Target Accused Of Infringing On Priceline Founder’s Patent

Target Accused Of Infringing On Priceline Founder’s Patent

An owner of many patents (with a history of suing big retailers) is accusing Target's online subscription service of patent infringement.

Target Corporation has recently taken steps to bolster its digital offerings—but after rolling out an online “subscription” service, the Minneapolis-based retailer is being accused of infringing on a patent that was developed by the founder of Priceline.com.

Target debuted its subscription service last fall, allowing customers to sign up to receive shipments of particular items at specified intervals. While Target initially focused on baby-care products, it recently expanded the program significantly, saying in April that it had grown its assortment of eligible items from 200 to more than 1,500, including everything from household cleaning supplies to beauty products. (Learn more about Target's subscription service here.)

Inventor Holdings, LLC, filed a lawsuit late last week, alleging that Target is infringing on its “breakthrough technology.” Inventor Holdings owns patents originally developed by Connecticut-based research and development lab Walker Digital, which is led by Jay Walker, the founder of travel-deal website Priceline.com. The patent cited in the lawsuit was awarded in 1999 to several inventors, including Walker.

Target declined to comment on the lawsuit, citing the fact that it is still pending litigation. But media reports indicate that Walker has an extensive track record of suing big companies in a variety of industries. Some have likened his tactics to those of so-called “patent trolls,” a comparison that he has rejected.


Target Is Not Alone

Target, of course, is not the only retailer offering subscription services. In fact, the Associated Press said in April that Target was “playing catch up in the subscription business,” noting that such offerings have “exploded in recent years.”

According to Inventor Holdings' recent lawsuit, which singles out Target's subscription service, the patent at issue covers a system that allows retailers to “effectively and efficiently provide subscription purchase agreements to consumers, thereby offering consumers lower pricing in exchange for their agreement to buy a specified number of an item over a specified period time, and increasing overall sales.”

The lawsuit says that Target's subscription service infringes on the patent because it stores customer-specific data pertaining to products that they buy, and then offers them lower prices for agreeing to buy a certain quantity over a specific period.


Walker's History Of Litigation

While the latest lawsuit focuses on subscription services and calls out Target specifically, Inventor Holdings is pursuing various patent infringement claims against a number of major retailers and has a history of pursuing litigation.

Last year, Inventor Holdings accused Amazon.com of infringing on a patent related to a “method and system for processing payments for remotely purchased goods.” This year, it has made similar allegations against Sam's Club and Wal-Mart. It has also targeted Sears, Bed Bath & Beyond, and Google with patent litigation. Back in 2011, Walker Digital filed 15 lawsuits against more than 100 companies, including Apple, Microsoft, and eBay. Those suits included allegations that companies were infringing on a variety of patented technologies. It's unclear whether Walker Digital has settled some of the litigation, although court documents indicate that some were suspended, at least temporarily, pending a U.S. Patent and Trademark Office reexamination of the patents involved in the cases.

Target’s subscription service is just one of many efforts the retailer has made to capture digital sales. In December, the company said its efforts have been paying off, as online traffic grew at “double-digit rates” during the holidays and mobile sales climbed 100 percent year-over-year.

Other recent efforts include new mobile apps, online streaming video, and allowing customers to pick up goods at physical stores after ordering them online, among other things.

Just this week, Target said it will begin offering free shipping on virtually all purchases over $50. Only a small number of heavy or oversized items, such as sofas, are excluded, the company said.

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