Etsy is an online marketplace where users buy and sell handmade and vintage goods. Last week, the Brooklyn-based company with the folksy feel raised a $40 million investment.
This week, Etsy is discovering one of the downsides of being a big-league business after it was hit with a patent lawsuit.
In a case filed in Manhattan federal court, a shell company claims Etsy infringed on five of its patents and is asking for profits, triple damages and a permanent injunction.
The patents are for “methods for storing, delivering and managing messages.” One of them, US patent 6,857,074, shows common technology in which an internet browser is used to route incoming messages.
The owner of the patents, Unified Messaging Solutions LLC, appears to be a subsidiary of Acacia which has been described as “the mother of all patent trolls.”
“Troll” is a derogatory term for shell firms that don’t make anything but acquire patents in order to sue companies that do.
The people behind Unified Messaging Solutions are the same fine Americans who have already sued Facebook, Groupon, Google, Southwest Airlines and more than a dozen other companies.
Because the shell companies don’t make or do anything besides file lawsuits, they are not vulnerable to patent countersuits such as the one Facebook filed against Yahoo.
Unified Messaging Solutions likely decided to sue Etsy this month because the hand craft site now has investor money it can extract. Trolls typically try to force a settlement and then use the money to file new lawsuits against other targets. A recent academic study estimates patent trolls have cost the economy half a trillion dollars since 1990.
Unified’s lawsuit against Etsy appears to be based on an off-the-shelf template. In one paragraph, the lawyers forget to fill in the blank of the offending party:
38. Defendant has committed direct infringement as alleged in Counts I through V at least through operation of its “Orders & Activity” feature accessible at least through its website, http://www._______.com
Update: An Etsy spokesman said the company could not comment on the lawsuit. A copy of the complaint is below: