Meetings Monopoly?
How a software patent could mean litigation for the industry.
By Rowland Stiteler
U.S. Patent No. 7,590,688 has the potential to shake the meeting and event industry from the net up. In September, Software Management Inc. (SMI) was granted a broad-reaching U.S. patent for its multi-layered meeting and convention marketing, management and online registration software.
Now-retired Founder and CEO Paul D. Franke Sr. started the process with the U.S. Patent and Trademark Office with an initial filing for a software patent in 1998, which was rejected in 2006. Yet, with experienced legal representation, the Webb Law Firm—which specializes in patent, trademark and copyright law—SMI was awarded the patent.
According to legal experts familiar with the situation, the patent likely puts SMI in position to charge licensing fees for potentially dozens of other companies that have produced similar software, or to file patent infringement suits against those companies if they decline to pay.
The potential for liability goes beyond that of companies that produce similar software, however—it extends to destination marketing entities, hotels and convention centers and even meeting and event planners who merely use meeting management and online registration software that is in violation of the new patent.
“It’s not an overstatement to say this is a hugely significant development in the industry,” said Jonathan T. Howe, Esq., founding partner and president of Chicago-based Howe & Hutton Ltd. “It has potentially far-reaching consequences, and an important point is that not all of those consequences are known yet.”
Critics claim that SMI is not just seeking to reap the rewards for some unique process that it created, but using the legal system to gain a monopoly over a process that others have developed independently and have been using in their businesses for years.
“There are dozens of other software applications out there that were not created by SMI and pre-date SMI’s patent by years,” said Corbin W. Ball, CMP, CSP, president of Corbin Ball Associates and 20-year meeting management tech veteran. “What bothers me about this is that it appears to be an attempt to use the legal process to gain a monopoly. There is a difference between gaining a legal right to do something and having a moral right to do something.”
SMI has yet to spell out its specific intents.
“It is possible that some of the existing technology in the meeting industry today may be in violation of SMI’s recently issued patent,” said Jennifer Reichenbach, president of SMI. “We are working closely with our patent attorneys to review a variety of strategic options and will be proceeding very carefully to determine our best direction. “
But the potential of having to either pay licensing fees to SMI or face lawsuits for patent infringement is clearly a worry for industry veterans such as Jeffrey Rasco, CMP, partner and CEO of Attendee Management Inc., who says he has been using meeting management software from sources other than SMI since the 1990s.
“The idea that someone could come along and say, ‘You owe us five years of back licensing fees for the software you have been using,’ is something that could have a catastrophic impact on a business like mine, where using meeting management software is part of the fabric of what my company does,” Rasco said.
John G. McConahy, CMP, CMM, president of Imagination Plus Inc., has mixed views about the possible end results of SMI’s new patent.
“While I hope it does not happen, I suspect that we will be seeing a lot of lawsuits in the not-too-distant future,” McConahy said, “perhaps by SMI to bring ‘offenders’ into compliance, perhaps by others to sue for monopoly of trade or grandfathering of proprietary software. For SMI, the patent is obviously a windfall; for the meeting industry, it will depend on SMI and how they handle their opportunity. It could be anywhere from having a minimal effect to being the single most detrimental step backwards that an industry, already injured by economic difficulties, will experience in the next 10 years.”
Attorney Howe has a wait-and-see outlook about what will happen next.
“I am reminded of the old adage about the dog chasing the car,” Howe said. “What does the dog do with the car if he catches it? Based on public statements, SMI does not know for sure where it will go with this, and with the slow pace at which legal matters go forward, it could indeed be a long, long time before the true impact of all of this is known.”
An important factor, Howe says, is a case pending before the U.S. Supreme Court, Bilski v. Doll, which deals with whether a patent can grant exclusive rights to single party for commonly used processes. The court ruling, which is expected this spring, could negate SMI’s ability to claim patent infringement against a broad group of software providers and users.
Liability Protection for Planners
In any event, meeting management software users should take steps to protect themselves against potential liability incurred in their use of software. Users must know whether or not software they use violates patent rights of other software providers and must, therefore, pay more attention to the legalities involved in software use.
But there are some simple and easy protection methods. Ask providers to warranty that their software does not violate the patent rights of others and to indemnify users. Another avenue of protection is through business insurance.
“A number of insurers are offering protection these days against the kind of property right liability we are talking about here,” Howe said.
Another significant factor that could protect planners in the use of meeting management software is that if the planner is using a system provided by the CVB in the city in which the event is being held, the planner may already be using SMI’s licensed software.
SMI, which itself has been in the meeting management and destination marketing software business for more than 20 years, provides the software used by more than 100 destination marketing organizations in 33 U.S. states and five Canadian provinces.
Regardless of whose meeting management software a planner is using these days, the industry is entering a new era in which it will be important to pay closer attention to the legalities of using that software, Howe says. In short, it’s time to read the fine print. One+
ROWLAND STITELER is a freelance meeting and event industry journalist.
Get Schooled on Tech Law at MeetDifferent
Attend MeetDifferent, Feb. 20-23 in Cancun, to learn more about managing liability and related topics during “Web 2.0: Legal Issues Affecting Emerging Technology,” led by Barbara Dunn of Howe and Hutton Ltd. This session is so essential, it is being offered every day during MeetDifferent.