If your business offers an iPhone or smartphone application that can show a user a map of service locations relative to the location of the phone, read on. A recently formed non-practicing entity (“NPE”) claims to hold the exclusive licensing rights to a patent that allegedly covers this technology. Even if this doesn’t sound exactly like what you do, if you offer iPhone or smartphone apps, you might want to read on—NPEs have a way of interpreting patent claims very broadly.
Cascades Ventures, an NPE formed last year and headed by the original “patent troll” Anthony Brown (formerly of TechSearch),1 claims it has obtained the rights to U.S. Patent No. 7,768,395 (“the ’395 Patent”), entitled “Brand Mapping.” The ’395 Patent, issued on August 3, 2010, claims priority to a provisional application filed on January 19, 2007. The Abstract of the ’395 Patent summarizes the invention as follows:
A user uses a portable electronic device to select an image representative of a brand. In response to the user’s selection of the image representative of the brand, the device automatically presents the user with an image of a map that indicates a current location of the device and shows one or more images representative of brand purchase sites where the selected brand may be accessed by the user.
Through a subsidiary,2 Cascades filed a patent infringement action in the U.S. District Court for the Northern District of Illinois on April 14, 2011, claiming that Walgreen Co. infringed the ’395 Patent.3 On June 28, 2011, Cascades amended its complaint to add defendants Best Buy Co., Exxon Mobil Corporation, Target Corporation, and Limited Brands, Inc. Cascades is represented by Flachsbart & Greenspoon, LLC—a spin-off of longtime TechSearch counsel Niro, Haller & Niro. On August 16, 2011, Cascades withdrew the complaint with regard to Walgreen Co. All other defendants remain parties to the action. The amended complaint alleges that each of the defendants “provides its customers the [defendant] application . . . [which] operates on consumers’ smartphones and like devices (such as the Apple iPhone), and allows such phones and devices to enable users to select a [defendant]-branded icon to locate [defendant]-branded retail locations in their vicinity on a map, without the users having to manually enter a device location.” Cascades claims each defendant knew about the ’395 Patent at least as early as April 2011 when Cascades sent them a “Notice of Infringement.” The remaining defendants have not answered the amended complaint and the judge has not set a schedule.
Several entities, including one in the financial services sector, have gone on the offensive against Cascades and the ’395 Patent. On May 5, 2011, ING Bank, fsb, filed a declaratory judgment action in the U.S. District Court for the District of Delaware seeking declarations that the ’395 Patent is invalid or unenforceable and that ING does not infringe any valid claim of the ’395 Patent.4 On August 10, 2011, TA Operating LLC, a subsidiary of TravelCenters of America and owners of the “TrackSmart App” for the iPhone and Android, filed a declaratory judgment action in the U.S. District Court for the District of Massachusetts seeking a declaration that the ’395 Patent is invalid.5 Both actions claim declaratory judgment jurisdiction based on strongly worded infringement letters written by Cascades to the plaintiffs in April and July. To date, there has been no reported activity in either case.
NPEs pose a unique challenge to their potential targets because they can operate under numerous identities. Cascades is an example of an NPE that went away (TechSearch sold out to Acacia) and then reemerged. Tracking NPE activity and staying one step ahead can be challenging as they often use aliases to hold acquired patent assets. For example, the ’395 Patent is assigned to N99 LLC with Cascades as the exclusive licensee. N99 also is the assignee of a published U.S. patent application that is a continuation of the application that led to the issuance of the ’395 Patent.6
Cascades Also Attacks Mobile Payments
Cascades has emerged somewhat from behind the veil of secrecy by holding assignments of several patents in its own name.7 Interestingly, seven of the eight patents Cascades currently holds in its own name relate to financial services and are entitled “Universal Credit Card Apparatus and Method” (“the Credit Card Patents”). Here again, Cascades used an alias—eCharge Licensing, LLC—when filing suit against Starbucks alleging infringement of five of the Credit Card Patents.8 eCharge Licensing is an Illinois-based NPE that claims to be the exclusive licensee of the Credit Card Patents. The suit alleges that Starbucks’ Card Mobile application infringes the Credit Card Patents by allowing users to pay for products using their smartphones or other like devices. The Court recently held over a status conference until late October and advised the parties of the availability of court-mediated settlement services, possibly indicating that the parties are engaged in settlement/licensing discussions. Any such agreement likely will result in a flood of new licensing demands and/or lawsuits from Cascades.
NPEs continue to pose a challenge for the financial services industry—and beyond. Those in the financial services industry should take notice of the recent public reemergence of TechSearch/Cascades and its focus on patents relating to financial transactions, particularly those that involve the use of smartphones and similar devices.