Small Vancouver company goes after social media giants

Firm sues Snapchat, sends cease-and-desist letters to Facebook and Instagram
Vancouver technology firm iFramed, under president Mike Schmidt, is suing Snapchat over allegations of patent infringement | Chung Chow  

Social media giant Snapchat’s patent fight against a small Canadian company isn’t getting any easier.

Vancouver-based social media platform iFramed Canada recently landed a blow in its patent infringement suit against Snap Inc. (NYSE:SNAP) after receiving approval for a U.S. patent earlier this month. Now, it is going after industry titans Facebook (Nasdaq:FB) and Instagram.

The B.C. firm claims that features used by Facebook, Instagram and Snapchat violate its patent. It filed a civil suit in August 2016 in Federal Court in Vancouver against Snap Inc., and a complaint for declaratory judgment in the U.S. before receiving approval for its U.S. patent on October 3 this year. Facebook and Instagram have not been named in any legal filing but have each been sent cease-and-desist letters.

According to UnitedCorp, the letters highlighted how Facebook’s frames feature and Instagram’s geostickers were allegedly infringing on the company’s patent.

IFramed Canada holds patents in Canada and several other countries for filters that allow users to place external content over their photos and videos and then upload them to social media.

The company was developed as a social media platform that defied industry norms. Rather than relying on users to generate a profit without compensation, it pays users to post photos with branded filters.

Before the approval of the U.S. patent, UnitedCorp and iFramed Canada did not have grounds to file a claim in the U.S. Instead, UnitedCorp brought a suit against Snap Inc. and the use of Snapchat’s geofilters in Canada.

Lawry Trevor-Deutsch, senior vice-president of corporate affairs for UnitedCorp, said he and UnitedCorp are unsure how the various strategies will play out. He hopes that the new U.S. patent will encourage these companies to come to the table, but he is unsure of how they will react to new developments.

UnitedCorp said it isn’t picking a fight just yet and wants to engage in discussion with Facebook and Instagram.

“Now that they are aware of the iFramed patent, we hope that they will act just as responsibly,” UnitedCorp president Benoit Laliberté said in a press release. “We will give them every opportunity to be able to use the technology legally.”

Trevor-Deutsch said the situation with Facebook and Instagram is different from the one with Snap Inc., explaining the two social media companies are not directly monetizing the use of the similar technology, and therefore are not in direct competition with iFramed Canada.

Snapchat’s geofilters, however, use the disputed technology to earn revenue, the company said.

Snap Inc. is also launching a revenue-sharing model like one used by YouTube, in which content creators are given a portion of the advertising revenue their videos generate.

“Our head was more to stopping [Snap Inc.] from using it rather than licensing it, because that’s essentially giving them licence to compete,” Trevor-Deutsch said.

In a statement to Variety magazine shortly after the U.S. patent office issued its letter of allowance, Snap Inc. said, “We are aware of their letter, which is another ploy in their groundless claims over an invalid patent.”

Trevor-Deutsch said iFramed Canada has been accused of patent trolling, the practice of filing a large number of patents on generic technology for the sole purpose of profiting from those patents by suing, or threatening to sue, people already using a similar process or technology. But those claims are baseless, he said, because iFramed developed the intellectual property itself and created a business around it, which is fundamentally different from the usual modus operandi of patent trolls.

Responding to the Canadian lawsuit, Snap Inc. argued that the patent was invalid, claiming the technology was covered by pre-existing patents.

However, the Canadian court ruled against Snap Inc., allowing the lawsuit to proceed, and iFramed Canada then used the court’s reasoning to explain why its technology was not already patented in its U.S. patent application arguments.

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