Crakmedia, a leader in the affiliate marketing industry, announced today that it won a judgment in a hard-fought patent infringement case that was filed against the company last year by Plaintiff Essociate, Inc.
Essociate owns U.S. Patent No. 6,804,660 (“660 patent’), issued to Evan Horowitz and Michael Landau in 2004 by the U.S. Patent & Trademark Office. The patent describes a method and system for configuring an existing affiliate network to receive “virtual affiliates” from an affiliate pooling network. For years, Essociate has claimed to own the concept of affiliate pooling, and it has used its patent to sue more than twenty companies in the affiliate networking space for infringing the ‘660 patent. According to industry reports, Essociate has obtained settlements from the companies it has sued simply because settling was more economically feasible for these companies than paying law firms to defend them.
Essociate sued Crakmedia, targeting their affiliate program CrakRevenue.com in April 2014 in the United States District Court for the Central District of California, where it had sued most of the other defendants. Essociate alleged willful patent infringement and asked to be awarded damages, lost profits, attorney fees, and a permanent injunction.
But unlike many other companies, Crakmedia decided not to settle. In January 2015, after months of litigation, Crakmedia obtained an order from the District Court striking all of Essociate’s infringement contentions. Crakmedia then teamed up with Clickbooth.com, which had also been sued, to challenge the validity of the Essociate patent under the United States Supreme Court’s recent decision in CLS Banks v. Alice Corp. The District Court granted Crakmedia’s motion, declaring Essociate’s patent claims invalid. This is a significant case for companies accused of infringing Internet patents that try to monopolize abstract ideas of doing business on the Internet.
Crakmedia’s CEOs and co-founders, Nicolas Chretien and Xavier Farooghi, said about the decision, “Crakmedia respects and believes in intellectual property rights. But we were determined not to give in to a frivolous lawsuit. We did not infringe Essociate’s patent and we never believed Essociate should have been allowed to patent the concept of affiliate pooling.”
Crakmedia is represented by Ben M. Davidson of the Davidson Law Group in Los Angeles, California.