The link to original story no loner exists.

Posted on: 07/01/2002

By Jim Olsztynski

Dickson Supply Co., a $5 million plumbing-heating wholesaler in central New Jersey, is among 11 non-related businesses named in a federal lawsuit charging patent infringement due to their e-commerce activities. The patents held by San Diego-based Pangea Intellectual Properties L.L.C. (PanIP) consist of broad descriptions of how Internet transactions take place, and could apply to literally millions of other online sellers, including other PHCP wholesalers along with e-commerce giants such as Amazon.com and eBay. Why PanIP chose Dickson and other small firms as the initial targets of litigation is central to their defense.

Owner Allan Dickson charges that PanIP selected his firm and other small businesses around the country, ranging from a furniture store to a ski shop to a video store, after hiring a consulting firm and using Dun & Bradstreet credit information to identify what Dickson termed "low-hanging fruit."

PanIP has offered to settle the case with Dickson and others if they pay a license fee that Dickson said ranges from $30,000 to $50,000. Fighting the case in court could take years and run up legal fees in six- or even seven figures. "It's a form of extortion," said Dickson. 

Dickson Supply has a Web site set up largely by drawing from the talents of high school and college students. It features an online store that sells plumbing, heating and irrigation supplies, as well as barbecue grills, outdoor furniture and gas lamps. Like most small business Web sites, it does not do a huge amount of volume. Dickson views it as much as an online community as a business venture. 

Dickson told me his D & B reports would show Dickson Supply to be a financially healthy business in good credit standing. This would identify them as being able to afford the license fee, although their size would make it prohibitive to endure legal fees that could run to more than a million dollars in defending against complex patent infringement litigation. One unidentified defendant reportedly chose to settle.

Nonetheless, Allan Dickson has decided to stand and fight. "We firmly believe that PanIP's patents do not cover Dickson Supply's e-commerce site or any other typical e-commerce Web site, and that the patents themselves will ultimately be invalidated by the Court. We also believe that PanIP knows that it is likely to lose this case, and that it specifically targeted Dickson Supply and the other defendants because it believed we would quickly pay a licensing fee without a fight. They are using the federal patent law as a blunt instrument to extract a check the plaintiff is not entitled to receive," said Dickson.

PanIP's principal owner, Lawrence Lockwood, previously had filed suit against American Airlines in 1994, charging that the company's online reservation system infringed on other patents he holds. Lockwood lost that lawsuit, which went all the way to the U.S. Supreme Court, according to PanIP's present attorney, Kathleen Walker. An online article in InfoWorld.com says that a deposition taken in that case quoted Lockwood as saying, "I enforce my patents," in response to a question about how he makes his living.

Attorney Walker, who was not involved with the American Airlines case, described to Supply House Times a drawn-out legal process by which the current lawsuit "could take years" to finally adjudicate. Walker agrees that the patent infringement charges could apply to millions of other Web sites, but indicated the law doesn't dictate a plaintiff has to go after the big firms first.

After articles appeared in the Asbury Park (N.J.) Press and some online publications, Walker and PanIP principals stopped talking to the media about the case, although she spoke briefly with me about non-substantive issues. She requested that questions be submitted via e-mail. I complied, but did not receive a response from either her or PanIP principals as of press time.

Dickson's attorneys from the Los Angeles law firm Liu & Liu filed a motion on June 10 to dismiss the lawsuit for jurisdictional reasons and other technicalities. The outcome was unknown as we went to press.

There is nothing to indicate PHCP wholesalers are of particular interest to PanIP. The disparate types of businesses named in the lawsuit suggest nothing distinctive about the industries served. 

Dickson and some of the other defendants have set up a Web site with details of the case at http://panipcase.homeip.net. He indicated that at some point the defendants will need to solicit funds from well-wishers to continue their court battle, but a mechanism for doing so was not in place when we spoke.

Jim is the editor of Supply House Times. He can be reached at 630/694-4006, Wrdwzrd@aol.com.