Elisar had some interesting technology and made some astute marketing decisions, but they suffered mainly from bad timing. The brainchild of University of New Mexico computer science professor Gregory Heileman, Elisar's MediaRights was a low-level DRM solution that worked as an add-on to the Windows OS kernel (and, later, to MacOS). Interestingly enough, the other vendor with that type of solution, InfraWorks, declared bankruptcy in April of this year.

At first, Elisar was a late entrant (circa mid-2001) into the large field of DRM vendors chasing the publishing market. After having found little interest there, the company shifted strategies and correctly identified digital stock image services as an underserved market for DRM. It hired an executive from Corbis (a leading online stock image vendor) to be CEO, entered into a marketing partnership with image watermarking vendor Digimarc, and garnered a few customers in the imaging market.

Elisar also attempted to accelerate growth by positioning its technology as "Digital Rights Protection" that could sit at the core of a broader DRM solution, and trying to establish partnerships with larger firms that could integrate its technology into that broader solution. This textbook marketing strategy technique -- subdivide an existing market, give that subdivision a new name, and claim you're the leader in that category -- might have worked but for the immaturity and already fragmented nature of the DRM market; instead, Elisar got no traction.

Another problem plaguing Elisar was that Microsoft was granted a U.S. patent in December 2001 for DRM capabilities built into operating systems. On the surface level, it would seem that if Elisar were to achieve any momentum in the market, Microsoft would go after the company for IP royalties or infringement. As it attempts to sell its IP, Elisar now has the explicit task of convincing potential buyers that its IP is both defensible and distinct from Microsoft's.