Tippr’s Federal Patent Lawsuit: 14 Daily Deals Players Targeted, Now All Quietly Settled

It’s been a wild few months for companies peddling daily deals. As market leader Groupon faces criticism for its accounting and turmoil in its executive ranks, bigger competitors continue to expand or kill their efforts, while smaller fish get gobbled up in a spree of consolidation.

If that’s not enough churn, you can also add some pretty hefty lawsuit filings.

Over the past several months, the parent company of Seattle-based Tippr added defendants to a federal patent-infringement lawsuit, eventually targeting a total of 14 other daily deals companies. The roster of defendants included reasonably well-known players like BuyWithMe, DealOn, and HomeRun, along with a clutch of smaller companies like Click-N-Shout and Deal Co-Op—but not the biggest players, Groupon and LivingSocial.

The case file is crowded with claims, motions, accusations, and denials—the kind of paperwork warfare that can earn intellectual property lawyers a pretty good living. Some of the defendants struck back, countersuing Tippr’s parent company, Kashless.

But now, suddenly, the fight is over. As of Sept. 15, every last defendant has settled with Kashless or been dismissed—in fact, the federal judge signed seven of the dismissal orders on one day.

The idea of some IP lawsuits from Kashless/Tippr isn’t really shocking. Martin Tobias, the entrepreneur behind Tippr, has been pretty outspoken about his patent holdings and their usefulness as a lever in the current Wild West era of daily deals offerings.

When he acquired a trove of related patents from the former Paul Allen company Mercata in 2010, Tobias told us that he’d just picked up “the pocket aces of IP in group collective buying.” He later said that “Tippr has the most extensive and deep patent portfolio in group buying.” And when Tippr acquired Austin, TX-based FanForce, Tobias said the deal was driven by the fact that “They realized what they were doing was covered by my patents.”

The sheer scale of this lawsuit is pretty interesting, however. When we originally reported on the lawsuit (and a related local case) in February, the patent claims only targeted BuyWithMe and DealOn. Why such a flurry of lawsuits through the daily deals chain? Even though the cases are now all settled, I couldn’t get any of the other companies involved to comment on the record (some were not even reachable).

Via email, Tobias confirms that his company “reached agreement” with all the defendants. Asked if that meant Tippr/Kashless had cut patent licensing deals with them, Tobias says, “I don’t want to say licensing agreements. The correct term is ‘settlement agreements.’ We are not disclosing the details of any of the settlement agreements. Tippr is extremely happy with the outcome of these settlement agreements.”

In my spelunking of the court files, I found just one reference to a licensing agreement (I could have missed something, since there are nearly 190 separate filings). It’s in this proposed dismissal motion, which says Kashless and Demand Chain (parent of Homerun) have “a settlement and license agreement … executed July 26, 2011, the terms of which shall remain confidential.”

One source with knowledge of the lawsuit, who insisted on anonymity, said Kashless had been trying to get many defendants to sign a licensing agreement to settle the cases—one that would take 4 percent of gross revenues. “That’s like the profit margin in this business,” the source said.

“But they probably got someone to. That’s what they were trying to pressure everyone into,” the source said. “A lot of these guys that he had on there were pretty small … People are going out of business like crazy.”

That’s not to say there’s no money left in the sector. Two days before the final Tippr/Kashless settlements were signed, research firm BIA/Kelsey bumped up its growth forecast for daily deals, instant deals, and flash sales, saying the market “will grow from $873 million in 2010 to $4.2 billion in 2015.”

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4 responses to “Tippr’s Federal Patent Lawsuit: 14 Daily Deals Players Targeted, Now All Quietly Settled”

  1. Esty says:

    I was scammed by TIPPR. How can I be in on the lawsuit?