Welcome
Coronavirus Outbreak

Startup Risks Clash With Apple, Google Over Virus-App Royalties

May 7, 2020, 7:27 PM

A Utah-based startup says it has exclusive business rights to the use of smartphones and other electronic devices for tracing people who have come into contact with a person with Covid-19, setting up a potential patent-infringement battle with some of the biggest technology companies.

Blyncsy, Inc., which describes itself as a “movement and data intelligence” company headquartered in Salt Lake City, holds the business method patent for “tracking proximity relationships and uses thereof” by identifying the movements of people with a contagious disease, Chief Executive Officer Mark Pittman said.

Blyncsy (pronounced BLINK-see) won the patent from the U.S. Patent and Trademark Office in February 2019. It recently launched a website for other companies to request licensing of its contact tracing methods. No company has received a license, yet plenty are offering contact-tracing apps, Pittman said.

But the company faces a serious uphill battle if it tries to protect the patent, practitioners say. Tech giants like Apple Inc. and Alphabet Inc., the parent of Google, which both offer contact tracing tools via mobile phone apps, aggressively seek to get patents canceled through the USPTO and are even more relentless in court. The type of patent Pittman has could be vulnerable under a 2015 Supreme Court ruling that limited the types of software that can be patented.

Utah App

Even if it got to a court battle, it would come just as the federal and state governments are getting their contact tracing programs running.

Blyncsy’s home state of Utah, for example, has a contact tracing app called “Healthy Together” through which residents self-report their health status on a daily basis, and which has received praise from the White House.

Twenty, the mobile app developer that has a $1.75 million contract to operate Healthy Together, said the app is based on technology it developed starting in 2014. “The app is based on our company’s own proprietary technology and is not based on any technology developed by Blyncsy,” Zea Moscone, spokeswoman for Twenty, said in an email.

About 35,000 smartphone users have downloaded “Healthy Together.”

‘Pencil and Paper’

Tracking someone who has come in contact with another person with an infectious disease “can be done with pencil and paper, which is a key issue,” said Jonathan Stroud, chief intellectual property counsel for Unified Patents, a defensive group that challenges patents it believes could be used to unfairly target industries like the tech or auto fields.

He said the concept of identifying who’s been in contact with a contagious person goes back to 1854, when British doctor John Snow tracked an outbreak of cholera to a local water pump.

Overbroad Patent

“This is the type of thing we’ve seen when someone small and inexperienced is granted an overbroad patent,” Stroud said. “If they sue, that would be the type of thing Unified would be concerned about -- an inappropriately overbroad patent in one of our tech spaces.”

The companies can file different types of challenges at the Patent Trial and Appeal Board or even file a pre-emptive lawsuit to invalidate the patent in court, said Mike Borella, a patent lawyer who heads McDonnell Boehnen Hulbert & Berghoff’s software and business methods practice group in Chicago.

“If I were asked to defend against this patent, I would have a lot of weapons in my arsenal to go after it,” said Borella. He envisioned any company contacted by Pittman as responding, “We’re just going to make your life miserable until you give up.”

‘Public Scorn’

Pittman also may face public scorn over any attempt to monetize the patent, he said.

“Immediately, the entire public is going to turn against you if you’re seen as trying to stop people from stopping Covid from spreading,” Borella said.

Pittman said Blyncsy is not itching for a fight, but is focused on rallying tech firms in the battle against Covid-19.

“Blyncsy would like to get its technology into the hands of other companies and government agencies, so that we can fight this virus together,” Pittman said in an statement announcing the website. “We believe it is important that we as companies come together at this time to leverage our specific technologies to assist in understanding and eradicating this virus, and re-opening our economy.”

Surveillance Concerns

The company’s other major goal is to make sure contact tracing isn’t used to expand government surveillance and violate individual privacy, he said. He wants companies not only to apply for a license, but to submit their privacy standards to a review board that the company is now constituting with tech and civil liberties representatives.

“We’re using our property rights to protect the privacy interests of the American people,” he said. “Can we trust Google and Apple?”

Google and Apple announced April 10 a joint effort to enable the use of Bluetooth technology to help governments and health agencies reduce the spread of the virus, “with user privacy and security central to the design.” Spokesmen for Google and Apple didn’t respond to requests for comment.

They aren’t alone. Consultant PwC is developing a mobile app that its corporate clients can use to identify employees who’ve come near another worker that’s covid-positive, CNBC reported.

Privacy Review

If companies refuse to get licensed with Blyncsy, their continued use of the patent could lead to an accusation of infringement in the federal district court, said Eric Maschoff of Maschoff Brennan, an intellectual property firm in Utah which represents the company. It’s not unusual for companies to offer up their licenses in order to avoid a dispute, he said.

If companies don’t get licensed and submit their privacy standards for review, Blyncsy will consider taking the next step, Pittman said.

To protect its property rights Blyncsy will seek to be paid royalties when companies make money from their contact tracing apps, Pittman said.

“If you give it away for free, it will be free for you, other than a licensing fee and just to pay the lawyers” and cover other costs, he said. “If you monetize it, you have to pay.”

Royalties will be below market terms “because we’re trying to develop the technology,” he said. “We’re not trying to profit here, but we have to protect our patent.”

“We might have to sue people,” if they’re making revenue off their app without getting licensed through Blyncsy, he said.

“We’re taking a stand to protect the privacy of American citizens,” he said. “If we have to do that in a more aggressive way, we’re open to doing that.”

(Updates with additional comment from Blyncsy in last four paragraphs)

To contact the reporters on this story:
Tripp Baltz in Arlington at abaltz@bloomberg.net;
Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editors responsible for this story:
Bernard Kohn at bkohn2@bloomberg.net

Elizabeth Wasserman

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

To read more articles log in. To learn more about a subscription click here.