Web Coupon Companies Stay Lawsuit Happy

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The Internet coupon patent wars flared up again this month, and they don't appear likely to cool off any time soon.

Catalina Marketing Corp., which manages both offline and Web-based coupons for consumer goods companies and retailers, said its online subsidiary filed a suit accusing CoolSavings.com Inc., Chicago, of allegedly infringing on a patent it received in January.

"It's part of our corporate policy. If we see infringement, we're going to vigorously protect our patents," said Carolyn Mahoney, marketing communications manager at Catalina, St. Petersburg, FL.

Catalina's online unit, SuperMarkets Online Inc., is not alone in this philosophy. The Web coupon and incentives arena is becoming a dizzying legal battlefield of patent infringement suits and countersuits. It isn't rare for businesses to sue one another, of course, especially when new technologies like those that run e-commerce are at stake. But there are signs the unusual number of legal dust-ups in the online coupon space might get worse before they get better.

In a registration statement filed with the Securities & Exchange Commission last month, CoolSavings revealed it is the defendant in two lawsuits filed by competitors. Meanwhile, CoolSavings itself has six infringement suits pending against rivals.

"We expect that, as the number of services and competitors in Internet advertising and direct marketing grows, we will be increasingly subject to intellectual property infringement, unfair competition and related claims against us," CoolSavings said in the document. The company is the lead player in the online coupon market.

At least some of the suits CoolSavings has pending are left over from last year, when the company sued almost all of its competitors in the virtual couponing space - ten companies in all - for infringing on a patent it was assigned in 1998. Some of those cases have been settled. Catalina Marketing was one of companies that didn't settle.

CoolSavings filed those suits with the help of Niro, Scavone, Haller & Niro, a Chicago law firm that is one of the few in the nation that accepts intellectual property cases on a contingency basis. Neither CoolSavings nor the firm has disclosed whether the two have a contingency fee arrangement, in which the firm would not get paid for suits it failed to win.

Another of the companies sued by CoolSavings, online promotions firm E-centives Inc., responded to the complaint by buying a patent that predated the CoolSavings patent and then suing CoolSavings.

Catalina's Mahoney said the case announced this month is separate - it's not a countersuit to the older CoolSavings suits. At press time, CoolSavings said it could not comment on the latest suit because it had yet to be notified of the case.

"Apparently, we have not been served," said spokeswoman Melissa Rabin.

The complaint, filed in US District Court in Los Angeles, seeks to protect a SuperMarkets Online patent for a "system and method for providing shopping aids and incentives to customers through a computer network." The patent covers techniques for making personal Web pages based on users' personal information and purchase history.

Meanwhile, CoolSavings has three more patents pending in the United States and 17 foreign patent applications "directed to different aspects of our technology and business processes," the company said.

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