RAPAPORT... Plaintiff eDekka LLC has sued jewelers Tiffany & Co. and Zale Corporation along with 160 other major retailers in the U.S. for patent infringement, claiming that each defendant had derived substantial revenue from their online "shopping cart" function.
At the core of the complaint is United States Patent No. 6,266,674, the "674 Patent," which was filed in March 1992 and reissued on July 24, 2001. According to the lawsuit, eDekka claims the patent, titled "Random Access Information Retrieval Utilizing User-Defined Labels" covers a method and apparatus for storing information, wherein a user inputs and defines the data structure. However, nowhere in the patent description does it specify website function or a shopping cart.
The patent infringement suits were filed in the U.S. District Court for the Eastern District of Texas -- Marshall Division. Judge Rodney Gilstrap has, over the course of the past two months, dismissed about 30 patent cases that were filed by eDekka in 2013, which included infringement charges against Avon Inc., Apple Inc., Sierra Trading Post Inc., Crutchfield Corporation and Coldwater Creek Inc. to name a few. Patent cases are still pending against more than 100 others including B&H Photo Corporation, Barneys New York Inc., Coach Inc., Dillard's Inc., Gilt Groupe Inc., Kohl's Corporation, J.C. Penney Inc., Macy's Inc., Liberty Interactive Corporation, Nordstrom Inc. and Saks Inc.
The spokesman for Tiffany & Co. would not comment on this pending litigation. Zale's spokesman had not provided a response as of press time.
Nonetheless, Patent Progress, a website that is dedicated to patent issues and reform, called eDekka a most prolific "patent troll" after it filed 87 new lawsuits against retailers in April, including those cases against Tiffany & Co. and Zale. Writer Matt Levy also pointed out that "just because eDekka is allowed to file a uselessly vague complaint," plaintiffs still must expense a strong defense to build their case.
"We can do a little back of the envelope math to begin to see how wasteful this is. Let’s assume that each company has to spend a minimum of $10,000 in legal fees initially for a case evaluation. That’s just over 20 hours of lawyer time for a big firm which charges an average of $500 an hour. These 87 (pending) suits would then cost $870,000 right off the top. That’s nearly a million dollars that could be going to job creation or innovation instead of being spent on legal fees to evaluate the case," Levy wrote.
Worse yet, the expense may be much higher for retailers. The National Retail Federation (NRF) stated that retailers who challenge a patent troll generally face an 18 month court battle at a cost of roughly $2 million to adjudicate. The NRF estimated that patent trolls cost the U.S. economy $30 billion a year.
David French, the senior vice president of the NRF, said, “Trolls’ claims not only affect ecommerce applications and the everyday use of technology, but also the storefront operations of traditional brick-and-mortar retailers. Some real-world examples cover point-of-sale and inventory control equipment, including scanning barcodes, printing receipts, the sale of gift cards and the connection of a computer or printer to an ethernet network.”
The NRF and other retail advocates have been calling upon Congress for urgent patent reform to prevent frivolous patent lawsuits. But on May 21, the U.S. Senate Judiciary Committee shelved its patent reform bill.
French said, “Withdrawing the patent reform bill is a victory for patent trolls. We are deeply disappointed that groups representing the status quo have continued to stall and stymie attempts at effective patent reform.
“Even though this is a loss for Main Street merchants, end-users will continue to work with those committed to strengthening and reforming our patent system. Small business owners, retailers, grocers, banks, coffee shops and restaurants need patent relief now, and without Senate action the problem will only grow worse," French added.