The Latest Threat To E-Commerce : The PanIP Patent Litigation

PanIP first asserted its patent infringement claims against eleven companies in a series of lawsuits brought in March, 2002.4 At the time of filing, PanIP offered the defendants in those suits a license under the patents at issue, initially demanding $30,000, which amount was later reduced to as little as $5,000.5 Most of the defendants in the first group of suits accepted PanIP's settlement offer.6 As a result, each of the original suits has been dismissed ' with the exception of one suit where PanIP has moved for a default judgement against a defendant that did not file an answer.7 Subsequently, starting in August, 2002, PanIP filed a series of four additional suits, each of which named exactly ten defendants8 ' for a total of 51 companies that have been sued overall.

The PanIP suits have received significant media exposure, due in large part to a Web site created by a number of defendants in the second group of lawsuits, www.youmaybenext.com, in order to publicize the lawsuits and to raise funds for a common defense initiative.9 The defendants allege on their Web site that PanIP, rather than file suit against major corporations that allegedly infringe the patents (via a technique previously made famous in complaints filed by inventor Jerome Lemelson), has instead chosen to target “small, hometown businesses with moderate gross earnings [and] limited financial resources and legal experience.”10 While these lawsuits have been reported on in various media outlets,11 the prior coverage has, for the most part, not addressed the issue of whether the asserted claims actually cover the allegedly infringing conduct. While the claims at issue have yet to be construed by the district court hearing the cases,12 a brief analysis of the claim language itself raises a number of questions as to whether the claims are capable of being construed so as to cover the e-commerce activities that PanIP alleges to constitute infringement.