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Shell company sues Facebook, Amazon over targeted banner ads

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A Memphis-based shell firm say it owns the rights to a common form of internet advertising, and has filed patent infringement suits against several major companies.

“B.E. Technologies LLC” claims that Amazon’s (s amzn) Kindle devices violate its technology for serving ads “in a personalized manner.” It has filed similar lawsuits against Facebook (s fb) and LinkedIn (s lnkd).

The patents in question date from 2000 and 2001 and describe the process of selecting interent ads based on what applications the viewer has been using on his or her computer. Here’s part of the abstract from US Patent 6,628,314 which B.E. Technologies claims Facebook is infringing:

A method and apparatus for providing an automatically upgradeable software application that includes targeted advertising based upon demographics and user interaction with the computer. The software application is a graphical user interface that includes a display region used for banner advertising that is downloaded from time to time over a network such as the Internet.  [..] when the user runs the program (such as a spreadsheet program), an advertisement will displayed that is relevant to the program (such as an advertisement for a stock brokerage).

The lawsuits raise the familiar question of whether the patent owner is an inventor who has been wronged by the giant companies or if this is just another instance of “patent trolling.” Under the trolling model, shell firms that don’t make anything acquire patents in order to demand money from companies that do. The prizes they collect then provide a war-chest to launch further lawsuits.

In this case, B.E. Technologies does not appear to conduct any other business besides litigation. Its patents also date from a period when the U.S. Patent Office issued a flood of notoriously flimsy patents. While many inventions appear obvious in hindsight, the idea described in BE Tcchnologies’ patent of serving internet ads based on user behavior may well have existed before the year 2000.

Facebook and Amazon are familiar with patent troll suits which can cost millions of dollars to defend. The troll suits, however, are also increasingly being aimed at start-up companies who have less cash to divert from developers to lawyers.

Here’s a copy of B.E. Technologies complaint against Facebook which requests damages and an order that the social network be barred from using the technology in question:

Banner Ad Troll

3 Responses to “Shell company sues Facebook, Amazon over targeted banner ads”

  1. Robert Syputa, robert at Maravedis com

    The fact that a company seeks licenses while not making a product that uses the patent is being largely mistaken by the industry as a negative and labeled ‘a patent Troll’.. IN fact, many companies, including Microsoft, IBM, HP, have thousands of patents they have accumulated through research and discovery that were never used or abandoned that they license. Are they all Trolls because the patent rights granted by the PTO, therefore held valid until proven otherwise, are not being used in their products? Of course not. Then why is the term being used in a blanket fashion for individuals or firms who have patents they wish to license?

    The term Troll should be reserved for firms or individuals who practice patent hold ups: that have patents they sue over and then settle for ‘inconvenience settlement’, usually from a couple hundred thousand to a few million, bellow the average cost of patent litigation for a large firm.

    In this case, there are numerous social, eCommerce, and what I label SeC, Social eCommerce patents (patents that incorporate both social and eCommerce elements in a way that they more are directed at social networking sites and apps. FaceBook is a relative newcomer including to filing patents in the related segments. They and other firms including Google, Microsoft, Salesforce, IBM, Oracle, and Amazon have increased filings and acquisition of companies that hold patents in this area.

    How valid are B.E. Technologies patents? You know that a determination requires an examination of this and the surrounding patents and circumstances, such as what FaceBook holds, as well as that can be determined due to cross-licensing and other things that might obscure their overall position.

    -Robert Syputa