I’m going to write about ongoing lawsuits involving webinar software vendors. I should start with a disclaimer that I have ZERO legal training and no firsthand knowledge of the case specifics. I am an unbiased external observer interested in what’s going on in our industry. I should also point out that I have no fiscal or business relationship with the vendors mentioned in this article and no investments in any companies involved.
ON24 is a long-established major player in the webinar/webcast space. Its history stretches back to 1998, starting with streaming news content over the web and morphing to a DIY platform for hosting web events. The company went public roughly one year ago.
The stock price has not had the explosive growth that investors were hoping would mirror the financial success of Zoom. It briefly hit $81.98/share on opening day and has been on a downward trajectory ever since, now trading under $17/share.
This has spurred a class action lawsuit against the company alleging that “representations made in the registration statement and prospectus used to effectuate the Company’s IPO were materially inaccurate, misleading, and/or incomplete because they failed to disclose, among other things, that the surge in COVID-19 customers observed in the lead up to the IPO consisted of a significant number that did not fit ON24’s traditional customer profile, and, as a result, were significantly less likely to renew their contracts.”
I don’t really have anything to say about that. We’ll see what happens. My cynical side says that when the dust settles the lawyers will get richer and the common investor won’t see much benefit from the lawsuit either way.
I’m much more interested in a lawsuit that ON24 has filed against webinar.net (Yes, the latter is one of those company names that includes a period and no capital letter. It makes sentences look very strange).
Part of the suit claims that webinar.net infringed on a technical patent held by ON24. The rest of the suit alleges “intentional interference with contractual relations, unfair competition, and false advertising.”
Technical patents get challenged all the time in our high tech world. I’m pleasantly surprised to see a suit pitting first-party developers against each other rather than the usual “patent troll” harassment suits that are brought purely as a financial gambit.
The current stage in the rather standard process for such things is that webinar.net has challenged the validity of ON24’s patent. The Patent Trial and Appeal Board will do a review of the merit of the original patent itself and then decide whether the suit can proceed to look at whether webinar.net infringed it in their software code. These things tend to play out over a protracted timespan.
At issue is the user-controllable webinar console that I have praised on my blog in the past. ON24 originated a unique way for webinar attendees to have their own control over size, placement, and expanded/collapsed status of different content windows on their own screens. It effectively makes the entire webinar window work like a modern operating system GUI, where users can dynamically view whatever content pieces they want in any way they want.
I was so impressed with the design concept and execution that I wondered why other vendors weren’t going with the idea. It is instantly intuitive. Now I know why… ON24 patented it under US-9148480-B2: “Communication Console with Component Aggregation.”
webinar.net started up in 2018 and introduced their software platform in November of 2019. The key executives had previous work experience with other companies in the industry, as might be expected. Most germane to the suit, co-founders Mike Nelson and Michael Henry both have LinkedIn profiles listing 11 years acting as Sales VPs at ON24 through the first decade of the 2000s. That makes the interference and competition parts of ON24’s suit more interesting. Could they have used previous familiarity and relationships with ON24 customers as an entry point to getting their new product into those companies? I have no idea and no insights into this part of the suit.
From a technical perspective, webinar.net certainly took the same conceptual approach as ON24 in creating a user-controllable webinar console. They let webinar administrators select which content pieces should be present as windows in the console. You might elect to show slides, webcam videos, public chat, private (moderated) Q&A, presenter bios, headshots, or something else. Then attendees can expand, collapse, resize, and move those content windows independently.
There is no question that the operational end result for users is similar in the two products. The question is whether the implementation in code violates a protected methodology. That’s not anything that we can see from the outside. If the Patent Office decides that the patent itself is valid, the investigation into the specifics of the coding will be quite a challenge.
There’s little else to report at this point. Things need to play out and we’ll see how all parts of the cases progress. I’ll try to check in from time to time with updates as I see them. I think it’s an interesting glimpse into a world where webinars are increasingly significant from a business and financial perspective.