Ad Heavyweights Battle Over Software
By SUZANNE VRANICA
based firm that provides a service simi1ar to DonovaI}'s.
In a fight between two heavy­
weights of the advertising industry,
the company that provides the soft­
ware used by m9st media-buying
firms has accused one of its former cus­
tomers, Starcom MediaVest Group
Inc., of stealing trade secrets.
Starcom, whose customers include
some of the biggest marketers in the
country, such as Procter & Gamble Co.
The dispute is between Publicis
Groupe's Starcom and Donovan Data
Systems Inc., a major supplier of tech­
nology to Madison Avenue. Its technol­
ogy allows media buyers to book adver­
tising time on a range of media, ensure
that those ads have run, bill clients,
and pay the media that host the ads.
Donovan has provided this function
for Starcom for the past seven years.
Powell, general counsel for Starcom.
The dispute puts focus on the grow­
ing desire among ad companies to re­
think their relationships with long­
time suppliers in an effort to get ahead
in the digjtal age.
Starcom and Donovan are in arbi. tration to resolve their differences.
The companies said Friday that they
are barred from speaking about the de­
tails of those proceedings.
In a December filing in the Su­
preme Court of the State of New York,
Donovan alleges that last year
Starcom conspired with another com­
pany, MediaBank LLC, to copy pieces
of its technology. Donovan accused
Starcom of "cloning and reverse engi­
neering" Donovan's systems for its
own use. MediaBank is a Chicago-
and Coca-Cola Co., rejects the allega­
tion. Starcom denies "that it misappro­
priated any intellectual properties
that belonged to Donovan," says Barry
MediaBank also denies any wrongdo­
ing. "We did not steal anything," says
Brad Keywell, MediaBank's chief execu­
tive officer.
The problems between the two com­
panies go back to at least February
2007, when Starcom and Donovan
were in negotiations to modify some
. provisions of their then-existing con­
tract. During the negotiations, accord­
ing to the court filing, Starcom says
Donovan falsely accused it of sharing
confidential information about Dono­
van's technology with MediaBank.
Starcom states in the 'legal documents
that Donovan also threatened to "im­
mediately discontinue" servicing
Starcom's contract unless it entered
into a new long-term agreement with
Donovan.
.
In the court documents, Starcom ar­
gued that its contract with Donovan
didn't end on Dec. 31, as Donovan
claimed, and said that at the very
least, it was owed up to 18 months be­
yond that to transition to a new pro­
vider. Starcom argued that it would be.
"irreparably harmed" if it didn't have
access to the Donovan system after
Dec. 31, 2007. It said it wouldn't be able
to "adequately process new media
buys or complete the processing of me­
dia buys alreadY'in" Donovan's sys­
tem, or "ensure that clients are billed
for their media purchase and that me­
dia vendors are paid for the advertis­
ing they run."
The court denied Starcom's re­
quest for an injunction to stop Dono­
van from cutting off Starcom's service.
According to people familiar with
Starcom, the company at the time was
interested in finding anather provider
that had better digital capabilities. In
the court filings, Starcom itself says
that Do
' novan "lagged behind in the de­
velopment of effective software solu­
tions to handle the increasing'd emand
for Internet and Web-based advertis­
ing."
Starcom now gets its media-man­
agement services from MediaBank
and Datatech, a firm that MediaBank
recently acquired. One Starcom client
said Friday that it had experienced "mi­
nor hiccups" since January, such as
late payments being made to some me­
dia outlets. But other Starcom clients,
including,Allstate Insurance Co., said
there hadn't been any problems stem­
ming from the transition.
Starcom itself now says that the
switchover has been a smooth one.
"We are up and running, and as far as I
know, there are no issues of sub­
stance," says Mr. Powell.