Groupon?s troubles continue to grow, with the company facing at least two patent infringement suits related to its mobile advertising activities.

The news follows continued devaluation of Groupon?s stock value and waning interest in daily deals as the market becomes saturated with deals from numerous sources. If the claims are upheld against Groupon and LivingSocial, which is also being accused of patent infringement, other companies engaging in similar mobile advertising strategies might also face charges.

?Groupon and LivingSocial are probably subject to the complaints because Xcellasave and Blue Calypso are targeting the biggest players involved in the activities they claim infringe their patents,? said Jason Koslofsky, an attorney with ArentFox LLP, Washington.

? If Xcellasave and Blue Calypso have success in the litigation or in establishing licensing agreements, they will look at other companies for the same reasons,? he said.

?Anything related to mobile, and especially smartphones, will continue to see a lot of activity in patent litigation. Smartphones will especially continue to generate litigation as they become used by more and more consumers.?

Interactive smartphone ads
Mobile advertising technology provider Xcellasave, Middle Village, NY, filed suits against both Groupon and LivingSocial last week claiming they are infringing one of its patent related to delivering advertising on smartphones.

Xcellasave?s patent is entitled "Method For Advertising On Digital Cellular Telephones And Reducing Costs To The End User." It was awarded by the U.S. Patent and Trademark Office on Aug. 28.

The patent pertains to a method for displaying messages such as advertisements and consumer promotions on a mobile phone by wirelessly downloading a single database containing multiple graphical interactive pieces of content, storing these to a mobile phone and displaying one piece of content during a particular time period.

According to the company, both Groupon and Living Social have infringed the patent by making, using, selling and offering for sale mobile phone applications for displaying interactive advertisements.

Blue Calypso's claims pertain to a patent that was issued in February 2010 and is titled "Method and System for Peer-to-Peer Advertising Between Mobile Communication Devices."

The company filed its complaint against Living Social on Aug. 24 and against Groupon at the end of July.

"LivingSocial has and continues to infringe the ?516 Patent by operating a computer-based program as shown in Exhibits C and D, which depict screenshots of LivingSocial?s computer-based program,? the Blue Calypso suit said. ?LivingSocial?s computer-based program includes functionality for enrolling both consumers and advertisers and for offering deals to consumers, as depicted in Exhibit C, based on identification of at least a geographic match between them consumer?s profile information and the advertiser?s deal.

?After offering the deal to the consumer based on such a geographic match, LivingSocial provides additional functionality for encouraging the consumer to refer the deal to other consumers. In particular, LivingSocial provides content to the referring consumer to carry out such a referral as depicted in Exhibit D."

Advertising growth
The cases have not progressed beyond the filing of the complaints. Neither LivingSocial nor Groupon has responded to the complaints.

Groupon is facing tough times. The company?s stock value has slid almost 80 percent since its initial public offering last year, hitting a new low of $4.05 yesterday.

The loss in stock value can be attributed in part to the company?s inability to put together a strong business strategy to compensate for waning interest in daily deals.

One of the biggest challenges Groupon faces going forward is continuing to build momentum in the mobile channel. The company will need to be able to provide consumers with innovative offers via mobile as others build their presence here and consumers get overwhelmed with the number of offers available.

LivingSocial, Groupon?s biggest competitor, is also under pressure to validate its business strategy as the opportunity in deals shrinks. The company recently switched its focus in mobile from location based deals similar to what Groupon Now! offers to mobile ordering and payment from local restaurants/

?Businesses continue to look for different sources of revenue from mobile, and mobile advertising will power apps and possibly devices going forward, allowing free services to be subsidized by ads,? Mr. Koslofsky said. ?There will undoubtedly be more patent litigation related to mobile advertising as it continues to grow.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York