Telstra is in court this week fighting patent infringement claims over its mobile eCommerce business

A fliptop phone in 2001. Koichi Kamoshida/Getty Images

Telstra is in court this week over a claim that its mobile eCommerce platform has been infringing a British inventor’s patents for many years.

Potentially at stake is hundreds of millions of dollars for past and future use of patents held by Thailand-based Simon Joyce. He is chairman of Upaid Systems, which he founded in 1997, and his company has brought the legal action against Telstra.

Upaid is taking similar action against telecommunications giant NTT DoCoMo in Japan, seeking more than $100 million. In the US, communication groups Verizon and Qualcomm license patents from Upaid.

A hearing is set down for three days in the Federal Court before Justice Yates from tomorrow.

The legal teams are from the top end of town. Upaid is represented by Bruce Caine, QC, and Telstra by Ross C Macaw, QC, and Angus Lang. Telstra has law firm King & Wood Mallesons, Upaid has Allens.

In documents lodged in the court, and seen by Business Insider, Upaid alleges Telstra infringed the patents which allow customers to make ­purchases using their Telstra mobile while roaming overseas or through Bigpond.

The technology claimed by Upaid allows mobile phone users to conduct business with a large number of merchants over many networks, rather than being tied to one telecommunications provider, which was a constraint in the early days of mobile transactions.

Telstra has rejected Upaid’s claims and is seeking to have the case thrown out. It is this application for dismissal of the case that’s listed in the Federal Court this week.

The issues at this hearing will centre on Telstra’s MOG, a music streaming and download service. However, the scope of Upaid’s case against Telstra covers many other products and services.

One patent held by Upaid goes back to 1998 and the second to June 2001.

In 1998, mobile phones weren’t designed for eCommerce. Their primary purpose was to make and receive phone calls. Some phones had a calculator, some had simple games accessed via a keypad. There were no touchscreens as good as they are now.

The data transfer rates were very slow, about 9,600 bits per second or about one fifth of the data rate for a dial-up modem.

At that time, a mobile user on one service network could not send a text message to a phone on another network.

And a common business model at the time was the walled garden where content and services were hosted on an internet service provider’s network. That’s where eCommerce took place.

Upaid’s technology made it possible to do business across networks.

The company is well funded. Among its investors is Kenneth Langone, a billionaire and the co-founder of homewares group, The Home Depot, in the US.

Joyce says patents are now mission-critical corporate assets and enforcement is a necessary aspect of doing business.

Joyce says on the company’s website: “Even the biggest players have recently found themselves excluded from markets by competitors and inventors enforcing IP (Intellectual Property) rights. Patents protect large swathes of intellectual real estate in our industry. Patent holders now exercise their rights both defensively and aggressively.”

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