Modavox Hits Up AOL-TWX for Tacoda Patent Hush Money


An unknown firm called Modavox (MDVX.OB) has emerged from the shadows to demand a big settlement from AOL and Time Warner (TWX) for Tacoda’s alleged infringement of a patent Modavox’s ancestors apparently filed for back in 1999.

Modavox describes itself as  “the leading developer of innovative software products that enhance, enable and protect global network based communications.”  Whatever industry the company leads must be a bit of a niche, as Modavox generated $602,000 of revenue in the quarter ended May 31. 

Modavox is new to the patent-troll business, but its executives are wide-eyed at the possibilities. The Phoenix-based company otherwise consists of two “operational divisions”, the “Internet Radio Division” and the “Interactive Solutions” division.  (Details after jump.)  The “interactive solutions division,” which is presumably the one in which someone stumbled across an old box containing the patent, had revenue of $70,819 in the May quarter, down significantly from the prior year.  $57,863 of this revenue came from “hosting services.”

Modavox has about $1 million in cash.  This, combined with a burn rate of about $330,000 a quarter, should allow the company to pay its legal fees for at least about six months while it prays silently that AOL will pay it a few million to go away. 

Love the sound of Modavox’s business?  Well, then, good news: You can buy the stock.  The ticker is MDVX.OB, and it’s only $1.73 a share (so you can buy lots of them!).  Of course, the company already has a $64 million market cap, which is approximately 30-times run-rate revenue, and if the AOL mugging doesn’t work out, it could burn through its cash within three quarters.  But you’ll be pleased to learn that a firm called Wasserman Morris & Co. just initiated coverage with “Speculative Buy.”  Kate Kaye has more.

UPDATE 1: An outraged reader excoriated me for not analysing the “merits” of the suit and blamed this failure on my scandalous past.  Helpfully, another reader, Joe Clark, says he has read the suit and thinks it has merit (in my experience, it’s very hard for lay-folks to make this determination, but perhaps Joe is not a lay-folk).  In any case, this, my expanded-ramification thoughts, and more in the comments…

UPDATE 2: We made some calls.  New information in More on Modavox, AOL, Time Warner, and Patent Trolls


Internet Radio Division that includes:

  • The pioneering VoiceAmerica™ Networks, the largest and recognised leader in Internet Talk Radio
  • BoomBox Radio™ our patented Internet radio software product line
  • Corporate & Custom Branded Radio Solutions
  • Production, Broadcasting, & Complete Host Services
  • Dynamic Ecommerce, Sponsorship & Advertising Partnerships
  • Global Content Delivery & Comprehensive Reporting

Interactive Solutions Division featuring:

  • Patented BoomBox™ Video software applications    
  • Branded & secure Corporate Broadcasting solutions    
  • Breakthrough Franchise Communications systems    
  • Global Pay-Per-View and E-learning software products    
  • Patented Stream Syndicate™ Online Audio & Video Advertising    
  • AudioEye™ audio publishing and accessible content navigation  software    
  • Global Content Delivery & Comprehensive Reporting