Tuesday, June 14, 2011

Two more lawsuits against Lodsys: by The New York Times Company and OpinionLab

What goes around, comes around. There can be no more doubt that Lodsys sent out vast numbers of patent assertion letters, but some of the recipients fight back and ensure they sue Lodsys before Lodsys sues them.

On Monday I already reported on a declaratory judgment action filed by anti-virus software maker ESET against Lodsys with the U.S. District Court for the Southern District of California, which shares certain characteristics with the declaratory judgment complaint previously lodged by ForeSee Results in the Northern District of Illinois. Two more companies have just followed ForeSee's example and also sued Lodsys in the Northern District of Illinois: The New York Times Company and market research firm OpinionLab.

This means there are now seven Lodsys-related lawsuits (I listed five in my previous posts). Three of them were started by Lodsys, but four (!) by companies seeking to invalidate its patents. Three of the four declaratory judgment actions were filed in the Northern District of Illinois. They will likely be consolidated into one, and it will be very hard for Lodsys to transfer that collective initiative out of Chicago. Unlike ForeSee Results and the NYT, OpinionLab is actually headquartered in that district (in Highland Park, Illinois) and has several of its customers there as well.

Both of the latest lawsuits against Lodsys target all four of its patents. Nevertheless they have some unique elements that are really interesting.

Lodsys accuses the New York Times of infringement of the '078 patent by tracking ad click-through

By coincidence, the New York Times quotes me today on Apple's settlement with Nokia.

The New York Times Company's complaint has Lodsys's assertion letter attached as an exhibit. That letter comes with an infringement claim chart of the kind that many app developers have already seen. It relates to the '078 patent (the one based on which Lodsys sent infringement claim charts to app developers) and shows once again how broad Lodsys claims the scope of that patent is: the NYT is accused of infringing that patent by tracking ad click-through.

Lodsys alleges that this constitutes "[t]wo-way interaction configured to elicit user perception information through the ability for the NYTimes to track whether a user clicks on the ad or not. As seen in the source code, the NYT is hosting the ads on its own domain server(s), nytimes.com" Furthermore, Lodsys refers to the NYT "[s]toring results of the two-way interaction to a central location as seen by the use of Doublclick [sic] pixel tracking for conversion results."

On this basis, Lodsys could probably target pretty much any website that displays ads...

OpinionLab goes beyond declaratory judgment of invalidity and non-infringement, additionally brings unfair competition and tortious interference claims

OpinionLab is the first company to sue Lodsys not only under patent law but to additionally make demands under rules against unfair competition and tortious interference.

Those additional allegations are tough, and beyond a merely declaratory judgment, OpinionLab seeks injunctive and monetary relief. In other words, they bring claims that pose a significant economic risk to Lodsys.

In its complaint, OpinionLab describes itself as "an industry leading provider of online user feedback and web page analytics solutions that allow OpinionLab's customers to analyze data collected from consumers regarding their online experiences with respect to web pages and other aspects of the customer's website" and points to its ownership of "numerous United States Patents and foreign patents." According to the complaint, "the vast majority of [OpinionLab's] employees -- over 30 individuals -- work in [the Northern District of Illinois]."

Here's an interesting paragraph from OpinionLab's complaint:

"14. Through communications and other conduct that was specifically engaged in by LodSys to negatively affect the goodwill, reputation, and business interests of OpinionLab, Lodsys has in bad faith repeatedly threatened assertion of the Patents-In-Suit against customers of OpinionLab because of their uses of the OpinionLab Online User Feedback Technology, even though those
uses could not reasonably and in good faith be said to infringe any of the Patents-In-Suit.

The complaint mentions, just by way of example, Lodsys letters to OpinionLab customers dated March 22, 2011; April 13, 2011; and May 13, 2011. Paragraph 16 states that "[o]n approximately May 23, 2011, counsel for OpinionLab contacted LodSys and explained in detail why the infringement allegations against OpinionLab’s customers were 'without merit.'" But according to the complaint, Lodsys didn't provide any further explanation. OpinionLab avers that "[u]pon information and belief, Lodsys's actions [have] caused at least one potential investor to reconsider an investment in OpinionLab."

OpinionLab claims that two of the ten companies Lodsys sued on Friday (in its lawsuit against adidas America et al.) are OpinionLab customers. The complaint does not say which ones.

After eight claims for relief related to the alleged non-infringement and invalidity of Lodsys's four patents, OpinionLab then claims violation of the Federal Lanham Act by way of "allegations of patent infringement in bad faith that LodSys knew, or should have known after reasonable inquiry and due diligence, were unfounded, not supportable, and wholly improper." OpinionLab says that those allegations of patent infringement "are likely to cause confusion, deception, and mistake in the marketplace."

On essentially the same basis, OpinionLab also alleges violation of "Illinois Common Law of Unfair Competition."

Finally, OpinionLab asserts "tortious interference with business expectancy." According to the complaint, "Lodsys is intentionally attempting to interfere with that expectancy by improperly and without a reasonable basis alleging that OpinionLab’s customers infringe the Patents-In-Suit. Lodsys's conduct in this regard has damages and is damaging OpinionLab’s continued and future business expectancy, including the unwillingness of potential investors to invest in OpinionLab, and will continue to do so until such time that LodSys is enjoined and restrained from making further such infringement claims against OpinionLab and/or its customers."

OpinionLab is represented by the law firm of K&L Gates.

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