Investors are not the only ones who see Groupon (NSDQ: GRPN) as a money maker these days. In a lawsuit filed today, a California company is claiming the daily-deal site’s mobile shopping apps infringe its location technology.
[Update: Court records show that the plaintiff also filed a similar suit against review site Yelp]
The patent in question is owned by a subsidiary of Hothand, an Orange County firm that gained attention in 2009 by offering advertisers a way to send messages to students on their mobile phones. The company received the patent in 2010 and has already used it to sue Foursquare, the location-based social networking service. The new lawsuit says that Groupon’s apps for the iPhone and iPad violate the patent as do its Android, Windows and BlackBerry applications.
If it’s as broad as it sounds, the patent could spell trouble for the emerging location-based marketing industry. The patent abstract describes it as:
A subscription-based system for providing commerce information for one or more mobile devices for one or more merchants. Some techniques employed feature a subscription-based method for presenting commercial resources to a mobile device. The method involves receiving mobile device user information relating to a geographic location to locate one or more merchants within a subscription-based shopping network, and receiving mobile device user information relating to a merchant type within the subscription-based shopping network…
Jonathan Hangartner, the attorney for the patent owner, says that Hothand’s technology is the “earliest implementation of a mobile coupon network” and that the inventor spent years developing the business. If this is true, the lawsuit is not a run-of-the-mill “patent troll” case in which investors buy up shaky patents and then sue in an unfriendly district in the hopes of forcing a settlement.
Groupon did not immediately return requests for comment. Foursquare, which is fighting an identical infringement case, has previously described the allegations as without merit. The court docket for the Foursquare case shows that settlement negotiations failed this summer and that the parties are preparing to dispute the terms of the patent claims.
After its frenetic IPO last week, Groupon’s shares appear to have mellowed out this week, closing at just under $26.