Source, Inc. Sends Form Letter Demand for Licensing Fees

March 7, 2008 · 0 comments

An insider at one of the rewards programs named as a defendant in the Source, Inc. rewards program patent infringement case tells me that they received an interesting letter from Source this week.
It was a form letter, apparently sent to multiple (if not all) defendants, stating that their rewards program was in violation of one or more of five patents that Source owned, and it urged them to contact Source to discuss licensing options in order to avoid litigation that would be costly to everyone involved. The letter was delivered by USPS regular mail, not certified and without delivery or signature confirmation. It was addressed to the company and not to any specific individual.
The impression that the insider got from this was that Source wanted a quick out of court settlement from everyone involved, and that they were in such a rush to get it settled, they didn’t even take the time to personalize the letter for each defendant in the suit.
I think that the insider is right, and this is why:
If Source was genuinely interested in negotiating licensing fees out of court with these programs, wouldn’t this letter have been sent BEFORE they filed suit?
Source went into this lawsuit on a high, having just settled with AmEx on a similar suit (no doubt for a nice chunk o’change). However, they’re getting more than they bargained for with Rainbow Rewards, who sued to prove that their cashback rewards program did NOT infringe on Source’s patent. In Rainbow’s favor is that the suit is occurring in their home turf, in Colorado…not in Source’s venue of choice, the patent holder-friendly Marshall, Texas.
If Rainbow Rewards wins, it will be a precedent that the defendants of the big multi-program case can use to show that Source’s patents do not apply to them, either…and Source goes home the big loser. Source must be concerned about their chances in the suit, which explains the hasty letter to the rewards programs.
I’m trying to get a copy of the form letter to post here; if you’re reading this and have access to it, please white out any identifying info and send a scan of it to me here (use a hotmail or gmail account to protect your anonymity if you’d prefer). Thanks!

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