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Why is the mobile industry so susceptible to shakedowns?

After shaking down RIM for $612.5 million, NTP Inc. is at it again, filing patent infringement cases against Apple, Google, HTC, LG, Microsoft and Motorola.  The company filed lawsuits in the United States District Court for the Eastern District of Virginia for infringing NTP's eight patents related to the delivery of electronic mail over wireless communications systems.

?These suits are often about aging, incumbent companies shaking down entrepreneurial innovators with what are becoming known as ?in terrorum? lawsuits,? said Michael B. Hazzard, a partner at Arent Fox LLP, Washington. ?This tactic is unfortunately becoming increasingly common.  

?Essentially, rather than compete fairly in the market, a powerful company or group of companies will use lawsuits to slow down, and in some cases bankrupt, start-ups that are perceived as threatening a business model by employing technology in new and exciting ways that benefit consumers.  

?A lot of big companies know that it?s easier to take on an entrepreneur in court than in the market.?

In the case of NTP, each of the defendants is a manufacturer or developer of either wireless handheld devices or software applications used in the delivery of email across wireless communications systems. 

Donald E. Stout, NTP's cofounder claims that the use of NTP's intellectual property without a license is just plain unfair.

But the NTP case is not alone.

Augme Technologies and AOL have a patent-infringement case in the works (see story).

Nokia filed a complaint against Apple alleging that the iPhone and iPad 3G products infringe five important Nokia patents (see story).

Patents are not the only types of ?shakedowns? that the mobile industry is facing. Consumer advocate groups are constantly asking for more privacy laws (see story).

From early terminations fee issues, to Telephone Consumer Protection Act suits, the mobile industry has been experiencing various litigation issues.

?Generally speaking - and not in the patent context ? mobile remains a channel still in its infancy without clear guidance by federal or state authorities,? said Andrew Lustigman, principal partner of The Lustigman Firm, New York.

?Instead, mobile marketers are faced with trying to comply with laws enacted long-before the development of the channel as it currently stands, and enforcement by private plaintiffs, instead of regulators who can establish a balanced industry-public approach,? he said.

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