Internet Fax Provider Sues Rival, Alleging Patent Scam

By Spencer D. Chin

TMCnet Web Editor

 

Courtroom patent disputes have been commonplace in the high-technology sector, and now they’re spreading to the fledgling world of Internet fax technology.

 

According to a complaint filed in the U.S. District Court for the Northern District of Illinois by Internet fax provider Integrated Global Concepts (IGC), rival Internet fax company j2 Global Communications  Inc. is operating a “patent troll” subsidiary designed to drive rivals out of the business.

 

The complaint alleges the company, also known as eFax, already commands a 90% share of the Internet fax market in the U.S. and “plans to remain the dominant provider, not by offering a better, more attractive service at competitive price, but by waging a campaign of acquisitions, extortion and sham litigation designed to raise its rivals’ costs and prevent them from offering competitive services altogether.”

 

IGC is reportedly seeking damages of $70 million, along with injunctive relief.

 

According to IGC’s complaint: “j2 and the other defendants have within the past four years waged a fraudulent and vicious campaign to intimidate providers of Internet facsimile services into paying money to j2 and/or Catch Curve (a wholly owned subsidiary) for licenses of patents that the defendants know do not cover the competitors’ activities but to achieve a settlement which costs less than litigating issues.”

 

IGC further alleges that j2 Global hid its 100% interest in the subsidiary, which the complaint states, “Exists solely to extract money from j2’s competitors… and to harm their efforts to compete and innovate.”

 

j2 reportedly holds many patents on fax technology enabling a public telephone network to receive and store data when a fax machine is busy or in use, thereby allowing fax machines to automatically redial and resend data.  But IGC’s complaint said, “The inventors have admitted that they did not conceive of any other method of transmitting the facsimile data except using facsimile protocol… and, in particular, did not conceive of transmitting facsimile data over packet-switched networks.”

 

At press time, j2 has not reportedly responded to IGC’s complaint.