Coinbase Hit With Lawsuit by Patent Troll Over Text Messaging Interface

The claimant, one Anuwave, LLC, filed a complaint in the federal district court of Delaware on June 27, 2019. Strikingly, the patent in question is not related to cryptocurrency or distributed ledger technology, but instead describes a “method and system to enable communication through existing SMS communication channels.” In its complaint, Anuwave said that it found Coinbase’s “Text Notification” service to be a case of patent infringement.

We have the first #blockchain related patent infringement lawsuit. Coinbase is being sued. pic.twitter.com/CcWIfThr9N

— Nelson M. Rosario (@NelsonMRosario) June 28, 2019

Work of a Patent Troll

Filed all the way back in 2007, the patent describes itself as enabling “an SMS enabled mobile device to perform certain actions using text commands.” Its core value proposition is based on the fact that users can interact with an automated system via SMS, even in the absence of an internet connection. Coinbase’s text message interface service allows users to access a wide variety of account management tasks, including a balance inquiry, view their recent transaction history, generate a QR code for their receiving address, and more. According to a TechCrunch report, the text messaging feature was first unveiled by Coinbase in 2013. It is likely that the feature flew under Anuwave’s radar until now. Interestingly, the SMS feature was reportedly developed by Litecoin creator Charlie Lee as one of his first projects after joining the company. Anuwave took ownership of the patent only four years ago, in November of 2015. Six days later, it used the IP to file a lawsuit against USAA Financial Advisors. Similar to the Coinbase case, the firm claimed that USAA’s text banking service was infringing on its patent. Since then it has accused dozens upon dozens of companies of infringement on the same basis. According to historical data from Google Patents, Anuwave has sued seven companies in the U.S. this year, alone — including Coinbase now. In the technology industry, companies like Anuwave are commonly referred to as ‘patent trolls.’ The term typically refers to a company or individual that hoards patents and intellectual property with the sole intention of using them in infringement cases. Such instances are surprisingly common and are usually motivated by either monetary gain or the desire to stifle growth and competition.

Cryptocurrency Lawsuits Ramping Up

Notably, this is not the first time a cryptocurrency firm has been dragged to court this year. Electric Coin Company, the startup responsible for the privacy-oriented token Zcash, was sued by a former employee for a massive amount of $2 million. According to court documents filed May 29 in the Superior Court of California, the employee did not receive $15,000 worth of company stock that was promised to him back in 2016. In April 2019, former Kraken trading desk manager Jonathan Silverman sued the cryptocurrency exchange for $900,000 over unpaid salary and benefits. Bloomberg reported that he had been verbally offered a $150,000 salary and a further 10 percent commission on his deck’s annual profit. Do you think Anuwave’s claim of patent infringement has any merit? Let us know your thoughts in the comments below.