The dispute between Coolsavings and Planet U centered on the two companies' respective patents, both of which deal with electronic coupon systems. As part of the settlement, each company recognized the validity of the other's patent, and San Francisco-based Planet U agreed to pay Coolsavings to license its patent.
"The settlement shows the validity of our patent," said Steven Golden, chief executive of Coolsavings. "It also shows that Coolsavings is more than willing to license our process. We're not looking to stay in the courtrooms."
Chicago-based Coolsavings offers coupons and points redeemable for plane tickets and merchandise at online and offline retailers. In exchange, consumers are asked for personal information including their birthday and email address. Planet U offers online coupons for manufacturers and retailers.
The settlement comes as a growing number of Internet companies have received patents on their software and business methods and have gone to court to defend them. The practice has drawn the ire of critics who charge that the patents often cover obvious innovations, and their enforcement will hinder e-commerce and the development of the Internet.
Earlier this year, e-commerce leader Amazon.com found itself in the middle of the controversy after receiving a patent for its widely copied affiliates program. On the heels of the uproar, company chief executive Jeff Bezos called for a reform of the patent system. The U.S. Patent and Trademark office later said it would step up scrutiny of business-method patents.
Golden said Coolsavings' patents are not as broad as those held by Amazon and other Internet companies. But Coolsavings has been more aggressive than most about defending its patents. The company is currently engaged in five different legal disputes over its patents; in addition to its lawsuit with Planet U, the company has already settled three other patent disputes.
And Golden said Coolsavings sees its patents as a source of revenue for the company via licensing. "As we go forward, it could add up to be some nice dollars, but it's not what we're building our business on," he said.
Coolsavings sued Planet U in October 1998, claiming Planet U had infringed on Coolsavings' patent No. 5,761,648. Planet U countersued in February, claiming Coolsavings had infringed on its patent No. 5,907,830.