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Litigation (L8n) in the Language Services and Technology Sector
Posted by Donald A. DePalma on December 11, 2014  in the following blogs: Supplier Business Issues, Technology, Web Globalization, Market Data
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The term "litigation" (or L8n, as we've taken to calling it inside CSA Research) has unfortunately entered the glossary for the language sector, with two cases representing disputes over intellectual property. A third involves a disagreement between the founders of one of the industry's largest providers. 

First of all, the long-running MotionPoint-TransPerfect case is settled -- well, at least until the inevitable appeal. The patent infringement case (CV 10-02590) between these two purveyors of localization proxy servers seemingly ended with a July 2013 jury verdict favoring TransPerfect. Last month U.S. District Court Judge Claudia Wilken affirmed that decision, thus bringing the current court case to a close. 

The judge ruled that TransPerfect's patent (US 6857022) stands, that MotionPoint infringes it and must cease using that technology within two weeks, and that MotionPoint's three patents (US 7627479, US 7580960, and US 7627817) for translation management systems and proxy servers are invalid. The judge also ruled that had the latter company's patents been valid, TransPerfect would not have infringed on them. Besides the jury's original award to TransPerfect, the judge required MotionPoint to pay 4% of any revenue derived from using the disputed technology until it ceases its infringement. In a separate action on November 21st, the U.S. Patent and Trademark Office (USPTO) confirmed the validity of all of the issued claims in TransPerfect's US 6857022 patent.

Why is this case so important? Whichever litigant prevailed could make infringement claims against: 1) second-generation localization proxy servers, such as Easyling, Linguaserve, LinguaNext, and Smartling; and 2) suppliers of translation management systems (TMS), some of which, such as Idiom (now part of SDL) and GlobalSight (at Welocalize), predate it in the market. The outcome could have had far-reaching effects on these two software sectors, their developers, and, ultimately, their buyers. Finally, because many corporations and LSPs build their own translation technology, they could be found in violation of these patents. 

Will TransPerfect enforce its patent? The company wouldn't comment, but as TransPerfect CEO Liz Elting stated last year, "We didn't start this fight, but we simply couldn't take a passive stance any longer while knowing that there was nothing new about MotionPoint's patents, technology, or service offerings." However, we do expect MotionPoint to appeal both the court and USPTO decisions, actions that could add another year or more to this saga. In any case, we reiterate -- based as they are on prior art, none of these patents should have been issued to either company.

That brings us to the second case, one that has yet to come to trial. Smartling, the most visible provider of localization proxy software, served up a different kind of content. In a lawsuit filed in July in the U.S. District Court in Massachusetts (1:14-cv-13106-RGS), the company claimed that Easyling is using the same formulation and connotation of name as it does (that is, something-LING), a similar logo, and "verbatim copying" of website content and promotional material. The suit goes on to claim that Easyling has attempted "to create either actual marketplace confusion or at least initial interest confusion in the relevant market for website translation and localization services." It says that these "[deliberate] efforts to create initial interest confusion are ongoing." 

As we expected, neither litigant would comment on the case, leaving us to pore over the filing and its various exhibits. While the court will decide on the validity and currency of the claims, we must make at least one observation: the name-ling. Company names in this sector are depressingly unimaginative and duplicative. For example, Smartling echoes names such as the expected pairings Acculing and Powerling, the more intriguingly named Strangely Compelling, and even ones such as MultiLing (founded 1988) that were in use well before Smartling came into existence. The use of ling-lingo-lingua-lang[ue] as a prefix, suffix, or infix leads to confusion even among close followers of the space.

That point aside, Smartling's claims about Easyling's copying of its logo, content, style, and marketing will be matters for the court to decide. As we see it, the issue isn't that clear-cut. Smartling and Easyling have been competing for a few years, but in different markets: Smartling sells to end-buyers and then allows LSP partners to use its technology, while Easyling markets technology exclusively to LSPs for use in website translation. Smartling also competes in the translation management market, and complements its proxy server with a branded content delivery network -- both areas where Easyling doesn't market its wares. In any case, Smartling's high level of funding allows it to compete both with features in the marketplace and potentially by tying up an underling competitor in court. We will track this case as we did the MotionPoint-TransPerfect dispute. 

Finally, there's the case of the ongoing imbroglio inside TransPerfect. The business press has joined the local New York City media in laying out the details of the dueling litigation between executives, but buyers keep coming. Our source inside TransPerfect reported that the privately-held company had a record month in October, and that the fiscal quarter that closed in September set a record for the company as well. As TransPerfect continues its quest to become the largest player in the market -- a mission complicated by Lionbridge's acquisition of CLS -- the company's management can only hope the suit doesn't affect its brand and that customers do keep coming.


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