Patent Problem on the Horizon for Facebook?

Single Touch Systems Inc., a technology based mobile media solutions provider that enables businesses, advertisers and brands to connect with customers, by and through its wholly owned subsidiary, Single Touch Interactive R&D IP, Inc., issued a “Letter of Notification” to Facebook, Inc. (NASDAQ: FB). The purpose of the letter was to inform Facebook of several Single Touch’s issued U.S. patents directed to streaming and routing media.  The patents include U.S. Patent Nos. 7,054,949, 7,191,244, 7,689,706 and 8,015,307, but also mention U.S. Patent Publication 2004/0025186.

The letter was sent on behalf of Single Touch by attorneys Polsinelli Shughart, P.C. The letter seems to obviously be a first salvo in what could become another patent problem for Facebook. While some may want to speculate that this is nothing more than an attempt at licensing, I find that difficult to believe. Why would Single Touch issue a press release if they were simply seeking to open the line of communication over the acquisition of the patents or the granting of a license?

Although rather muted in tone, the letter is easily recognized by those in the industry as either an attempt to open licensing negotiations, or a subtle warning that patent infringement litigation is right around the corner.

So as to not provide Facebook with an opportunity to seek an immediate Declaratory Judgment in the district court of their choosing these letters necessarily seem innocuous, but the point is clear. Single Touch must believe that Facebook is infringing upon these patents. They seek a payday.

[Patent-Litigation]

The letter was sent by James Stipek, and in its totality reads:

Polsninelli Shughart PC represents Single Touch Interactive, Inc. (“Single Touch”) in intellectual property matters. Single touch owners issued patents and published applications directed to streaming and routing media, including U.S. Patent Nos. 7,054,949, 7,191,244, 7,689,706, and 8,015, 307 and U.S. Patent Publication 2004/0025186, copies of which are attached. Please contact me if you have any interest in the technology or intellectual property identified in Single Touch’s patents and published applications. My contact information is listed above.

Not surprisingly, the four mentioned patents are all related. The parent is the ‘949 patent with the ‘244 and ‘307 patents being divisionals of the ‘949. The ‘706 patent is a continuation-in-part of the ‘949 patent.

These related patents pertain to a system and method for streaming media to a viewer and managing the media. The system comprises a media switch, a routing processor, and a management system. The media switch is configured to receive a request for media and to receive an identification. The media switch processes the identification and the data to determine if the identification is valid, and, if valid, streams the media requested. The routing processor is configured to receive the data, to determine if the media switch can stream media for the request, and to transmit the data to the media switch if the media switch is able, at least initially, to stream media for the request. The management system is configured to receive the request for media, to build data for the request, and to transmit the data to the routing processor.

But does Facebook steam media? Here is what the ‘949 patent says about the definition of the term “media”:

Media streaming, both live and on-demand, provides the optimal environment for viewers to experience multimedia by establishing a logical, one-to-one connection between the media and the audience (a “session”). This enables a rich media, interactive experience and is the foundation for a reliable streaming service platform. Media may include audio, video, and other data. Media may include one or more media clips, a part of a media clip, a presentation as defined below, or part of a presentation. A session may include an internet protocol session and/or a broadband connection. For simplicity, the word session may be used in some instances to mean only an internet protocol session, only a broadband connection, or both, depending on verbiage.

Thus, “[m]edia may include audio, video, and other data,” which is a rather broad definition for media. Based on this definition of “media” then it would seem that what Facebook does to push data to a user’s news feed could be generally captured within what is described in these patents. That is not to say that I think Single Touch will be ultimately successful, but there is at least on its face a plausible connection to what is covered in these patents and what Facebook does. Enough so that further inquiry would seem advisable for both Facebook and Single Touch.

While it is too early to tell what Single Touch things Facebook is doing specifically that would require a license under these patents, the press release issued does provide a few additional clues.  Facebook is extremely successful and their operation makes more than one billion users easily reachable by advertisers, who are paying money to use the Facebook platform to reach said billion plus Facebook users. The release explains:

Facebook mission is to make the world more open and connected. People use Facebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them. Facebook enables advertisers to reach more than one billion people with ads that are relevant, engaging and have social context. In the Third Quarter of 2012 14% of Facebook’s ad revenue came from mobile.

Single Touch Systems, Inc. and its subsidiary has a current portfolio of 18 issued and additional pending patents related to mobile search, commerce, advertising and streaming media.

For what it is worth, Polsinelli Shughart is one of the top 100 law firms in the U.S. according to The National Law Journal. They have more than 600 attorneys in 16 cities stretching from Washington, D.C. to Los Angeles. While size alone is not an indication of a lot in many circumstances, when you are going to potentially be taking on the likes of Facebook in a patent infringement litigation size can certainly matter. Additionally, when I see a 600 attorney firm sending a letter like this it sends a different message than would be sent if the firm were of modest size, unless of course the firm of modest size is a known giant killer.

So what does that mean? Well, I have no way of knowing whether Single Touch is paying by the hour or they have some kind of contingency deal in place with Polsinelli Shughart. If they are paying by the hour for a big firm like this they are paying handsomely, which would suggest they have strong financial backing and confidence in their patents and a solid belief they are infringed. If they have negotiated some kind of a contingency arrangement, or hybrid contingency/hourly billing arrangement, that would mean that a group of attorneys have convinced themselves that it is not a fools errand to spend time that would never be compensated. In either case, the unwritten subtext here suggests confidence. Time will tell whether that confidence is founded or not.

Call it a hunch if you like, but something tells me is a case worth keeping an eye on.