E-centives Files Patent Infringement Lawsuit Against Coupons, Inc.

E-centives, Inc. (SWX: ECEN), a leading provider of online direct marketing technologies and services, today announced it recently filed a patent infringement lawsuit against Coupons, Inc. in Federal Court in Maryland based on two patents relating to online coupons, U.S. Patent No. 6,336,099 and U.S. Patent No. 6,321,208. E-centives has taken this action to protect its intellectual property and significant investment in building this industry.

E-centives' Extensive Patents Rights & Licensing Protections

E-centives, Inc. has built one of the largest and earliest dated collection of patent rights in this area, including five (5) issued patents and one (1) additional U.S. Application that has been allowed and will issue soon. In addition, E-centives has dozens of other U.S. Applications and Foreign Applications that remain pending, with the rights to file many more foreign patents still available.

"We contacted Coupons, Inc. prior to serving them with the lawsuit and offered them a license. Their refusal forced us to serve them to protect our intellectual property," said Kamran Amjadi, CEO of E-centives, Inc. "We want to make sure our significant investments in resources and technology are not taken advantage of by those who are not playing according to established laws. We will aggressively protect the rights granted to us by the United States Patent and Trademark Office against those who we believe infringe on these rights."

"E-centives' patent rights are among the most comprehensive in the industry, based on their filing dates and also the significant number of prior arts cited," said James Gatto, Co-Head of Intellectual Property at Mintz Levin Cohn Ferris Glovsky and Popeo. "And the protection that E-centives provides to its customers is more than just its own significant and exclusive patent rights. E-centives also has licenses to patents of other companies in the space, which extends their protection umbrella even further."

Patents Play Critical Role in Growing Online Coupon Industry

After over 8 years of cumulative investment, inventions and development, E-centives, Inc. is beginning to see the online print-at-home couponing market take off. The promise of online print-at-home coupons has significant impact on the $7 billion coupon industry. At its most basic level, this new generation of technology enables manufacturers to target coupons much more efficiently and cost-effectively. More promising applications include the use of this technology to build unprecedented knowledge about consumers, such as their prior product purchases and loyalty data, and to get a significantly more accurate measure of the actual impact of marketing expenditures on sales. Given that more than 8 out of 10 Americans use coupons when grocery shopping*, a significant opportunity exists to create much smarter promotions that can better enhance customer profitability and loyalty.

Until recently, coupons were delivered mainly through Sunday newspaper inserts or the postal service, utilizing little innovative technology in what is considered a somewhat mature industry. As a result, companies in the coupon industry were not concerned about the issue of patents. This has now changed significantly. With the availability of new electronic channels to deliver coupons (e.g. Internet, e-mail, etc.), there have been significant investments made by certain companies to develop technologies and to drive this aspect of the industry. Concurrently, these innovators have sought to protect their investments in technology and intellectual property by obtaining patents.

Afundamental principle of the United States' patent system is to prevent latecomers from taking advantage of the hard work, risk and investment of pioneers. Thus, a patent gives innovators exclusive rights for a certain time to recoup their investment. The U.S. government (through the United States Constitution) recognizes that without such a system, pioneers and the financiers that back them would be far less inclined to take those risks in the first place. It is this fundamental structure and strong patent system that nurtures the entrepreneurial efforts that have made America the world's technology leader.

Costs, Penalties & Liabilities in Infringement Lawsuits

Patent infringement lawsuits can be very expensive, with the average suit costing about $2-5 million or more to prosecute or defend. Additionally, it consumes considerable time of a company's key executives. A company found to be infringing on another's patent could be liable for damages that can easily range in the millions of dollars. Furthermore, if the infringing company was aware of the patent and willfully infringed, the damage award can be tripled. In some cases, courts may also issue an injunction against a company found to be infringing, requiring it to completely cease the infringing activity.

Furthermore, the U.S. Patent laws permit patent holders to sue not just those companies that make and sell infringing technology, but those that use it as well. Therefore, a client that utilizes a vendor's infringing technology or service can also be sued and found liable for infringement.