Every E-commerce Website is Threatened by Lawsuits!

This news release is about 11 small businesses being sued for having ecommerce websites. We are accused of accepting credit card information over a phone line and on a computer screen for the purpose of making a transaction. We are also accused of displaying text and graphics on a computer screen for the purpose of making a transaction.

On April 4, 2002, Dickson Supply Co. was served with a patent infringement lawsuit that poses a threat to nearly every business, large and small, in the United States. Along with ten other unrelated companies around the country, Dickson Supply has been accused of infringing two patents held by a company called PanIP, LLC of San Diego. According to PanIP, its patents cover any web site that: (1) contains both text and graphics, and (2) is capable of obtaining credit card or other financial information from the user. You may want to read that again. It means that PanIP believes that virtually every ecommerce web site in the country infringes its patents.

While we are confident that the judicial system will ultimately prove PanIP wrong, we believe that these cases represent an extraordinary abuse of the legal system and amount to a direct attack on small business in America.

-- About Us --

Dickson Supply is located in the shore community of Brielle, New Jersey. We are a third generation family business, established in 1946; twenty-five are employed at our single location. We are a distributor of Plumbing, Heating, Hardware, Gas Barbeque Equipment and Irrigation products.
In our industries Dickson Supply has come to be known as an innovative "Early Adopter". That is true, as a small business, trying to compete we continually look for ways to work better, cheaper, faster, so we recognized the benefits of technology early on, we bought our first computer in 1981, and put our web site on-line in 1996, and had our first on-line sale in 1998. We have worked relentlessly every day for the past five years developing our world class web site. We have a very talented staff of six part time web programmers and designers, most who originally came to work with us as high school students.
We are committed to our Ecommerce venture. Although it is still a small segment of our overall business, it is growing and holds great prospects.

-- The Hard Choice --

As the unlucky recipients of these lawsuits, we and the other defendants sued by PanIP must choose whether to fight or settle. Neither choice is appealing. The cost of defending a patent litigation, particularly one on the other side of the continent, can be extraordinary. Typical defense costs may run as much as $1 million per patent for cases such as these that involve technical issues. By contrast, the direct cost of settlement for any particular defendant would be far less - PanIP has offered to sell a license to its patents for about $30,000.00 per defendant.

This sounds like an easy business decision. Pay hundreds of thousands of dollars and spend untold hours over the course of several years pursuing an uncertain result, or pay tens of thousands to make the problem go away today. Duh.

But it's not that easy. We firmly believe that PanIP's patents do not cover Dickson Supply's ecommerce site or any other typical ecommerce web site, and that the patents themselves will ultimately be invalidated by the Court. We also believe that PanIP knows that it is likely to lose this case, and that it specifically targeted Dickson Supply and the other Defendants because it believed we would quickly pay a licensing fee without a fight. On the whole, we see this as nothing more than a modern extortion racket - using the federal patent law as a blunt instrument to extract a check that the plaintiff is not entitled to receive.

Further, beyond the moral costs of caving in to such threats, the pure economic comparison described above does not take into account any of the hidden costs of buying a settlement. Those costs to society as a whole are extraordinary. If each of the current eleven defendants settled for $30,000.00, PanIP would receive a $330,000.00 windfall just for the cost of filing a few lawsuits. Talk about incentive to continue. PanIP would undoubtedly promptly return to Court and file against another ten, twenty or a hundred more companies, using its recent settlement to induce more and more companies to buy a right that they already possess.

-- We Need Your Support --

Dickson Supply Company, along with the majority of the other defendants sued by PanIP, has chosen to stand its ground and fight. Although settling out of court may be the easiest and least costly way out of this situation, it would be wrong.

In doing so, however, we are taking on a huge task and we are asking for your support. There is nothing that distinguishes Dickson Supply's ecommerce web site from thousands of other ecommerce sites around the country, so any business with an ecommerce site is equally likely to be the target of PanIP's next lawsuit. Please tell your friends, associates and government representatives about what is happening here. And tell us if you support what we are doing.

To provide you with more information, Dickson Supply and several of the other defendants sued by PanIP have set up this special web site containing information about the cases. The site will include a guest book / bulletin board type conversation thread. The site will also include a spot for interested parties to sign up with their e-mail address so that they may be kept informed of events in the case as we post new information. We will also have a link or links to many of the documents filed in this lawsuit, including the complaint PanIP filed and the patents that are at issue.

Let this serve as a wake-up call to the ecommerce community and the consumer who will ultimately shoulder the burden of a higher cost of goods. Action needs to be taken now to protect our current methods of business and to prevent "patent pirates" of the future from taking advantage of what they perceive as easy money situations. Any ideas or assistance that you can provide is greatly appreciated.

Thank You,
Allan Dickson
Dickson Supply Co. Inc.