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March 15, 2016

Appeals Court: Essociate’s ’660 Patent Invalid; CrakMedia Victorious

PATENTVILLE—A U.S. Federal Court ruling issued Friday, March 11, confirmed a lower court’s ruling from February 2015 that a patent held by XPays is invalid, and therefore their claims of patent infringement against CrakMedia and Clickbooth are unfounded. “It’s a big day for us. We fought for something we believed in. Although a settlement would have certainly been less costly than litigation, we couldn’t let patent trolls continue to bully us and others in our industry,” said CrakRevenue's founder and CEO, Nicolas Chretien. “We can now focus on the goal we set four years ago: centralize all the industry’s top offers with the CrakRevenue network.” In 2004, the United States Patent and Trademark Office (USPTO) officially granted U.S. Patent No. 6,804,660 to inventors and longtime business partners Evan Horowitz and Michael Landau, aka XPays, who had filed an application for the patent three years earlier. Referred to thereafter as the "’660 patent," rights were assigned to sister company Essociate with the title, "System method and article of manufacture for internet based affiliate pooling." Starting in 2009, Essociate went on to file patent infringement suits against various companies, including Clickbooth in December 2013 and CrakRevenue in April 2014. Rather than settle, the companies jointly fought the matter, and last year U.S. District Judge James V. Selna for the Central District of California issued a single ruling granting identical Motions for Judgment that had been filed by the defendants in co-pending cases, Clickbooth and Crakmedia, in the process invalidating the 660 patent for being an "abstract idea" that is patent-ineligible under 35 U.S.C. §101.  Essociate immediately filed an appeal, but the Federal Court’s decision last week effectively ends the case and confirms the ’660 patent is invalid. The patent described a method and system for configuring an existing affiliate network to receive “virtual affiliates” from an affiliate pooling network. Essociate used its patent to sue more than 20 companies in the affiliate networking space for infringing on the ’660 patent.   Clickbooth and CrakMedia challenged the validity of the patent following the U.S. Supreme Court ruling in Alice Corp. v. CLS Bank International. Alice essentially codified the notion that patents should be found to be invalid if their "claims were drawn to an abstract idea," especially if the abstract idea is tied to "a fundamental economic practice and a method of organizing human activity."  “A year ago, this was a significant case for companies accused of infringing on patents that try to monopolize on abstract ideas on common Internet business practices, when Essociate made an appeal of the judgment,” CrakMedia said in a statement. “The U.S. Federal Circuit's decision settles this judicial battle once and for all, sending a loud and clear message.”

 
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