Cyberwise private eyes.

Cyveillance protects copyright and trademark rights on the Internet

Often called the new frontier, the World Wide Web conforms to few rules, including copyright and trademark regulations. These laws, which protect the unauthorized use, transmission and sale of materials registered to a company or individual in the real world, have struggled to keep up in the virtual world. As the federal government takes the slow road to Internet regulation, cyber-opportunists are making a profit by illegally using protected material on their Web sites. However, Cyveillance, an Internet surveillance company, is protecting businesses from infringement when the government can't--or won't.

"We haven't come across many Fortune 1000 companies for which we can't find hundreds of violations of their copyrighted or trademarked material," says Brandy Thomas, chairman and CEO of the Alexandria, Virginia-based company. "Over 90% of U.S.-based entertainment companies and more than 80% of Fortune 1000 companies are victims of copyright and trademark abuses on the Internet."

Infractions run the gamut from the illegal and unauthorized use, sale and distribution of licensed information and material to the immoral use of trademarked characters and logos. "We found over 800 sites distributing Titanic before the Academy Awards--nearly six months before its official video release," says 30-year-old Thomas, who's able to get copies of most movies on the Net before they've even been released to theaters.

The proliferation of pirated movies on the Net prompted Cyveillance's first client, the Motion Picture Association of America (MPAA), to enlist the company's services in August 1997. "We started with a focus on the entertainment industry, but we found that almost every company has a need for our product," explains company president and COO Christopher Young. Cyveillance has a three-pronged strategy for servicing its clients: help them generate additional streams of revenue through licensing; limit liability exposure due to unauthorized use of company property; and prevent lost revenue from unauthorized sales. Other companies that have benefited from Cyveillance's services include the American Society of Composers, Authors and Publishers (ASCAP), the National Basketball Association, the Recording Industry Association of America, Software Publishers Association and Time Inc.-New Media.

"We're really the only shop out there that can give them quantitative and qualitative information about what's happening on the Net," states Thomas. Cyveillance uses WebSentry, a patent-pending technology program developed by Thomas' brother Jason, the company's senior vice president of technology. The program allows them to search the Internet to identify, monitor and prioritize information in four areas: electronic commerce, copyright and trademark, pornography and perception.

It builds a comprehensive list from Web pages and Usenet groups, then filters and prioritizes that information. Once WebSentry refines and synthesizes what it has found into easy-to-read reports, clients then use the information to ask offending sites to cease and desist, pay a copyright or licensing fee or face prosecution--or the client may take no action at all.

ASCAP, the world's largest performing rights organization, enlisted Cyveillance to create EZ-Seeker, a custom program that deals specifically with Web sites that play unlicensed music. "The Web is an exciting new venue for performances of music, but finding those unlicensed sites that are performing music and generating licenses for them is a challenge," says ASCAP senior vice president of new media and strategic planning Marc Morgenstern. "EZ-Seeker is a terrific tool for accomplishing all that. It's a prospecting, monitoring and licensing tool all in one, and functions like no other product." That uniqueness has put Cyveillance on track to earn over $1 million in 1998--its first full year of operation.

In just under two years, Thomas and Young, the company's founders, have turned a good idea into a profitable company in an Internet industry that has seen more than its share of great ideas become miserable failures. The pair first contemplated cashing in on the Net while still employed at Mercer Management consulting in Alexandria. They'd both won accolades at Mercer, where they consulted with clients to identify and analyze new business opportunities. But after years of doing it for others, it was finally time to do it for themselves.

Initially, Young and Thomas wanted to form a company that would download information for clients from the Internet for convenient retrieval. The service would have provided clients with discs containing their favorite 25 Web sites, saving them both valuable time and hard-drive space. However, an attorney soon informed the pair that such a service could lead to possible copyright violations due to unsanctioned duplication and distribution of private property. Rather than a setback, it became the spark that started the fire.

"That got us into the whole realm of trying to understand how we could participate in the copyright game on the Internet because there really was no central licensing authority," recalls Thomas, who has a B.S.E. in biomedical engineering, electrical engineering and computer science as well as an M.B.A. from Stanford. During the summer of 1996, while they fine-tuned their business plan, Thomas' younger brother, Jason, an MIT graduate with several years' experience at the World Wide Web Consortium and Microsoft, began developing the software. WebSentry was the end product.

In January 1997, armed with a rough version of both the business plan and the software, Thomas and Young jumped ship at Mercer to open their own company, confident that they had enough combined consulting experience to make it successful. Two months later, Online Monitoring Services was formed (the company has since changed its name to Cyveillance). "Everybody who goes into consulting will tell you that they're doing it because, ultimately, they want to have their own business and they think consulting will teach them how to run a company," says Thomas, a 30-year-old former systems integrator for Apple. "But we found that it only prepares you for about 5% of what might be encountered when trying to start and run a business." The first obstacle was startup capital and office space.

Fortunately, Dennis Brownlee, former CEO of Advance Inc., a computer systems integration company, donated office space and computer equipment in exchange for a stake in the company. In addition, the duo raised $225,000 in start-up capital through private loans and savings. They spent several months making cold calls and writing letters to potential customers such as Viacom and the National Football League. Finally, the MPAA gave Cyveillance the opportunity and credibility it needed, which soon translated into more clients.

Establishing a viable market for the company's services made it more attractive to investors and was key to landing financing from several venture capital firms. In May 1998, Cyveillance received more than $3 million in equity funding from Lazard Technology Partners, B. Perry Investments Ltd., Capital/Investors L.L.C. and Graystone Venture Direct Equity. The windfall will be used to bolster the company's sales and marketing department, and to research and develop new software products that will help the firm keep better watch over clients' rights.

So far, the product is unique. "We can't get lethargic though," vows Thomas. "We know what we have is great and there's nothing else like it, but we're not foolish enough to believe no one can do this. We want to make sure we stay ahead of the game."