A tech company stands to earn an awful lot of money from digital coupons, without ever clipping a single one. It’s demanding that more than a half dozen retailers either stop offering digital coupons – or pay up.
Over the past couple of weeks, Connecticut-based Advanced Marketing Systems has filed seven lawsuits against retailers that offer digital coupons. In each suit, the company claims that the retailer is using AMS’ patented digital coupon technology without permission.
Targeted in the lawsuits filed from February 17th through the 26th are drug stores CVS and Walgreens, grocery stores Hy-Vee, Brookshire’s and Ingles, and grocery companies Ahold (the owner of Stop & Shop and Giant), and Delhaize (the owner of Food Lion and Hannaford). And they may not be the last. (Note: Publix was later served with a lawsuit as well.)
AMS owns three patents issued between 2012 and 2013, that describe “a data processing system for tracking and processing a plurality of in-store discounts… comprising a membership card including a unique customer identification code for facilitating system transactions.”
All of the retailers, AMS claims, offer a system that infringes on those patents, by operating “a website to load digital coupons… for later redemption at time of purchase.”
That might seem awfully vague, not to mention that digital coupons were around long before AMS’ first patent was issued in 2012. And that was the argument that Kroger made, when AMS sued it last year.
But Kroger ultimately agreed to settle the case, and pay AMS a licensing fee in order to continue offering load-to-card digital coupons.
And that settlement seemingly opened the floodgates. After the Kroger agreement was announced late last year, AMS’ chairman said he believed dozens of retailers were infringing on his company’s patents, and he vowed to pursue legal cases against all of them.
And that, some retail advocates say, is a problem. AMS was founded as a company specializing in “software and computer management solutions for marketing and promotion applications.” But its founder passed away last year, and the firm is now considered a “non-practicing entity” – a company that holds patents but isn’t actively using them. Instead, it’s defending those patents by filing legal challenges against those it believes are infringing on them.
Some critics have another name for non-practicing entities – “patent trolls.” The National Retail Federation, the world’s largest retail trade association, has been a vocal proponent of patent reform that could put a stop to the types of lawsuits that AMS has been filing. Non-practicing entities “make a business of threatening companies large and small with dubious patent infringement claims and unreasonable demands,” NRF Senior Vice President for Government Relations David French said recently. Patent infringement cases “often involve opaque claims regarding common practices, services or technology. The trolls’ hope is that businesses would rather settle or pay a licensing fee instead of hiring attorneys to review infringement claims or fight back in court.”
Kroger didn’t put up much of a fight in court. And AMS presumably hopes the seven other retailers don’t either – which could help pave the way for even more lawsuits against even more retailers in the future.
Who knew offering coupons could be so controversial? And, in the case of retailers forced to pay licensing fees to continue offering them – and the shoppers who may ultimately end up bearing the brunt of those costs – so expensive as well.
I would like to sign u fr digital coupons