Coupons.com Inc. owes it $10 million for unauthorized use of its anti-copying technology, Document Security Systems Inc. claims.
A onetime customer of DSS, Coupons.com is misappropriating its blockout-file technology, DSS alleges in a lawsuit filed Oct. 24 in U.S. District Court in Rochester.
Based in Mountain View, Calif., Coupons.com offers an online service that lets shoppers search and print out manufacturers' coupons offering discounts on products and retailers' coupons offering deals such as free shipping or discounts to shoppers who spend a minimum amount.
Citing a July Nielsen Co. research report on website traffic, Coupons.com claims to be the 39th-largest U.S. site on the Web. It lists clients that include the large grocery chains such as Kroger Co., Safeway Inc. and Publix Super Markets Inc.; drugstores such as CVS Caremark Corp. and Walgreen Co.; and manufacturers such as General Mills Inc., Kellogg Co., Johnson & Johnson and Kimberly-Clark Corp.
Rochester-based DSS develops and manufactures security and anti-counterfeiting products. The company's attorney, Richard Rochford of Nixon Peabody LLP, said DSS officials declined to comment on the lawsuit.
From 2003 to 2008, Coupons.com was a Document Security Systems client, buying specially treated anti-copying paper, the anti-counterfeiting company states in court papers.
The court complaint states that David Wicker, DSS vice president of operations, met with Coupons.com officials in California in 2006, turning over to the Coupons.com officials discs imprinted with DSS technology. One disc had the blockout file, a pattern that makes it impossible to reproduce any image on which the file is super imposed and allow the copy to be read by an optical scanner.
A 2005 non-disclosure agreement limits the use Coupons.com can make of any proprietary technology shared by DSS, allowing the California company to use such technology only to evaluate DSS products, DSS states in court papers. Under the agreement, Coupons.com could apply the blockout-file pattern only for testing purposes.
The file Wicker gave to Coupons.com in 2008 is the only way Coupons.com could have gotten its hands on DSS' blockout technology because it is impossible to reverse engineer, DSS maintains in the brief. Since 2008, the California firm has illegally applied the blockout file to hundreds of millions of coupons, DSS claims.
The $10 million it is seeking from Coupons.com is an estimate of minimum damages to which it believes it is entitled, DSS states in court papers. In addition to the damage award, the anti-counterfeiting firm is asking for a permanent injunction barring Coupons.com from using its blockout file.
Citing a company policy against speaking about matters under litigation, Coupons.com spokeswoman Jenny Davis declined to comment.
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