Grayhair Settles Patent Troll Suit

Grayhair Software has arrived at a settlement with a so-called patent troll to drop lawsuits it filed against several of the mailing software provider’s clients over the past two years. The details of the settlement were not disclosed.

Secured Mail Solutions, a non-practicing entity or NPE whose sole purpose is to hold patents, filed suits against companies including Harte Hanks, RR Donnelley, and Vertis charging that they had violated a patent it held for a system and method for mail verification. Using Intelligent Mail barcodes to identify and track mail pieces, such as the defendants did using Grayhair software, violated its patent, SMS held.

Patent trolls exploit the legal system to pressure high-profile companies into quick settlements. Current patent law requires the discovery phase of the suit to take place before a court can interpret the patent claims, forcing defendants to endure a lengthy and costly discovery process. They most often find settlement to be the quickest and cheapest way to dispose of the nuisance, making the filing of such suits a high-yield, low-risk business for NPEs.

But last December, the House of Representatives passed the Innovation Act, which seeks to delay discovery in patent infringement cases until a court has established that the patent holder’s claim has merit. The bill would also require the winner of the suit to pay all legal costs incurred, making trolls think twice before taking action.

The Obama administration subsequently enlisted in the cause, urging the U.S. Patent and Trademark Office in February to changes its rules and require the identification of an attributable owner of a patent involved in a suit.

Grayhair President and CEO Cameron Bellamy chose to fight Secure Mail Solutions and Todd Fitzsimmons, the patent holder and lawyer who owns the shell corporation, but legislation and President Obama arrived too late to rescue him. Still, Bellamy feels he succeeded in beating back the trolls.

“For the last two years, Grayhair has been fighting against the postal industry’s biggest patent troll,” Bellamy says. “Finally as the last company standing, we can claim victory and continue to provide our clients with risk-free use of the IMb.”

As more digital technologies are introduced to the hardcopy mail industry, and as legislation awaits passage, Bellamy warns the mail industry to remain on guard for trolls and fight them off to the best of its ability.

“We were left with absolutely no choice. Given the rules of the game, we were subjected to nearly two years of discovery, and eventually had to make a settlement,” Bellamy says. “My advice for others in the same situation is to fight your way through it.”

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