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Lodsys - This is going to get expensive . . . for Lodsys - UPDATED 2Xs
Tuesday, July 05 2011 @ 02:10 PM EDT

Another day and three new declaratory judgment actions against Lodsys with respect to the four patents it has been asserting. While one of the three new actions is in the Northern District of Illinois, where several of the other declaratory judgment actions have been filed, two of them are in new venues - one in Arizona and one in the Southern District of California. This changing of venues is important. While Lodsys may seek to consolidate the cases in the Northern District of Illinois for the sake of efficiency (and saving Lodsys attorney's fees), Lodsys will likely have to defend in each of the other jurisdictions where a declaratory judgment action is filed, thus increasing the cost of defense as local counsel is retained in each case.

The new declaratory judgment actions are:
DRIVETIME AUTOMOTIVE GROUP, INC. vs. LODSYS, LLC
UNITED STATES DISTRICT COURT, DISTRICT OF ARIZONA
COMPLAINT FOR DECLARATORY JUDGMENT [PDF]
Case No. 2:11-CV-01307-NVW Ballard Spahr representing Drivetime Automotive Group

ESET, LLC vs. LODSYS, LLC,
UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF CALIFORNIA
COMPLAINT FOR DECLARATORY JUDGMENT [PDF]
Case No. 11CV1285WQHRBB
Jones Day representing ESET

LIVEPERSON, INC. vs. LODSYS, LLC
UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION
COMPLAINT FOR DECLARATORY JUDGMENT [PDF]
Case No. 1:11-CV-4088
Proskauer Rose representing Liveperson

Also, in the ESET case, ESET has filed a copy of the Lodsys letter [PDF] alleging patent infringement and the Lodsys claim chart that Lodsys sent ESET. The claim chart in particular may be helpful to those of you interested in continuing the search for prior art.

**********

Lodsys demand letter sent to ESET:

Lodsys, LLC

March 28, 2011

Via Federal Express
Ms. Rita Pertzborn
ESET,LLC North America
610 W Ash St., Ste 1900
San Diego, CA 92101

Dear Ms. Pertzborn,

Re: Infringement of U.s. Patent Nos. 5,999,908,7,133,834,7,222,078, and 7,620,565 (Abelow)

Lodsys, LLCa Texas limited liability company is the owner of United States Patents 5,999,908, 7,133,834, 7,222,078, and 7,620,565 (the "Lodsys Patents"). The Lodsys Patents are directed to systems and methods for providers of products and/or services to interact with users of those products and services to gather information from those users and transmit that information to the provider. Attached is a complete copy of the '908 patent as well as certain pages of the '834, '078, and '565 patents for your review.

The inventions described by these patents are used by companies to interact with users of their products and services to, among other things:

  • provide online help, customer support, and tutorials
  • conduct online subscription renewals
  • provide for online purchasing of consumable supplies
  • survey users for their impressions of their products and services
  • assist customers to customize their products and services
  • display interactive online advertisements
  • collect information on how users actually use their products and services
  • sell upgrades or complimentary products
  • maintain products by providing users notice of available updates and assisting in the installation of those updates.

Some of the benefits companies receive from using these inventions are:

  • increased product sales (of consumables, subscriptions, and complementary products)
  • increased additional revenues (of in-product digital items and interactive advertising)
  • more efficient design of subsequent products (through faster time to market, better targeted features, and the ability to interactively update products in the field)
  • greater customer satisfaction (both in terms of future product development as a result of consumer input and through keeping products up to date or providing more effective online help resources in a cost efficient manner).

    The inventions detailed in the various claims of these patents were developed by Daniel Abelow, an expert in usability and in the organization, presentation, and incorporation, of information in websites, products, services, and enterprise systems. Dan earned a Bachelor's of Science in Economics degree from the Wharton School of Business at the University of Pennsylvania in 1971 and a master's degree from Harvard University, which included graduate work at the Massachusetts Institute of Technology. As an independent consultant on presenting information via the internet, Dan's clients have included companies such as Accenture, Agilent Technologies, Cisco, Harvard Business School, IBM, and Lotus Development.

    To date, companies including - Adobe, American Express, Apple, eBay, Google, Intuit, Microsoft, Nokia, Nokia-Siemens, Nvidia, Sony, Sony-Ericsson, Verizon, Yahoo and several other Fortune 1000 companies - have chosen to license the Lodsys Patents.

    Based on Lodsys' review, this letter constitutes our notice that ESET,LLC North America is infringing at least claim 1 of US 7,620,565 and claim 1 of US 7,222,078 as it relates to your provision of notice of available product updates and assisting in the download and installation of those updates with respect to your ESETNOD32 Antivirus 4.

    The Lodsys Licensing Opportunity

    Lodsys' patented technology provides numerous benefits to your company by reducing costs, increasing customer satisfaction, increasing revenues, and providing customer data and impressions that allow you to build more effective and relevant products faster and with greater certainty of meeting real customer needs. This is made possible by your collection of customer product usage details, demographic information, impressions on the usefulness of features or relevance of advertisements, and desires to customize your products or services and in what manner. It further occurs through the sale of consumable supplies and product upgrades or enhancements, the sale of complementary products, sales of subscription renewals, the provision of online support (to discover what customers do not understand or are having troubles with), and in product (or in website) customer satisfaction surveys and interactive advertising. These actions among many other instances of customer data collection, provide you with the opportunity to sell more products and services, build new versions faster in a competitive marketplace, have greater relevancy of your products and services (leading to greater customer satisfaction and greater brand value).

    We are interested in reaching a negotiated non-litigation licensing arrangement with you for ali uses of the Lodsys Patents and would like to discuss this matter with you within 21 days of your receipt of this letter. Please contact the undersigned at your earliest convenience to address this matter.

    Lodsys, LLC

    Lodsys is a limited liability company based in Marshali, Texas. We have retained the firms of Kelley, Donion, Gili, Huck & Goldfarb PLLC (www.kdg-Iaw.com) based in Seattle, Washington, and The Davis Firm, P.c. (www.bdfirm.com) based in Longview, Texas, to assist the company in the licensing of the Lodsys Patents.

    Sincerely,
    /s/ Mark Small
    Mark Small, CEO
    Lodsys, LLC
    Mark.Small@Lodsys.com
    (903) 935-3202
    Enclosures (4)

    Notice
    Lodsys LLC reserves all rights with regard to the '908, '834, '078, and '565 patents, including: (1) the right to seek damages anytime within the last six years that your company started to make use of lodsys' patented technology; (2) the right to change its royalty rates at any time; (3) the right to change this licensing program at any time without notice, including variance to conform to applicable laws. You should not rely on any communication or lack of communication from Lodsys, Kelley, Donion, Gill, Huck & Goldfarb PLLC, or The Davis Firm Group as a relinquishment of any of Lodsys' rights.

and the Claim Chart:

ESET North America

Infringement Claim Chart
for Claim 1 U.S. Pat. No. 7,222,078

Claim 1 of U.S. Pat. No. 7,222,078

  • A system comprising:
  • Units of a commodity that can be used by respective users in different loctions,
  • A user interface, which is part of each of the units of the commodity, configured to provide a medium for two-‐way local interaction between one of the users and the corresponding unit of the commodity, and further configured to elicit, from a user, information about the userís perception of the commodity,
  • A memory within each of the units of the commodity capable of storing results of the two-‐way local interaction, the results including elicited information about user perception of the commodity. A communication element associated with each of the units of the commodity capable of carrying results of the two-‐way local interaction from each of the units of the commodity to a central location and,
  • A component capable of managing the interactions of the users in different locations and collecting the results of the interaction at the central location.

Alleged examples of the infringement of these claims are provided in images in the slides [PDF] containing the Claim Chart.

**************

UPDATE

Earlier today Lodsys filed a patent infringement suit in the Eastern District of Texas against a number of the companies that have previously filed declaratory judgment actions against Lodsys in other jurisdictions. Defendants in this new action are DriveTime Automotive Group, Inc., ESET, LLC, ForeSee Results, Inc., LivePerson, Inc., OpinionLab, Inc., and The New York Times Company. Look for Lodsys to now seek a change of venue in each of the declaratory judgment actions, transferring them to the Eastern District of Texas. The challenge will be that Lodsys was not the first filer or first to serve in these competing cases, and, as others have already pointed out, while the patents are common, the facts of the alleged infringements are not. Will be interesting to watch these battles play out. In the meantime, expect new declaratory judgment actions to be filed as other potential defendants seek to avoid the Eastern District of Texas.

Here is the new Lodsys complaint [PDF].

**************

UPDATE - 2

ESET, LLC has elected to file a second declaratory judgment action [PDF] against Lodsys, this time in the Eastern District of Wisconsin where it believes Mark Small, CEO of Lodsys, lives and works. Hey, the more the merrier! That brings the total number of DJ actions to seven, filed in four different jurisdictions.


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