PA Advisors, LLC v. Google Inc. et al
RESPONSE in Opposition re #420 MOTION in Limine (Defendant Yahoo! Inc.'s Motions in Limine) MOTION in Limine (Defendant Yahoo! Inc.'s Motions in Limine) filed by PA Advisors, LLC. (Attachments: #1 Affidavit, #2 Exhibit A-1, #3 Exhibit A-2, #4 Exhibit A-3)(Anderson, Patrick)
PA Advisors, LLC v. Google Inc. et al
Doc. 460 Att. 4
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UNISEARCH: A N A D V A N C E IN PERSONALIZED INTERNET SEARCH
Unisearch (or t h e "Company") has developed an enabling methodology, based on a unique multi-disciplinary approach, which minimizes the time requirement and inefficiency associated with current online search technology. A t present a typical search tends to produce hundreds, even thousands, o f search results requiring labor-intensive, time-consuming screening by the user. In addition, because t h e great majority o f results often turn out to be o f little utility, users frequently experience frustration concerning their inability to find the information they are seeking. Conversely, the proprietary Unisearch system will produce results specifically targeted to each user's uniquely individual characteristics and needs, resulting in a streamlined process and a customized end product. Unisearch can benefit the average Web surfer as well as professional researchers and businesses. It also has the potential for broad e-commerce applications. Its methodology can be applied to t h e public Internet a s well as corporate, institutional, and other proprietary databases. Certain applications can be immediately commercialized, such as an online dating service, generating revenues while the development for additional applications is being completed. The Company has applied for patent protection in t h e US and under the Patent Cooperation T r e a t y ("PCT") w h i c h f a c i l i t a t e s i n t e r n a t i o n a l p a t e n t p r o t e c t i o n .
Value t o Investors
T h e v a l u e o f t h e C o m p a n y t o p o t e n t i a l i n v e s t o r s i s d e m o n s t r a t e d below:
Unisearch, formed in 1999, provides a completely unique approach to t h e pitfalls o f searching databases including the World Wide Web. Its advantages are achieved by combining multiple disciplines including information technology, Internet technology, linguistics, and sociology. The typical Web professional simply d o e s n o t have adequate knowledge o f these diverse disciplines o r how to combine them to create an effective, personalized technology for locating desired information on the Internet.
U n d e r s t a n d i n g Search E n g i n e s
Search engines are instruments that catalog part o f all o f t h e content available on the W W W . T h i s information is compiled in a database or directory hierarchy which can then be searched using key words and phrases. The exact method o f searching differs from engine to engine. Based on the search, a list o f results is displayed for t h e user, with items usually including the site name (URL) o r document title along with t h e first f e w words o f content. The order in whi~h results are displayed for users is also unique to each engine. Competition among search engines is currently based on t h e number o f sites/pages indexed (discovered) by t h e various engines rather than the utility o f the search result to the end user. In fact, the end user does n o t pay f o r search engine usage. Therefore, the user's preferences are subordinate to the business objectives o f an intermediary such as a portal o r directory. Current search engines are relatively ineffective, given t h e vast size o f the W W W and the high degree o f variation in the quality o f information available there. The engines are unable to keep pace with the rapid proliferation o f Web sites (1.5 million new Web pages are created every day). No one engine indexes more t h a n 16% o f t h e Web, according to a study reported in the journal, Nature. Content sites also continue to grow rapidly. It is said that i t takes an average o f 1 8 6 days f o r a search engine to index a n e w page. According to International Data Corporation ("IDC"), there will be 7 . 7 billion Web pages by 2002. Even i f search engines improve their ability to cope with t h e increasing number o f Web sites available, how does the end user sift through these sites to find what is most relevant to him? Substitute products do n o t exist. Approximately 46% o f Internet users find new Web sites by using search engines, as opposed to word o f mouth and random surfing which account f o r about 20% each. The next largest source o f sites is magazines a t about 4.4%. The Wall Street Journal found that people access the Internet to use a search engine 88% o f the time, second only to using email (96%). The market is large a n d fragmented, and no one search engine has a clear competitive advantage. However, Google now claims to be the largest engine, with a full-text index o f 5 6 0 million URLs. In addition, because o f how Google makes use o f link data, i t claims its reach extends to a further 5 0 0 million URLs t h a t i t has, in fact, never visited. Both WebTop and Inktomi have indicated that they plan to announce their own half-billion page indices. Thousands o f companies refer to themselves as either search engines o r directories. O f these, about 4 0 0 are covered by the specialty media (see Appendix). The general user has no grasp o f how search capabilities differ, nor does the popular media provide users with this information. However, categories differ by type, b y method o f searching, as well as by business model. · Genuine search engines actively crawl t h e Web in order to add pages to their information database. Other "search engines" rely strictly on the databases o f other organizations; t h e y may then filter information in another database in a proprietary manner or use unique placement algorithms in ranking search results and delivering information t o users. · Among the active crawlers, t h e "depth" o f the crawl also varies widely, as does the amount o f information stored for each document found (home page v. full site). Thus, the level o f detail a given engine is capable o f providing varies widely across t h e industry. · Directories, which abound, are listings only, n o t engines. · T h e r e a r e b o t h g e n e r a l p u r p o s e a n d s p e c i a l i z e d search e n g i n e s . · As an additional category, "meta" search engines (e.g., AskJeeves) aggregate the ''top'' listed results from several unrelated search engines to produce their own "results".
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Competition seems t o be based on two criteria, size and perceived quality, generally including speed, ''freshness' o f information, and level o f site detail. Since many "search engines" use information developed by other engines and directories, differences may relate only to ranking methodology, filtering o f results, or how much o f the data is purchased from the real engine.
Search Engine B u s i n e s s M o d e l s
Current search engines/directories operate based on several different business models, all geared to optimize financial return rather than enhance enduser satisfaction. Many intermediaries share the same databases and even certain algorithms and filters; portals like Yahoo frequently change providers, although differences have been minor. Those "engines" that, in reality, use Google for their searches, for example, will not necessarily have access to their full database. Price is a consideration in selecting the number o f pages to cover. Many engines or portals j u s t use the "most popular" pages. Yahoo when using the Inktomi database never contracted for the full data offering available; it is not known whether they will continue this practice using Google. Search engine business models tend to address relationships with (a) listed Web sites, (b) advertisers/sponsors, and (c) consultants seeking higher search engine ran kings for their clients. Most models assume that aggressive URLs will pay for placement directly o r by purchasing advertising on a site.
Unisearch capitalizes on the work o f lIya Geller, a multi-talented scientist, author, computer consultant, and expert in the "philosophy o f language" who emigrated from Russia to the United States in 1992. He has had the advantage o f working and studying in vastly different academic areas, which disciplines have provided him with varied expertise and an open mind. His knowledge o f unrelated fields such as linguistics, the psychology o f speech, and computer technology provides the springboard for creating an innovative multi-disciplinary approach to search. The Unisearch methodology is unique - it passively identifies certain preferences and characteristics specific to each end user, creating a customized, but anonymous, user profile. A similar approach is applied to Web pages to create site profiles. Unisearch then automatically compares user and site profiles through screening t o produce a customized result which allows user time to be devoted to information gathering rather than screening. Abandoning a search due to lack o f time o r frustration becomes a thing o f the past. The Unisearch methodology is non-intrusive, passively creating a user profile which reflects such attributes as education and intelligence, areas and levels o f knowledge and expertise, and linguistic ability and preferences. No invasion o f privacy is experienced. Once created, the profile can be automatically applied to search results as part o f any filtering process, yielding URLs consistent in construction and content with the searcher's profile.
Unlsearch · C u r r e n t O p e r a t i o n s
An operating prototype demonstrating t h e Unisearch approach has been successfully tested in Russia, and results have been extremely promising. Basic research conducted in Russia has taken advantage o f the large pool o f well-educated technical talent available a t reasonable costs. Additional development, while necessary prior to a full-capability launch, is operational in nature and requires limited additional capital. The Company has been fortunate recently t o obtain employment commitments from two Russian technologists with outstanding experience and capabilities who would be willing to emigrate to the US in order to complete the non-routine aspects o f the project in this country. Patent protection was applied for in the United States in1999 and through the PCT. Additional patent applications will be filed in key international locations within the year. The technology can be extended to languages based on pictographic alphabets and can include graphics. Management is aware o f no other search methodology in use today, or on the drawing board, which produces results that are tailored to each user.
Unisearch creates a user profile unobtrusively by passively identifying user-specific preferences and characteristics. When initiating a search, the system automatically compares the profile o f the user with the profiles o f each site identified by a general search engine. The system can then automatically screen responses and eliminate URLs that do not correlate with the user's profile. Unisearch is based on identifiable linguistic pattems and preferences which reflect such attributes as education and intelligence, areas and levels o f knowledge and expertise, and linguistic abilities and preferences. Once created, the profile can be automatically updated.
Unisearch can be applied to all searches and is especially effective when results must closely relate to user preferences. Unisearch has broad application to e-commerce a s well. In addition, the technology can be applied t o private (corporate) databases as well as public (Internet) data. The technology, in combination with a to-be-developed "intelligent purchasing agent", should have very important commercial application in business-tobusiness as well as business-to-consumer environments. Other applications are under consideration. Over time, the Company will amass important information regarding buying habits and preferences o f users which will be extremely valuable to third party businesses. This database o f information can be commercialized for greater profit to the Company after it reaches a given number o f users.
The Company is considering a dating service for its first commercial application which would allow it to begin operations in a niche market to which its product is admirably suited and generate cash flow while development work continues. The Company understands that the dating marketplace generated approximately $600 million in revenues in 1998, with about 500,000 individual users, which will be expanded to a t least $786 million by 2003 (Marketdata Enterprises). Demographics indicate that there are in excess o f 90 million adult singles in the US alone. A typical dating service business model is subscription-based, with pricing between $30 and $50 per quarter. Advertising, sponsorships, and e-commerce related to the dating service will generate additional revenue. Other business segments for early development include patent search and legal search applications which would require a specialty profile rather than a passively-acquired user profile.
Unisearch B u s i n e s s Model A l t e r n a t i v e s
Unisearch is exploring several different business models, which alternatives are not necessarily mutually exclusive. These include: a. Ucensing Company technology to genuine search engines to enhance their offerings and increase their exposure in the portal and/or corporate markets
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b. Licensing the technology directly to corporations for screening large proprietary databases c. Creating a stand-alone business through which search results can be filtered and profiled as an enhancement and competitive edge for general search e n g i n e / d i r e c t o r y o p e r a t o r s d. Offering an independent subscription service through which searchers, whether individuals or corporations, can directly access Unisearch's capabilities e. Creating an independent end-to-end, full-service database/search engine/profiling capability in direct competition with traditional search engines. Ultimate business model selection will determine the level o f investment funding required over time and the expected retum on that investment. Marketing and Promotion Subsequent to funding, the Company intends to initiate limited market research to help determine the optimal direction for the business, based on the available alternatives described above. Regardless o f direction, the Company intends to establish a brand image to stimulate demand on the part o f end users. A branding campaign will stress the system's results-oriented approach and its intrinsic value to the end user, creating demand "pull" on the part o f the public, business, and academia. The Company's uniquely differentiated approach will provide good "copy" for the media and lend itself to public relations efforts ..
Nature o f the TransactlonlUse o f proceeds To date, t h e project has been funded b y its principal, friends and family. The ability to pursue technical development in Russia at reasonable cost has given the Company a significant advantage and continues to be a viable option for basic programming and development. Currently, the Company is considering an angel round o f financing in order t o expedite completion o f certain near-term technical objectives, begin building proprietary dictionaries, conduct market research, initiate the branding process, and add key staff in t h e US. We believe that accomplishing these goals will position the Company favorably for its n e x t round o f funding. The Company anticipates that it will need a lump sum investment o f approximately $ 1 7 5 , 0 0 0 to be spent through September 2000, with a run rate o f $ 7 5 , 0 0 0 per month subsequently. Within six to nine months thereafter, the Company would have a fully developed product, with one o r more applications up and running and would be poised to initiate an institutional round o f financing a t that time.
Planned Use o f Proceeds - 1 8 mos.
Equipment and Infrastructure: S t a f f expenses C o r p o r a t e Identity/Promotion Patent-Related Costs O f f i c e Rent/Expenses Consulting services Proprietary Dictionaries
$45.900 270,000 225,000 76,000 102,400 15,000
Financial P r o j e c t i o n s
The Company's financial projections will relate to t h e business models selected from those described above. Details will be set forth in the full Business Plan which is currently under development. Unlsearch, Inc. Summary Forecast Statement of Operations F o r T h e Y e a r s E n d e d D e c e m b e r 31
Revenues Operating P r o f i t
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N e t Income EBITDA
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