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Tuesday, October 29, 2002

A group of online retailers is banding together to fight a series of lawsuits by Pangea Intellectual Properties LLC that seeks to collect licensing fees from retailers that PanIP claims are violating PanIP’s patents. PanIP says its patents affect any web site that contains text and graphics that is capable of obtaining financial information, whether in an automated format or not. 

With a round of suits earlier this month, PanIP has sued 50 retailers. It already has succeeded in collecting payments from a number of small retailers who preferred to settle rather than take the case to court. 

But now, online chocolatier DeBrand.com, which received a letter from PanIP threatening a suit if DeBrand did not settle, is spearheading a movement among online retailers to establish a defense fund to fight the charges. Timothy Beere, one of the owners of DeBrand Fine Chocolates, says the group has 10 commitments thus far and interest from another 10 retailers. 

PanIP will not comment about the suits. Jon Hangartner, an attorney with law firm Sheppard, Mullin who will represent the group of defendants, says that PanIP has been targeting small retailers who are not near PanIP’s home base of San Diego. “They’ve been looking for retailers big enough to pay the licensing fee but not big enough to fight the suit in California,” Hangartner says.

The group will base its defense on the broad nature of the technology under patent. Hangartner notes that the principal behind PanIP, Lawrence Lockwood, undertook similar litigation claiming to hold a patent on technology that American Airlines was using in its Sabre system and that the claim was eventually dismissed. The defendants will first ask the U.S. Patent Office to void the patent because of its broad nature, Hangartner says. The cost of disposing of these suits could range from $30,000 to $300,000 if the defendants succeed in persuading the Patent Office to invalidate the patent or it they can persuade a judge to issue a summary judgment. If the cases got trial, Hangarnter says the bill could run to $750,000 and more. "These are complex patents and it would be a complex case to litigate," he says.

The defendants have a web site at YouMayBeNext.com.