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Over the summer months, Quark Images LLC (Longview, TX) entered into a compound arrangement to have two patents assigned from the Jones Soda Co. (Seattle, WA).  In the middle of August, Quark Images sued Adidas AG, which offers custom-designed athletic shoes through its NikeID program, and more than 25 other defendants claiming infringement of those two patents for a “method of creating customized branded merchandise over a computer network.”

The complete list of defendants targeted in the suit gathers global players in the apparel industry and several financial institutions, well beyond the original “Soda Company” field of the invention:   Adidas AG, Adidas America, Inc., Adidas International, Inc., America First Federal Credit Union, BBVA Compass Bancshares, Inc., BBVA USA Bancshares, Inc., BMW Bank of North America, BMW Financial Services NA, LLC, Banco Bilbao Vizcaya Argentaria, S.A., Bayerische Motoren Werke AG, Capital One Financial Corporation, Capital One Services, L.L.C., Capital One, National Association, CardLab, Inc., Discover Financial Services, L.L.C., Hallmark Cards, Inc., Mars, Inc., Nike, Inc., Oakley, Inc., PAYjr, Inc., Polo Ralph Lauren Corporation, Ralph Lauren Media, L.L.C., Reebok International Ltd., Serverside Group, Limited, Shoreline Busines Solutions, Inc., Sole Technology, The Topps Company, Inc., Wescom Credit Union, Zions Bancorporation, and Zions First National Bank.

As initially reported, the IP community saw potential flaws in the patents (issued in December 10, 2002 and January 18, 2005, respectively), which fail to reference several published pieces of prior art, along with the usual caveats of business method patents.  In essence, one could ask if it should matter at all in issuing a patent that even medieval craftspeople were known to make “custom merchandise,” and whether adapting this to eCommerce would be obvious the one “skilled in the art.”  At the time of the filing a Patently Obvious report concluded a significant amount of prior art, not all of it via patents, existed and could be part of a potential defensive strategy.  One example could be Hallmark which introduced customized greeting cards as far back as 1994.  There was a clear sense of the danger that if the plaintiff prevailed, “… licensing fees could be demanded from any entity, large or small, that provides customized products via the internet…”

Curiously enough, denoting the lack of independence between Quark Images and Jones Soda,  in the week following the filing the patents (numbers 6,493,677 and 6,845,365) were assigned back to Jones Soda under a “Security Agreement.”

The first answers to the complaint were filed by Adidas and Reebok in early October.  A month later, the first unopposed dismissal with prejudice was ordered with regards to 18 defendants, including the BMW and Capital One entities. Soon thereafter,  Oakley, Adidas, and Reebok joined the “License and Settlement Agreement” dated December 20, 2010, which has been the basis for the subsequent dismissal orders for the rest of the defendants.

Finally, Hallmark settled two days ago and Discover Financial Services settled today.  According to our count, all defendants have now settled.  So unless one of the parties involved discloses the information, we are left in the dark as to the forced license fees extracted in this litigation.

Case: Quark Images LLC v. Adidas AG,2:10-cv-00293, U.S. District Court, Eastern District of Texas (Marshall).

This entry was posted on Wednesday, January 12th, 2011 at 10:52 pm and is filed under Case Law, Infringement, Intellectual Property, Licensing, Patents. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.