Local.com - Part 2 - 411 Patent Details

The second patent awarded to Local.com in a week was announced in the July 2nd press release for U.S. Patent Number 7,200,413 for Ad-Supported 411 Local Search Model. The interesting thing about that announcement was that the press didn’t seem nearly as excited as after the first announcement. Chairman & CEO Heath Clarke appeared more bullish on this as he prodded free 411 providers to license the technology.

Given the lack of coverage, we are left with the patent text and other public information to help us gauge whether the patent will help the company generate more revenue. Looking at the patent text, there are a couple of things that are noteworthy: a) the description starts with a Notice of Copyright and Trade Press. One can only guess at the reasons behind the company adding this clause for this patent while not doing it for the local index search patent. It may have to do with the company wishing to use some of the drawings and/or other content as a way of identifying their product in the future, and b) there is only 1 claim in the patent. If there were other claims in the original filing, they may have been rejected by the patent examiner. This could imply that the company may originally have attempted to make this patent apply in an even more general situation.

The patent claim text follows:

1. A method of sharing directory listings via a wireless messaging system in a distributed environment using a computer network comprising: (a) Maintaining a database including a plurality of directory listings, wherein each listing is associated with a referral phone number, at least one search term and a dynamic, controllable index; (b) Receiving a directory assistance request in the form of a keyword from the customer; (c) Identifying the directory listings having keyword terms generating a match with the request; (d) Ordering the identified directory listings into a phone number result list in accordance with the values of some controllable index for the identified directory listings; (e) Translating phone number result list into a format that is compatible with a wireless messaging standard; (f) Transmitting the translated result list through a wireless messaging system back to the requesting customer's wireless messaging device; (g) Enabling the receiving message device to automatically callback the directory listing provider requesting a telephone referral; (i) Receiving the message phone callback and authenticating the caller; (j) Correlating the callback to a previous request and result set; (k) Transferring the callback phone call to the corresponding telephone referral number; (l) Initiating a business transaction to generate billing and revenue transactions for the paid referral.

It describes a free 411-service model that uses ad-supported keyword based business matching. We will assume that the technology itself is valid IP, since there hasn’t been any press releases or other material from the media that questions the validity. Let us proceed to look at the value a business might see in licensing the technology. Currently, the 411 businesses make money at both ends of the deal. Ie, on the one side, businesses have to pay money to get listed and at the other side 411 customers pay a fee for the service. The new technology touts the use of a fully ad-supported revenue model by allowing a much more flexible business search mechanism using keywords. It should benefit the consumer since they get to use a free flexible system as opposed to a rigid fee based system. It should also benefit the service provider since they get to make money based on what potential customers are willing to pay for choice keywords as opposed to fixed revenue based on the business listing.

One other area we have to look at is the competitive landscape. This is a more difficult area to look at. There are products in place that have very similar functionality and so the added value is very tough to gauge: a) Internet search provides similar functionality and has the added advantage that one gets access to all service providers –with the proliferation of wireless internet, it should be regarded as very viable competitive threat, and b) GPS devices have similar functionality and have the added advantage that for local searches it knows your location already.

So, what can be said of the value of the patent? - PDA’s with both GPS and wireless Internet functionality seems to provide a far superior alternative to a search variant of the old 411 business and so developing a new business model may not be that easy to do. However, existing 411 businesses may see value in licensing the technology as an upgrade to their existing businesses.

Local.com Analysis:
  1. Part 1 - A Patent Speculation Play.
  2. Part 2 - 411 Patent Details.
  3. Part 3 - Investment Outlook.
  4. Part 4 - Analysis Of Another Speculative Upturn.

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