Most tech-savvy Americans have come to expect WiFi availability at restaurants and coffee shops, but if one company gets its way, those providing the service will have to pay up.  Over the past ten months, Innovatio IP Ventures has filed patent infringement lawsuits against companies (including for example, Au Bon Pain and Panera) that provide wireless internet access to customers.  Innovatio, which owns 31 patents and has a business model limited to buying and asserting patents, has been targeting individual hotels and chains, such as Hyatt and Marriot hotels, in its latest round of suits filed throughout September.

In letters to accused infringers, Innovatio asserts that its patents are “controlling patents in the area of [wireless local area networks] WLAN (e.g., Wi-Fi) and mesh networking technologies.”  Further, that the patents cover almost all “wireless hotspots” and therefore the presence of a wireless network would be per se infringement.

Matthew McAndrews, counsel for Innovatio, has stated that the company is seeking a one-time fee of $2,300-$5,000 from each infringer.  The low asking price (relative to most patent infringement suits) appears to be part of a strategy to discourage litigation by making a settlement the better economic decision.  With over 200 defendants in Illinois alone, Innovatio looks to have no shortage of targets, and the settlements have the potential to add up quickly.  There is, however, good news for those with WiFi networks in their homes: while the patents allegedly cover all wireless local area networks, including those found in many homes, McAndrews has recently stated that “Innovatio has made a strategic and business judgment at this stage that it doesn’t intend to [sue] residential [WiFi users].”  Additionally, he doesn’t expect the plan to change any time soon.

Innovatio’s road to riches is not without its potential potholes.  In May, in response to Innovatio’s actions, two large manufacturers of WiFi equipment, Cisco Systems and Motorola, filed a suit against Innovatio to protect their customers.  The suit seeks declaratory judgment of non-infringement by those originally targeted by Innovatio and challenges the validity of the patents asserted by Innovatio.

If, in the end, Innovatio prevails in these suits, the question becomes: who’s next?  Do you trust that they won’t go after individuals?  How about universities, cities that provide wireless networks, or hospitals?   What do you think?

– Mike Ritter

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One Response to Patent Troll Looks to Gorge on WiFi Providers

  1. wpickens says:

    I wonder whether Innovatio packaged and mailed Wi-Fi to itself?

    Who’s next? I can’t imagine that anyone would ever decide to go after individuals for this sort of thing–the cost of identifying residential users and bringing the claims would obviously (it seems) outweigh they payouts they could come up with (possibly even before factoring in the risk of losing).