A Victory for Companies Held for Ransom Over Questionable Patents

An Arizona-based Ballard Spahr team successfully shut down threats of patent infringement in a case with wide ramifications—and relief―for digital marketing companies across the United States.

USADATA Inc. is a digital marketing company with a national client base. It retained Ballard Spahr after its clients and several prominent digital marketing companies were threatened with legal action by a patent enforcement entity, DataWidget, for using conventional marketing methods.

Because DataWidget had pursued claims against a number of digital marketers and their clients—and because the threats of legal action potentially were so costly—the case attracted national interest.

Beginning in 2019, DataWidget began issuing threats to three USADATA customers. In a series of aggressive letters, the company claimed that by using USADATA’s services, the customers had infringed on a DataWidget patent covering software methods to compile mailing lists. DataWidget asserted the same patent in suits percolating against other digital direct mail companies in Georgia and Texas.

Brian W. LaCorte, a nationally recognized Intellectual Property litigator in Ballard Spahr’s Phoenix office, argued that the DataWidget patent was invalid as non-patentable subject matter because it did little more than formalize the already common practice of aggregating a mailing list using generic computer components.

U.S. District Judge Douglas L. Rayes agreed. In a seven-page opinion issued in October 2021, Judge Rayes granted USADATA’s motion to invalidate DataWidget’s patent under Section 101 of the Patent Act, writing that “the patent’s claim constitutes an unpatentable idea.”

“As far back as the pre-Civil War era, humans have acquired geographic and demographic data and used a printing service to reach a targeted audience,” Judge Rayes wrote. “The patent essentially computerizes a long-standing economic practice.”

Fending off patent infringement claims can be extraordinarily expensive for small businesses. Defending a patent case through discovery and a trial can cost millions of dollars. With this win, Mr. LaCorte’s team invalidated a dubious patent being enforced around the country, freeing digital marketing firms to engage in ubiquitous direct mail services that have been practiced for over a century, without risk of liability.

Ballard Spahr’s client is not finished yet. Mr. LaCorte’s team is pursuing USADATA’s attorneys’ fees in securing the invalidation of the DataWidget patent, with a ruling expected in early 2022.