Watch Out! Local.com Patent Covers Local Crawling

We can argue somewhere else whether the U.S. Patent Office is helping to foster innovation in 2007, or hinder it. But the bottom line is that yet another wide ranging, fairly obvious patent has been issued – this time to Local.com – and local media and local search companies can ignore it only at their own peril.

Local.com’s patent basically covers all crawling of local businesses on the Web It was written by Xiagwu Xia in January 2005. Xiagwu now runs Local.com’s R&D.

In recent years, many companies have made it a policy to basically ignore such wide- ranging patents. Google, in particular, seems to strong-arm anyone who hits them with a patent violation. But as Research in Motion (i.e. Blackberry) found out when it was sued by a so-called “patent bandit” firm in Washington D.C., patent violations come with major consequences.

Local.com CEO Heath Clarke says Local.com’s intention is not to be a patent bandit. The way he characterizes it is the company is mostly trying to protect its growing portfolio of intellectual property; put it on potentially favorable distribution terms with possible violators; and return maximum value to shareholders.

A couple of years ago, Local.com itself fell prey to a wide-ranging patent from Overture.com (which became Yahoo! Search Marketing) and had to pay a sizeable sum to settle. Overture waited until Local.com was going IPO to charge a violation, and was “very strategic by doing so” Clarke notes. But it ended up being a win-win since Local.com got a highly valuable distribution agreement with Yahoo Search Marketing out of it. Clarke envisions similar results with other companies that settle with Local.com.

In any case, if a company (such as Google), tries to outlast Local.com’s legal efforts, it won’t work. “The company that (theoretically) buys us will carry it out,” he says. Indeed, it would put a rival (to Google or some other company) who buys Local.com in an advantageous position since they could use the patent to close down a business or some other aggressive action.

Clarke says that Xiagwu is currently researching companies that violate the agreement. Companies such as Yellowpages.com and some other directory companies definitely don’t violate it, he says. But others probably do.

The way the patent violation strategy typically works, adds Clarke, is you go after the small guys and establish a track record. “You validate it in the marketplace. Then you go after the big guys” who have the real money, channels and value.

9 thoughts on “Watch Out! Local.com Patent Covers Local Crawling

  1. It sometimes amazes me how these patents get awarded in the US. What is new or innovative about crawling a website for local information? More to the point how can it be claimed that there was no prior art?

    This is definitely a strong case for hindering innovation. Most innovation tends to stem from startups and as Clark writes “you go after the small guys and establish a track record.” The long term damage these exercises pose to US tech should not be underestimated.

    I am deeply saddened by these sort of activities and I for one will not be using local.com (which isn’t even that good anyway) anytime soon.

  2. What a bunch of hooey. Good luck proving you “invented it.” when there are a ton of sites and open source projects that have been doing this sort of thing for years. How about this one…definitely one of the later local search developments since it only goes back to 2002:
    http://www.google.com/programming-contest/winner.html

    Not even worth the paper it was written on! Good luck getting acquired for that “wonderful” patent/IP! Someone should fire the person who cam up with that brilliant idea!

  3. I’m not a particular fan of the sentiments Heath voiced, but they are a busienss reality given today’s litigious environment. Yes, there is substantial prior art, but it may never be heard by a jury.

    Patents, like laws, are considered binding until they are legally disqualified. Having a patent means that you are obligated to protect your rights in and to the IP by enforcing the patent. In general this means either threatening to enforce the patent (usually to accomplish some market strategy) or by actually enforcing it through claims of infringement and damages against a specific business or group of businesses.

    Unfortunately for smaller businesses, claims of patent infringement can be devastating, since it will cost approximately $1 million to mount a significant defense. What usually happens is that several smaller players cave and the owner of the patent moves on to try and fry bigger fish.

    From a legal perspective, this is where the game gets interesting. Bigger fish can afford to mount a defense. The biggest fish may even attempt to have the patent invalidated. It is at this point that prior art, anticipation, etc, become critical parts of the process. Until then people can argue about validity, but doing so accomplishes little except raising your blood pressure.

    Next, remember, patent infringement is really not about what’s right (although we could all wish it were so). It’s about some lawyer standing in the courtroom with a jury composed of people who watch the Jerry Springer show, opening a laptop, showing a local search application and then pointing to the defendant and saying “This software from (Insert the Company name here) is exactly what my client invented and they stole it from him and have made billions in the process.” In reply, the defendant’s experts are going to explain how the algorithm really works, how computers really work, how databases really work and as the eyes of the jurors start glazing over, the plaintiff starts counting his money.

    If you want to consider a real nightmare in patent law, look at Markman Hearings, a critical part of any patent lawsuit.

    The Patent process is the U.S. is broken ! We need to find a way to fix it, not to complain about it being screwed-up.

  4. Oh, that’s just lovely – a business model based on “go after the small guys” who can’t afford the lawyers. Have we lost all perspective here? In what respect is that an ethical or honorable or productive way to think about business?

    If people can find loopholes in the system, be it the patent system or the search system or whatever, in a way that allows them to make money legally without actually contributing anything or having a real idea or working for a living, well, whatever. It’s up to us to change the laws. But let’s not pretend, Mr. Clarke, that there is anything being “validated by the market” here, or anything entrepreneurial or creative or interesting or useful or fair. On the contrary.

    By considering this sort of thing to be just regular business, worthy of the same respect one would give an actual innovation, we enourage otherwise smart people to spend their talents gaming the system. Peter, peer disapproval can be a healthy and powerful thing, and I think you should be a rather less agnostic on this sort of thing. Local.com, if your strategy is screw the little guy, I say screw you.

  5. There is a ton of prior art circa 1998 from northern lights. Plus we have tons of prior art as TrueLocal circa October 2000. Anyone can get a patent for a very unique method, but there is nothing here that is groundbreaking. I cannot beleive Heath is going to try to go after anyone with this, but as a public company it is important to protect your specific alogorithms although personally I prefer to keep them secret and not publish.

  6. The patent description herein, fully supports the notion that, indeed, Local.com owns the process technology for local search for which Google and Yahoo use as their fundamental platform for utillizing ‘local search’. Presumably, this will transform how Local.com generates EBITDA going forward. As noted in several documents, Local.com has been generating the process for Local Search for many, many years, some going back to pre-internet boom. I would note as well, that Interchange (Local.com) had the local search business model long before Google had released their version of ‘local search’.

    I would have to conclude that Google and Yahoo ‘local search’ platform’s infringe on Local.com’s newly rewarded patent.

    http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&u=%2Fnetahtml%2FPTO%2Fsearch-adv.htm&r=1&p=1&f=G&l=50&d=PTXT&S1=7,231,405.PN.&OS=pn/7,231,405&RS=PN/7,231,405

  7. @Charlie Styner: citysearch has been around a lot longer and has been doing local search before any of them. Crawling for local content part is something completely different than just having local search. This part alone has been done by many others for a very long time and local.com is a new entrant trying to make money off of it. Sounds like a sinking ship to me.

  8. uh, uh, commenter #8. citysearch crawls its own database.

    local crawls the web. not the same at all.

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