Patent Troll Sues Dozens Over Abandoned-Cart Emails
By Ken Magill
A patent troll has sued dozens of ecommerce companies, claiming their abandoned-shopping-cart emails violate a patent it holds.
As was first reported to the email marketing community by Laura Atkins on her blog Word to the Wise, UbiComm LLC was formed in Delaware in January and acquired a patent from Xerox in February.
The patent is no. 5,603,054: “Method for Triggering Selected Machine Event When the Triggering Conditions of an Identified User Are Perceived”
UbiComm has reportedly filed suit against at least 40 companies alleging abandoned-shopping-cart-email patent infringement.
Abandoned-shopping-cart emails are considered to be one of the most effective triggered messages in any online merchants’ arsenal.
They commonly generate double-digit conversion rates and are a widespread online retail tactic. As a result, UbiComm is apparently operating in a target-rich environment.
The list of companies UbiComm has sued so far reads like a who’s who of the retail industry, including: Ace Hardware Corp., Boot Barn, Bulbs.com, Crocs, Dick’s Sporting Goods, GNC Holdings, Lowes, Neiman Marcus, SkyMall, Zale, eBay, Urban Outfitters, Victoria’s Secret, Zappos, Wine.com and Williams-Sonoma among others.
Patent trolls tend to sue betting defendants will settle rather than fight back.
“The standard business model for NPEs [non-practicing entity, or patent troll] includes filing suit and then negotiating a ‘nuisance value’ settlement at less than the cost of defending the case,” wrote Rex Donnelly, an attorney with intellectual property law firm Ratner Prestia, in a blog post on the case.
Patent trolls were once primarily a concern of high-tech companies, but not anymore, wrote Donnelly.
“[T]oday it is an inescapable reality for any business involved in online commerce, as more than half of all patent lawsuits filed in the last year were filed by NPEs, many targeting small businesses that engage in online commerce,” Donnelly wrote.
He added that preparation is key to heading off a potential attack by a patent troll.
“Defendants should evaluate every litigation independently to determine the best approach for a particular case,” he wrote. “Knowledge is power — the sooner a potential defendant prepares for an attack, the more forcefully it can respond.”
Drew Curtis, founder and CEO of news satire site Fark.com, gave a TED Talk in February, 2012 on how he allegedly beat a patent troll in another case involving the dissemination of email.
“Last January my company Fark.com was sued along with Yahoo!, MSN, Reddit, AOL, TechCrunch, and others by a company called Gooseberry Natural Resources,” he said. “Gooseberry owned a patent for the creation and distribution of news releases via email.
“[T]he patent system is dysfunctional and as a result most of these lawsuits end in settlements,” he added. “And because the settlements are under a non-disclosure agreement, no one knows what the terms were, and as a result the patent troll can claim that they won the case.”
Curtis said that even though his site was clearly not infringing, under patent law, the burden of proof is on the defendant.
The average patent-law defense costs $2 million and takes 18 months “when you win,” said Curtis.
He said he had hoped to team up with the other defendants to fight Gooseberry, but one by one they settled.
“None of these companies infringed on this patent, not a one of them,” he said.
Six months into discovery, Fark.com asked Gooseberry to provide screenshots of the alleged patent infringements.
“Perhaps it’s because no such screenshots actually existed, but suddenly Gooseberry wanted to settle,” he said. According to Curtis, when Gooseberry’s attorney asked how much he was willing to settle for, he said: “How about nothing.”
When Gooseberry sent the settlement paperwork, he struck the non-disclosure clause and it came back signed.
Curtis’s advice: “If you can, don’t fight the patent. Fight the infringement. Patents are very difficult to overturn. Infringement is a lot easier to disprove.
“Second, make it clear from the beginning that either you have no money at all, or that you would rather spend money with your attorney fighting the troll than actually giving them the money,” he said. “Patent trolls are paid a percentage of whatever they can recover in settlements. If it becomes clear to them that they cannot recover any money, they become less interested in pursuing the case.
“Finally, make sure that you can tell them that you will make this process as annoying, and as painful and as difficult as possible for them,” he said.
“It boils down to one thing,” Curtis said. “Don’t negotiate with terrorists. Patent trolls have done more damage to the United States’ economy than any foreign or domestic terrorist organization in history, every year.”