SMS marketing to get a boost from dismissal of pivotal law suit
By Chantal Tode
August 19, 2013
A recent text messages from JCPenney
In a potential game-changer for the use of SMS by brands, a judge has dismissed several suits alleging patent infringement by The New York Times, JCPenney and others because of their use of hyperlinks in text messages.
The suits were brought against numerous marketers by Helferich Patent Licensing, which claimed the defendants violated its patents by sending text messages with URLs to customers. The dismissal could accelerate the adoption of SMS/MMS marketing by large brands and small businesses that had previously been concerned about facing similar suits.
“By ruling the patent is ‘exhausted’ prevents HPL from going after SMS solution providers or brands for those patents,” said Richard Eicher Jr., CEO of Skycore, Boston. “Many brands resisted or delayed deploying SMS and MMS innovations for fear of litigation or liabilities from patent trolls like HPL even if they were not infringing.
“Going forward, we should see more investment by brands and solution providers in SMS and MMS content communication technologies and innovations,” he said.
The technology at issue is an important one in SMS marketing campaigns, enabling marketers to send links to breaking news alerts and exclusive online content.
The judge ruled that the patents were already exhausted since they had been licensed to the handset manufacturers. Basically, the judge said that Helferich should not be allowed to recover multiple times on the same patent by selling licenses to the patents piece by piece.
“The doctrine of patent exhaustion is designed to avoid double recovery by a patentee, promote the orderly administration of patent rights, provide an efficient method for determining the termination of the patent monopoly and promote fair competition,” said Judge John W. Darrah in last week’s ruling.
“To permit HPL to recover multiple times on the same patent by selling licenses to the patents piece by piece (or claim by claim) is contradictory to these policies supporting the doctrine of patent exhaustion,” he said.
Some of the other organizations that have been sued by Helferich include CBS Corp., Bravo Media, the NBA and G4 Media. The company reportedly has sued dozens of companies since 2008 and sent notices to many others.
Hyperlinks in text messages
Last August, the New York Times Co., G4, CBS, Bravo and JCPenney came together to share resources and strategies to defeat the suits, and last week’s ruling was the culmination of that effort.
Helferich, which does not appear to be operating in the mobile space, holds a number of mobile-related patents dating back as far as 1997.
While the lawsuits are over, the patents are still being examined by the United States Patent and Trademark Office.
"The U.S. economic recovery requires investment from the business community, and patent trolls have corporate American frozen in indecision,” said Tim Miller, president of Sumotext Corp., Little Rock, AR.
“While the Helferich patents to links in text messages have always seemed absurd, the average person would be shocked to know the number of legal departments who have intervened to prevent or interrupt their organization's SMS services over these claims,” he said.
As smartphone adoption continues to grow, opening up opportunities for newer mobile marketing strategies, text messages remain an important tactic for brands since 97 percent of text messages are read within three minutes of their receipt.
However, the fear of legal repercussions has prevented some from embedding hyperlinks in their text messaging campaigns. With that fear now ostensibly removed, more brands may invest in SMS marketing.
“For SMS solution providers and brands using SMS alike, this ruling removes a legal and financial risk in utilizing text message marketing,” said James Citron, chief marketing officer of Payvia, Los Angeles.
“Brands seeking to embed hyperlinks in text message marketing campaigns, and the solution providers they partner with, can now do so with greater confidence than before,” he said. “Text messages have an open rate 10 times that of email but for some brands, the risk had offset the benefit.
“With the removal of that risk, brands and solution providers are free to innovate and succeed with text message marketing to the benefit of the whole mobile ecosystem. This was one of the most significant legal hurdles facing SMS and MMS marketing, and its ruling should only help to accelerate the continued growth in the medium.”
Chantal Tode is associate editor on Mobile Marketer, New York
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