A subsidiary of Hothand, Inc. is suing Yelp and Groupon on grounds that the web giants’ mobile shopping apps are infringing a patent on a system for mobile commerce Hothand developed before Yelp and Groupon incorporated, according to a pair of complaints filed Nov. 7. The Mission Viejo, Calif.-based company filed a similar suit against Foursquare back in March.

Jonathan Hangartner, the lawyer representing Hothand, tells The Patent Examiner that Hothand’s founder created a system in the mid-2000s that allowed pizza parlors and bookstores near colleges to advertise discount deals to students’ cell phones.

“We think it’s the earliest implementation of a location-based mobile merchant network like this,” Hangartner says.

Hangartner says he doesn’t know which specific universities or how many of them Hothand served, and that the company is not “operating as it was in the past.” Hothand’s website implies it has set up networks around UC Berkeley, UCLA, Virginia Tech, University of Michigan, University of Nebraska and University of Notre Dame.

Yelp and Groupon are the latest social networking companies to come under legal fire for allegedly infringing Hothand’s patent on “mobile commerce framework,” (No. 7,693,752), first filed in 2004. The company filed suit in March against Foursquare, one day after it transferred the patent to a subsidiary called Mobile Commerce Framework, Inc., which is the named plaintiff in each of the three lawsuits. The case against Foursquare is still in litigation; both sides are preparing to dispute the elements of the patent claims. Hangartner says the case is “going pretty much exactly as we’d hoped.”

Hangartner says Hothand is targeting Yelp, Groupon and Foursquare and not other companies in the mobile promotions market because “they’ve been somewhat successful.” Hothand is demanding injunctive relief, meaning if the company were to be successful in its suit, it could compel Yelp and Groupon to shut down their mobile applications.

Location-based marketing is one of the most explosive areas of the digital economy; last year, Forbes magazine called Groupon “the fastest-growing company ever.”

Is Hothand currently sizing up any other companies?

“We’re always looking at the market for location-based mobile services,” Hangartner says. “We’ll be watching that evolution.”

The inventor on the patent is Randolph Jaramillo, president of Hothand. Jaramillo did not return phone calls for comment on this story before Examiner deadline. “He’s best described as a businessman and, we think, a pioneer in this mobile space,” Hangartner says.

Assisting Hangartner in the Yelp and Groupon litigation is Farney Daniels LLP, a law group based in Georgetown, Texas, just north of Austin.

Read the full complaints [PDFs] mentioned above:


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