Visto: Another Mouse that Roars

Posted by: Steve Hamm on June 30, 2006

There’s plenty to dislike about patent trolls. They exploit flaws in the patent office and legal system to stick up innovative technology companies. But just because a patent holder is small, that doesn’t mean it’s a troll. Consider Visto, a mobile e-mail developer that has sued Microsoft, Research In Motion, Good Technology, Seven Networks, and Infowave and accused them of violating its patents. (Just because RIM settled its contentious legal battle with patent-holder NTP in March by forking over $612 million doesn’t mean its intellectual property headaches are behind it.) Visto is a legit technology innovator with an ongoing business and a handful of key software patents that have been upheld in court. “People have called us a patent troll. The big companies try to create that image. We do work the patents, but we’re not a troll,” insists a slightly miffed Daniel Mendez, one of Visto’s co-founders and its senior vice-president for intellectual property, the guy who works the patents. While Visto isn’t well known, it could end up being a force to reckon with in the mobile computing industry.

That's a pretty significant statement for a company that has almost gone out of business several times. Visto was started in 1996 with the idea of selling e-mail and data-access software products to corporations. But all the pieces weren't in place to make enterprise mobility take off, and the little company found it too difficult to sell to giant corporations. It switched to the consumer market, but that was crowded and hard to make headway in. The company's lowest point was in 2002. The Internet bubble had burst, it had scant revenues, and it was nearly out of money. Visto's executives had visited countless venture capitalists and had been turned down. But, on the morning of Dec. 24, 2002, its luck turned. The top execs met with Bandel Carano, a veteran VC at Oak Investment Partners in Palo Alto, and by late afternoon they had a term sheet. Eventually, Visto closed a $70 million venture round that not only saved it from oblivion but put it in position to be the pesky factor in the industry that it is today.

What Visto had that venture capitalists liked was patents. (Right now it has 27 patents worldwide and another 60 pending) Its key US patents cover certain aspects of remote data access, security, and synchronization between mobile gizmos and e-mail servers. Even while Visto set out to beef up its core business it started going after companies it considered patent infringers. Its first target: competitor Seven Networks. In April, a federal jury in a patent-friendly jurisdiction in Texas found that Seven had infringed on three patents. The award was just $3.6 million. But there could be much more to come via the other suits. Mendez points out that they're carefully targeted. "We're not suing willy-nilly. These all are companies who are competitors and who knew about our patents," he says.

Meanwhile, Visto is pushing forward on the competitive front. Rather than sell branded software, it sells software to telecommunications carriers that's embedded in their consumer services for smart phones and PDAs. IT sells in 30 countries, and so far has had most of its successes outside the United States. While Visto's share of the six million person consumer market is small, Mendez expects the company to grow rapidly by riding the mobility wave. Some analysts expect the number of people who use mobile e-mail to someday reach one billion. "The lawsuits are something we feel compelled to do, but they're not what gets us up in the morning," says Mendez.

He insists that only two of Visto's 400 employees--he and the general counsel--spend much of their time thinking about patent suits. I guess that goes to show: If you have good patents, you don't need an army of people to try to enforce them.

Reader Comments

still-angry-email-user-in-asia

June 30, 2006 7:36 PM

Who can forget Visto 6-7 years ago when they en masse deleted thousands of users' emails on their systems with absolutely no backup? How could a tech company do that? I lost so much precious email. I, for one, will never forget that, so whatever email products they are still providing are still being made under the same shoddy brand.

dg

June 30, 2006 10:45 PM

It's good to know smaller companies still can defend their innovations. Sometimes, it seems like given the expense involved to defend it, a patent itself ain't really worth much.

Bob

July 3, 2006 11:28 AM

The only thing more exciting then new mobile technology is business, law and patents...wait.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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