UPDATED: Help Stop 1-800-CONTACTS from Abusing Patents to Squelch Competition
UPDATE APRIL 22:
1-800-CONTACTS contacted us, through their lawyer, to complain about this post. The company complains that we incorrectly stated that it does not provide a virtual try-on system. Well, it turns out that the company (which owns Glasses.com) intends to launch a virtual try-on iPad app. We weren't aware of this app. And this is not surprising, since it is not yet available and was publicized on April 17, 2013, the same day as our post. In contrast, Ditto's competing product was launched back in April last year.
1-800-CONTACTS also protests that there is nothing "scandalous" about its CEO visiting Ditto's site to check out its product. We agree. There is certainly nothing wrong with keeping tabs on the competition. What we do think is scandalous, however, is what the company did next. After checking out Ditto's product, 1-800-CONTACTS apparently went out and purchased a patent in order to sue its competitor. This is the key fact and one the company's response to us carefully avoids mentioning. Indeed, 1-800-CONTACTS claims that its CEO is the "inventor" of its own app. But the company's lawsuit is based on U.S. Patent 7,016,824, a patent that has nothing whatsoever to do with its CEO, that is, until his company purchased it.
1-800-CONTACTS says it is not a patent troll. Sure, the company is not a classic patent troll—a shell company that does nothing but buy patents and sue—but it's little better. Patent trolls generally want to use the club of litigation to extort licensing fees. But all indications are that 1-800-CONTACTS isn't interested in a license from Ditto. Rather, it wants to destroy the competition.
You can read 1-800-CONTACTS' complaint here and decide for yourself if we are being too hard on the company. One thing to consider, however, is that 1-800-CONTACTS has a long record of using the courts to bully its competitors. It is a serial trademark bully and has pushed for terrible laws in its home state. When companies like 1-800-CONTACTS compete in the courts instead of the marketplace, lawyers win but innovation and consumers lose.
Here at EFF, we've recently been talking a lot about how the flood of bad software patents has led to an explosion in abusive patent troll litigation. But patent trolls are not the only problem with the patent system. Companies are increasingly using software patents to compete in the courts instead of the marketplace. Sometimes, as in the smartphone wars, these fights are between industry giants. In other cases, established players can leverage the massive expense of patent litigation to squelch the competition.
Take, for instance, the story of Ditto. Ditto is a two-year old company that employs 15 people. Its founders started it to address a problem they had found trying to buy eyeglasses on the Internet, specifically that existing ways to virtually try before you buy were awkward. So they spent many long days and late nights developing a pretty cool technology: one where users record a video of their face using their webcam and then allows them to see how eyeglasses look on their face through 180 degree views.
The folks at Ditto focused their energy on building and launching a product that would appeal to consumers. And their hard work was paying off: they received funding to grow the business, money they used to improve the technology, to hire employees, and to market the product.
Then, as we hear all too often, along came the claims of patent infringement. We often talk of trolls as companies who neither make nor sell anything, but in this case Ditto was threatened by 1-800-CONTACTS, a company who sells glasses online but does not provide the kind of technology that Ditto had painstakingly developed.
It appears that 1-800-CONTACTS' CEO went onto Ditto's website the very day it launched, presumably to investigate the upstart competitor's new technology. Having seen Ditto's product, 1-800-CONTACTS then went out and purchased a patent from a defunct company that claims to cover selling eyeglasses over a network using a 3D model of a user's face.
But here's the thing: 1-800-CONTACTS does not appear at all interested in licensing the patent to Ditto. Rather, it seems determined to put Ditto out of business. Period. So it's suing Ditto in federal court in Utah, hundreds of miles from Ditto's headquarters in California.
Ditto's CEO Kate Endress calls the 1-800-CONTACTS suit "devastating." As opposed to reinvesting money in growing the business, DITTO now has to spend money on litigation. As Kate put it, "It's really disheartening. How can any company innovate in this atmosphere?"
One of the many problems facing Ditto right now is that, according to Kate, it may not even be able to afford to win. Patent litigation is expensive and takes years. (This is the problem that the pending SHIELD Act will help fix, which is one of the reasons we support it.)
We'd like to help Kate and her company Ditto, and are asking you to join us. We have published a call for prior art at Ask Patents. Please read the call and share any prior art you might know about. We also hope you'll further join in the conversation at Ask Patents by upvoting the submissions from others you think are best (and by sharing information you have on even more patent applications).