‘Patent Trolls’ Take Aim At Geo-Data Companies
Factual fought back and got a patent case against them thrown out — but the win cost the company a million dollars.
Claims of patent violations of intellectual property by entities that neither make nor market such services reached an all-time high last year, according to Lexus-Nexus’ analysis. As the importance of geo-data and location technology grows in importance, companies in the space can expect to face an increasing amount of so-called patent troll cases.
Location analytics and data platform Factual is claiming in one such case after the Central District Court of California dismissed a lawsuit brought against the Los Angeles-based company by Locata LBS LLC.
A Costly Legal Battle
“We won, but it cost us,” said Factual CEO/Founder Gil Elbaz, in a statement. “It cost us close to $1 million and several hundred hours of executive time over 28 months. Time and money I would have much rather spent investing in data and technology — investing in our product, for our customers. At least we were able to invalidate the claims in the patent so they can’t go after anyone else.”
In Factual’s view, this victory represents what the geo-data specialist described as a “successful defense [that] protects the company, its customers and the entire mobile world from a baseless patent held by a patent troll.”
On October 18, 2013, Locata LBS LLC, which Factual identifies as “a California based Non-Practicing Entity,” filed a lawsuit against alleging that Factual was directly and indirectly infringing U.S. Patent No. 6,259,381.
The patent covers the “triggering of an action on a roving device based on a predetermined location, or, in other words, a basic and obvious use of location on mobile devices,” Factual said. “From car-sharing services that tell you when your car has arrived, to delivery notifications in the on-demand economy, to in-store messaging and coupons, and, of course, billions of dollars worth of location-targeted mobile ads, an increasing share of the mobile experience is at least in part predicated on location, and patents like these serve as a tax on innovation.”
The Rise of Trolls
The case was thrown out on February 4, 2016 by the Central District Court of California, while those same claims of infringement were deemed invalid by the United States Patent Office on December 17, 2015. Factual is commenting on the details publicly for the first time today.
In addition to the Lexus-Nexus data, industry trade group Unified Patents also found that 2015 saw the most patent disputes in history. The organization noted that more than two-thirds of patent lawsuits were filed in the high-tech sector, and more than 88 percent of the high-tech cases involved “non-practicing entities” (aka “patent trolls”).
“The Consumer Technology Association notes that the average cost of a patent litigation lawsuit is between $1 million and $2 million, which is why it’s no surprise that 82 percent of patent troll victims in 2014 were small and medium sized businesses — businesses that would have a hard time funding a costly defense,” Factual noted.
In his statement, Elbaz said that Factual had decided to rebuff several offers from Locata to settle, though he added that it would have been cheaper to do so.
“Apart from the fact that I think it’s ridiculous to claim that someone invented that abstract concept of ‘using location to trigger an event’ — something the patent office agreed with when they invalidated a significant chunk of our troll’s patent — patents that hinder innovation need to be fought,” Elbaz said.
“I started Factual to empower innovation,” he added. “Factual’s mission is to make data accessible to everyone in order to drive innovation. And as important as the data itself is to innovation, it is meaningless without the ability to apply that data. So, when Locata sued us, effectively seeking to collect a toll and make it harder and more expensive to use location data – not just for us, but for everyone, we decided we couldn’t stand for it. Even if they’d offered to settle for a dollar, it would have been a dollar too much.”