In February, SaltWorks, a Woodinville manufacturer of sea salt consumer products, received some disturbing legal news: The 19-year-old company was being sued for allegedly violating patent covering technology in its e-commerce system.
Although the patent appeared so common in the lawsuit that it could apply to any type of e-commerce, SaltWorks allegedly tied up with the plaintiff, North Carolina-based Landmark Technology A, instead of waging an expensive court battle.
Saltworks, which declined to comment on the case, is not the only company targeted by Landmark.
In recent years, at least 10 Washington State firms, including Seattle-area businesses Jones Soda and The Essential Baking Company, have been sued by Landmark or predecessors, known as patent trolling. According to the state attorney general’s office, this “predator” strategy uses “bad faith” patent claims to force small businesses into quick cash settlements.
But Landmark may be getting some of its medicines.
On Thursday, Landmark became the first company to file a lawsuit under the Washington State’s Patent Troll Protection Act, 2015 law, which, according to the Attorney General’s office, was intended to “crack down” on ‘patent trolls’, which the younger Harasses and threatens. Businesses with claims of patent infringement. ”
Attorney General Bob Ferguson said in a statement on Thursday, “Landmark recovers from small businesses, demanding payment for the webpages needed to run the business.” “It returns them to a corner – pay now, or get bogged down in legal fees.”
Along with the lawsuit, Ferguson said he is “putting patent trolls on notice: bullying businesses with unfair patent claims, and you’ll see us in court.”
John A. Lee, a Menlo Park, California., Attorney listed in court documents as Landmark Technology A’s legal counsel, did not answer questions about the case. Court documents also list Lee as a lawyer for Landmark Technology, a second company based in San Diego that brought the first patent infringement cases against Washington firms.
According to the Attorney General’s Office, Landmark Technology is the successor to A Landmark Technology, and is registered in North Carolina with a single member, Raymond Mercado, a North Carolina resident.
According to Ferguson, Landmark Technology A’s “entire business model involves seeking license fees from other companies.” Between January 2019 and July 2020, the company sent “similar form demand letters” to around 1,200 small businesses across the country.
The companies were told that they had infringed on a patent owned by LTA, covering a wider scope of e-commerce operations and in many cases threatened with litigation until they paid Landmark a $ 65,000 license fee did not do.
According to Thursday’s lawsuit, filed in US District Court, Landmark Technology A “primarily targets customer login pages on the company’s websites, but not webpages with privacy practices, shopping carts, products for sale, and the company’s home page Has also asked for a license fee. In short, any business with a web presence is a potential target for LTA. ”
But in a 2014 legal action, the Attorney General’s lawsuit notes, the United States Patent and Trademark Office determined that the patents under consideration would be declared invalid because it “does not text a technical feature that is novel on prior art and Not clear, and therefore not a technical invention. ”
However, since the cost of taking LTA to court is so high, according to Ferguson, most companies end up compromising.
The lawsuit states, “While it is absurd that LTA has patented all company websites, individual businesses lack the necessary resources to counter LTA’s extortion demands.” According to the lawsuit, four Washington companies have tied up with LTA for between $ 15,000 and $ 20,000.
“Fighting these entities is expensive,” said Seattle lawyer Ben Hodges, who has represented many of the firms named in the landmark lawsuits. Hodges stated that the legal cost of filing only the initial response to LTA may be similar to the amount often fixed for LTA, which can be volatile for small firms.
“You don’t see them after Amazon, the world’s microsoft,” Hodges said. “You see them going after small, family-owned businesses.”
The five Washington businesses named in LTA lawsuits either did not answer questions about litigation or declined to comment – citing the requirements involved in settlements in some cases. Among those firms were Saltworks, Spokane-based Stoneway Electric Supply and Seattle-based firm Tom Bihan Inc., Essential Baking and Specialty Bottle.
Washington firms named in an earlier suit by Landmark Technology, LTA’s predecessor, included Jones Soda, Totally Chocolate, Thrift Books and Gensco.