CrakRevenue Wins Appeal in 'Virtual Affiliate' Patent Fight

CrakRevenue Wins Appeal in 'Virtual Affiliate' Patent Fight
Rhett Pardon

WASHINGTON — The U.S. Court of Appeals for the Federal Circuit has sided with CPA network CrakRevenue’s parent company in a patent dispute over “virtual affiliates.”

On Friday, an appeals panel agreed with a federal court’s decision to invalidate a patent that works with methods and systems used for configuring an existing affiliate network to receive “virtual affiliates” from an affiliate pooling network.

Patent holder Essociate Inc. sued CrakMedia, CrakRevenue’s parent company, and mainstream CPA company Clickbooth three years ago for patent infringement over the employment of U.S. Patent No. 6,804,660, a process that allows a merchant to avoid or reduce competition while also allowing it to track which and how many customers the referring entity directs to the merchant.

The suit was one of numerous patent infringement claims filed by Essociate against numerous affiliate networks dating back to 2009. Essociate is led by co-founders Evan Horowitz and Michael Landau.

The lower court judge who heard the case said in his original ruling that “mathematical algorithms, including those executed on a generic computer, are abstract ideas” and rejected Essociate’s contentions that its patent was valid. Implementing an abstract idea on a generic computer is not patentable.

The  judge agreed with CrakMedia and ClickBooth’s contention that the steps in the underlying patent simply embody the fundamental economic practice of receiving and tracking referrals from referral sources, and providing incentives to those referral sources — both concepts that involve the “mere formation and manipulation of economic relations.”

The judge further ruled that Essociate’s patent does nothing more than seek to limit the use of the abstract idea of receiving and tracking referrals from referral sources to the technological environment of an existing affiliate system. 

Essociate appealed the case, and on Friday a Federal Circuit panel ruled for CrakMedia and ClickBooth, affirming the lower court’s ruling.

CrakRevenue's founder and CEO, Nicolas Chretien, said of the decision: “It’s a big day for us. We fought for something we believed in, although a settlement would have certainly been less costly than litigation, we couldn’t let patent trolls continue to bully us and others in our industry.”

“We can now focus on the goal we set four years ago: centralize all the industry’s top offers with the CrakRevenue network.”