E-Coupon Providers Cut and Save Lawsuit

Two of the Internet’s leading coupon providers reached an agreement this week to settle a patent lawsuit which has tied the Internet coupon industry in knots.

CouponSurfer.com and CoolSavings.com reached an undisclosed agreement to put an end to the patent infringement suit filed by CoolSavings.com against its Bedford, Massachusetts-based competitor. CoolSavings still has pending lawsuits against four other Internet coupon providers.

The CEO of CouponSurfer.com says the company is the only significant online coupon provider which has settled with CoolSavings.

“Like it or not, e-commerce patents are now a reality in how businesses compete on the Net. Online couponing is moving much too quickly to waste time and resources on patent litigation,” said CouponSurfer CEO Adam Schwartz. “We’d rather concentrate on the fastest growing marketing segment on the Internet.”

Jack Jackson, a CouponSurfer spokesman, told the E-Commerce Times Thursday that the lawsuit involved the targetting and distribution of coupons over the Internet. Jackson declined to disclose any more details, including whether there was any financial settlement.

Industry On The Rise

By all accounts, coupon clipping is expected to experience an explosive growth on the Internet. The offline industry is woth some $6 billion (US$), and, if current trends continue, the online industry could match or exceed that growth.

Forrester Research, a leading Internet research company, estimated that nearly 25% of online consumers are using coupons and the number is expected to rise. A recent Nielsen report said the clickthrough rate for coupon banners is 20%, which is far and above the industry average CTR of standard banner ads. That proves, of course, that loads of people love a bargain.

Jackson says CouponSurfer.com provides just that, and an added benefit as well. The company’s site is protected by a privacy clause, which prohibits merchants from contacting surfers who click on coupons. Offline coupon clipping does not offer that service, Jackson said.

CouponSurfer currently has over 40 merchants offering coupons, including Disney, eToys, PC Flowers, Reel.com, planetRX, Office Max and many others. Jackson claims the company, which was launched in 1998, is on target to exceed one million registered users by year’s end. The service is free to consumers. Revenue is generated by merchant fees and advertising.

Chicago-based CoolSavings offers coupons for 300 companies. Founded in March, 1997, the company claims 1.4 million registered users and an additional 7,500 new ones every day.

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