Augme Technologies (AUGT.OB), one of the mobile marketing emerging leaders set it sights on Millennial Media (MM) Thursday, targeting them for infringement on three of its patents. Augme Technologies filed suit for patent infringement citing three separate patents(6,594,691,7,269,636,7,783,721) on Thursday in the Delaware courts.
In a story first broke by Techcrunch, Mobile Ad Wars: Augme Slaps Millennial Media With Patent Lawsuit Over Targeting Technologies, Augme has added Millennial Media to the growing list of infringers of its patented technology. This list now includes AOL (AOL), Yahoo (YHOO), Velti (VELT), Time Warner (TWX), Gannett (GCI) and Pandora Media (P).
While Millennial Media just went public a week ago and quickly saw its stock price double, it is worth reviewing the S-1A filing to see what they had to say about their own Intellectual Property. Investors in their haste to try and make a quick profit, often ignore warning signs, even when the company itself clearly points them out. See pieces of S-1A below.
We have begun to seek patent protection for certain of our technologies and currently have five U.S. patent applications on file, although there can be no assurance that these patents will ultimately be issued.
Future litigation may be necessary to defend ourselves or our clients by determining the scope, enforceability and validity of third-party proprietary rights or to establish our proprietary rights. Some of our competitors have substantially greater resources than we do and are able to sustain the costs of complex intellectual property litigation to a greater degree and for longer periods of time than we could. These claims are time-consuming and costly to evaluate and defend and could: adversely affect our relationships with our current or future clients cause delays or stoppages in providing our mobile advertising services; require technology changes to our platform that would cause us to incur substantial cost; subject us to significant liabilities; and require us to cease some or all of our activities.
In addition to liability for monetary damages against us, which may be tripled and may include attorneys' fees, or, in some circumstances, damages against our clients, we may be prohibited from developing, commercializing or continuing to provide some or all of our mobile advertising solutions unless we obtain licenses from, and pay royalties to, the holders of the patents or other intellectual property rights, which may not be available on commercially favorable terms, or at all.
While Millennial Media clearly recognized the risk of potential patent litigation in its S1 filing, I'm sure even they are surprised at how quick Augme was to strike. But why should Augme wait? Millennial now has $150 million in cash making their inability to pay seem unlikely. Let's face it, if someone stole something of yours and was profiting from it use to a tune of many millions, you probably wouldn't wait either. Remember, Augme uses its patented technology in its mobile platform and offerings, they aren't like others termed "patent trolls" who are just seeking to monetize patents. Augme's active and ongoing use of its patents in it's mobile business entitles them to damages well beyond what a NPE "none practicing entity" may be entitled to.
If Millennial Media is infringing this patented technology, it's nothing they can't quickly remedy with a license agreement paying a reasonable royalty. Considering their apparent complete lack of any IP at all, this would seem to be a prudent consideration towards resolving this material liability on behalf of its shareholders.