PanIP drops patent litigation against small businesses

Mom-and-pop Web stores can breathe easier: PanIP LLC has ended patent infringement lawsuits against a number of small businesses, which defendants had warned could threaten thousands of similar companies.

PanIP had sought damages for the businesses' use of retail e-commerce systems it said infringed two patents for which it is the exclusive licensee. PanIP now has no outstanding litigation regarding the patents, it announced quietly via its Web site last Wednesday.

The suits, filed in the U.S. District Court for the Southern District of California in San Diego in 2002, targeted small businesses with e-commerce Web sites, all based outside California. PanIP, of San Diego, dropped the suits on March 19, and entered into a confidential agreement and covenant not to sue the defendants, according to its Web site.

A group of defendants led by small business owner Tim Beere formed the PanIP Group Defense Fund Inc. to raise money to contest the cases, entitling their Web site "You may be next." There, they warned that PanIP may be looking to make easy money by delivering legal threats and demands for payment to small businesses which could not afford to contest the claims in court.

In 2003, the defense fund was awarded attorney's fees by the court. PanIP dismissed the proceedings in return for a waiver of that fee, according to a statement on the fund's Web site.

Companies involved in the defense fund, which plans to wind up now that it is no longer involved in litigation, included American Science & Surplus Inc., in Skokie, Illinois; Arcade Electronics Inc. of Alexandria, Virginia; Burrage Music Co. Inc. of Raleigh, North Carolina; Cherry Republic Inc. of Glen Arbor, Michigan; CR Magnetics Inc. of Fenton, Missouri; DeBrand Fine Chocolates Inc. of Fort Wayne, Indiana; Delasco Dermatologic Lab & Supply Inc. of Council Bluffs, Iowa; Denver Fabrics Inc. of Colorado; Eagle Wings Inc. of Kissimmee, Florida; Katco Industries Inc. of East Northport, New York; Kreg Tool Co. Inc. of Huxley, Iowa; The Little Pie Co. Inc. of New York; Rock Valley Tractor Parts Inc. of Rock Valley, Iowa; Soldan's Feeds & Pet Supplies Inc. of Lansing, Michigan; and Three Dog Bakery Inc. of Kansas City, Missouri.

The defense fund referred questions to its lawyer in San Diego. Neither the lawyer nor PanIP could be immediately reached for comment.

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