to be more specific.

Anderson said Goldman's patent claims are "not relevant" to the product EarthLink developed inside the company.

Goldman acknowledged that the system is in its infancy and needs ongoing refinement. It is probably not best suited for businesses that sell directly to customers, he said, because consumers might resent having to send verification when they want to make a purchase.

Others see deeper problems.

"Challenge-response will indeed block the vast majority of spam," said John R. Levine, a computer consultant and co-author of "The Internet for Dummies." But he said a lot of people will never respond to a challenge, or will think the challenge e-mail itself is spam.

Levine said that already, spammers are disguising e-mails as challenges to get people to open the messages. And he worries that if large numbers of people begin to use the system, user address books will be a target of hackers seeking to obtain lists of approved addresses.

Some viruses launch attacks using computer address books, and if that happened, confidence in the challenge-response system would erode, Levine said.

"The consequences of spammers' response to challenge-response will be really ugly," Levine said.

Boosters of the system remain confident that challenge-response can effectively combat spammers' attempts to sabotage the process. "This is as close as there is to the silver bullet" against spam, Anderson said.
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USA Today
Verizon rate cut could launch broadband price war

NEW YORK (Reuters)  A move by Verizon Communication to cut the price of its high-speed Internet services could be the opening shot in a price war in which cable and telephone companies are forced to sacrifice profits to lure customers who want faster Web connections.
Verizon Monday began offering high-speed Internet services for $34.95, about $10 cheaper than its previous rate. However, it was unclear if rival broadband service providers would follow suit right away.

"It does signal in our view the beginning of a price war," Legg Mason analyst Chris King said.

Cable and phone companies are in the best position to sell high-speed connections to their customers, as they already have "pipes" into homes over which data can travel.

For telephone companies this offers a chance to boost growth stalled by the trend towards cell phones and e-mails that has cut usage of traditional phone service.

Cable operators, which claim two-thirds of the U.S. high-speed Internet market, have much to lose if digital subscriber lines catche fire.

"Cable companies are going to need to come out in relatively short order and try to create some sort of differentiation," King said.

Another independent telecommunications analyst, Jeff Kagan, said cable companies should use caution in trying to beat Verizon's rate, as a price war could cause Internet providers to meet the same fate as battered long-distance companies. 

However, if cable companies  which currently charge rates in the range of $45 per month for Internet access  see customers defecting en masse to rates closer to $30, it may be hard for them to resist slashing prices.

"Cable companies see broadband as a huge growth opportunity and if they see their (subscriber) numbers shrinking it could trigger intense price competition," Kagan said. "I think Verizon needed to do it to increase its market share and to create more loyal and profitable customers."

Donald Norman, co-founder of consultancy Neilson Norman Group, noted that price wars have mixed results.

"Price wars are usually good for consumers, but they are not necessarily good for business," Norman said.

Other analysts predicted that cable companies would wait and see rather than cutting rates immediately. Some noted that a similar promotion by SBC Communications in California failed to take many subscribers from the local cable companies.

Two cable television companies that compete with Verizon, Comcast and Cablevision Systems, said they recently raised rates for their television customers' broadband services.

Comcast raised its fees by $1 a month in some markets while Cablevision upped its price by $5.

"We're very comfortable with our competitive position," said Comcast Vice President of Sales and Marketing Dave Watson, who did not directly answer questions about prices.

Verizon's price cut could finally make broadband services an affordable alternative for some customers who now pay for two phone lines and reserve one for Internet use.

"What could happen is the total number of new households subscribing to high-speed Internet could actually accelerate," said Davenport & Co analyst Drake Johnstone.

Johnstone, who also cited SBC's difficulties as a sign that Verizon's price cut might not hurt its cable competitors, predicted that cable companies would still continue to add subscribers and that "phone companies might even see an improvement."
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MSNBC
The prince of pop-up ads 
Patent holder eyes profits from Internet ad form
By Bob Sullivan
 
May 6  If you hate pop-up ads, you might blame Brian Shuster. A long-time figure in the Internet pornography world, Shuster recently received a patent for the ad format and is now looking to make some money off the sites that use it. And that?s just the beginning  Shuster has a long list of pending patents, including one for pop-up audio ads that cannot be turned off.
     ?I APOLOGIZE FOR being a pioneer,? Shuster said, adding he?s had to apologize many times to Internet users. Two years ago, Shuster?s XPics.com settled a lawsuit with the Federal Trade Commission that stemmed from accusations that several porn Web sites he operated were deceptively charging customers. 
       He still runs some porn sites, but Shuster has now turned his attention to Ideaflood Inc., an intellectual property holding firm he set up to license revenue from sites that use pop-ups and, assuming his patents go through, other advertising technology.
       Shuster?s pop-up patent, known officially as the ?Traffic Management Utility? patent, claims that pop-up ads account for ?20 percent of the revenue of the two most profitable Internet segments,? online casinos and ?adult entertainment.? In 2002, the patent claims, these two segments had revenues $9.25 billion.
       Shuster wants a slice of that money.
       He said he will demand licensing fees from sites which use pop-ups, but he hasn?t actually filed any patent cases yet. What Shuster hopes to do is attract investors intrigued by his pending patents, thus generating enough cash for Ideaflood to fund an effort to recoup licensing fees.
       ?Companies that I?ve built used this technology to become $100 million operations,? he said. ?It?s used ubiquitously through this segment of the Internet.? 
       And others, too, he claims. Online banking sites, for example, sometimes track when users leave secure transaction areas and deliver pop-up messages saying they?ll have to log back into the system. That, too, would be covered under the ?Traffic Management Utility? patent, Shuster said.
       
NET PATENTS HARD TO ENFORCE
       Internet technology patents have so far proved difficult to enforce. In the most famous case so far, Amazon?s patent for one-click purchasing led to a two-year legal fight with Barnes & Noble. An initial court-issued injunction against Amazon was overturned, and the two companies eventually reached an out-of-court settlement.
      Other high-profile patent cases are still pending, with plaintiffs both big and small. SBC Intellectual Property, a division of the telecom giant, is demanding fees from Museumtour.com over a Web navigation design patent it holds. On the other extreme, electrical engineer Thomas Woolston, founder of MercExchange, has sued eBay for infringement of online auction patents he holds. That case is currently being argued in U.S. District Court in Virginia.
       There hasn?t yet been a high-profile case where a plaintiff has won big for a patent infringement, said Greg Aharonian, a patent expert who runs the Patentbust.com Web site.
       Shuster does have time on his side, Aharonian said. The pop-up patent was filed in 1998, and under patent law, challengers would have to show similar technology being used prior to 1997.
       ?That is a bit early in Internet history,? Aharonian said. ?He?s got slightly favorable timing.? 
       Still, given the lack of success from other Internet infringement cases, Aharonian was skeptical that Shuster would be able to turn the patent into a money-maker. Amazon?s case against Barnes & Noble was basically a wash for both firms, he pointed out, and when British Telecom tried to enforce its patent on hyperlinking by suing Prodigy Communications Corp., a U.S. federal threw the case out.
     Schuster wouldn?t comment on whether or not he has sent out any copyright infringement notices, and he said that some Internet patents have been frivolous  but not his.
       One-click shopping ?was fairly obvious,? Shuster said, as opposed to his ?more sophisticated mechanism? of doing what he calls controlling ?exit traffic? and others have likened to ?browser hijacking.?
       ?I don?t think there was anything resembling this business method when we filed for the patent in 1998,? Shuster said.
       The patent is explicit, describing computer code that can ?interact with the browser to modify or control one or more of the browser functions, such that the user is directed to a predesignated site or page, instead of accessing the site or page typically associated with the selected browser function.?
       
OTHER PATENTS IN THE WORKS
       Other Shuster patents include similar technology to take control of a user?s computer and send them to unexpected Web sites.
       One, called ?Method, apparatus and system for directing access,? describes the use of ?hidden frames? to inject javascript onto an unsuspecting user?s computer, which can later be used to send the browser to another Web site.
      Shuster defended such redirections, saying they are necessary for Internet advertising to be successful. And exit traffic, he said, can be used simply to survey visitors leaving a Web page. The technology has since been abused, he said, leading to the current state of affairs  porn Web sites with endless loops that sometimes cannot be escaped until the accidental visitor turns off their computer.
       ?Yes, the use of this technology contributes to horrific pop-up loops that are of no value,? he said. ?In my opinion, pop-up loops are in contradiction to the rights we have in this patent.? He even suggested that, armed with the patent, his firm will be able to clamp down pop-up abuse.
       
MORE HIJACKING METHODS 
       In fact, in his settlement with the FTC in 2000, Shuster said he agreed to limit the use of pop-ups on his sites. But computer consultant Richard Smith, who operates ComputerBytesMan, found other redirect technologies still in use on a porn site connected to Ideaflood.
       The computer of a relative of his was recently hijacked and continually sent to a porn Web site, Smith said. The software then turned the porn site into the browser?s default home page and search page. The computer?s registry was also changed so that any time a less-than-complete Internet address was typed into the browser?s address field, the surfer was redirected to the porn site.
       For example, typing in ?www.hotmail.com? instead of ?http://www.hotmail.com? would deliver a pop-up porn window, and then send the browser to Hotmail, making it look, Smith said, like Hotmail was advertising porn.
       While the porn site was registered to Ideaflood, Shuster said it was run by a third-party group based in Russia. His business hosts some 100,000 independent Web sites, he said, adding that he had no idea what software was redirecting Web browsers to this particular site. However, Shuster said, the software as described by Smith would violate Ideaflood?s terms of service.
       The porn site was pulled down after MSNBC.com?s inquiries because ?some of the women looked like they may be underage,? Shuster said. He said he then filed a complaint about the site with the National Center for Missing and Exploited Children.
       Shuster drew a sharp distinction between the software Smith encountered, which he said was ?probably illegal,? and other forms of traffic redirection he has developed. He said pop-ups regularly generate successful leads for casino and pornography sites, and consumers do click on them.
       ?Obviously many people do, 20 percent of the revenue generated in this major market segment is from exit traffic,? he said, echoing claims made in his patent. The figure comes from internal company research, Shuster said.
       
EFFECTIVE ADVERTISING
       ?The reason the Internet has stalled out so badly is that advertising is a non-profitable segment,? he added. The use of ?hijacked traffic? is a question of balance, Shuster said, but there has to be effective advertising so ?a provider of content can make a reasonable living.? 
       And so Shuster is continuing to develop new aggressive advertising techniques.
       One of them would force Web surfers to hear an ad from start to finish with no way for the listener to turn the ad off. Or, as the patent application states, ?the Web site then delivers the audio advertisement to the user via the network in a format that precludes the user from controlling the manner of playback of the audio advertisement.? 
       In lab tests, the response rate to what might be called ?pop-up audio? has been outstanding, Shuster said, meaning such ads may soon be interrupting plenty of Web surfers, or at least those who don?t manage to turn off their speakers fast enough.
       ?They will be hugely effective,? Shuster said. ?I apologize in advance to everybody on the Internet who won?t be able to surf the Net in quiet anymore.?
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