Nervous wait on text promotion rights outcome

By IRENE CHAPPLE

The threat of an over-riding international patent on text message promotions has sent shivers through other companies in the young and thriving market.

Pipers Patent Attorneys lodged the patent just over two years ago on behalf of Auckland company Cool 123.

Pipers said this week that the patent was close to being accepted, which would have "far-reaching implications" on the market for text-messaging promotional systems.

If the patent is successful, Cool 123 could claim retrospective damages on breaches of the patent, generally calculated from profits made by companies using the product.

Cool 123 could then be the sole provider of the product, or license it to other users.

The company, which was registered in 2000 and includes Pipers' principal Jim Piper as a director and shareholder, said it invented the marketing tactic and that its patent would cover the practice of promotional text messaging.

Text messaging promotions have become a cheap, effective way to target the youth consumer.

Cool 123's claims - which are what will be protected if the patent is successful - include "an interactive marketing and/or survey system utilising short message systems (SMS) provided on mobile or cellphones, including in combination a means of displaying an advertisement, the advertisement invites a participant to respond with a defined short text message via SMS on a mobile or cellphone".

Another nine claims in the patent include varying themes on the practice, including participation in a promotion through the internet, television or radio.

The application, which cost $281.25 to lodge, has gone through the examination phase in New Zealand.

Previous searches by the World Intellectual Property Organisation did not discover any patents to invalidate Cool 123's claims.

Intellectual property lawyer and AJ Park partner Ken Moon said the claim would succeed if, at the date it was lodged, no other companies could show they were using the process.

But Cool 123 also had to prove that the system was "non-obvious" - that connecting the data, SMS, and marketing system was not an obvious use of the technology.

Even if the patent office accepted the claim, companies could disprove it later and invalidate the patent.

Piper is an equal shareholder in Cool 123 with system inventor Glen Smith, together with England-based Michael Browne and minority shareholder Cornwall Trustees.

Companies in the text promotion market include Lateral Profiles, Synapse and The Hyperfactory, who deal with the two major SMS outlets, Vodafone and Telecom, and television and radio stations.

They are seeking legal advice on the implications of the patent.