As you all know by now, Catalina and APT have settled their 15-month old patent suit over the issuance of purchase-triggered coupons. They agreed that APT will pay license fees to Catalina in the future, and that the two companies will work cooperatively to further the reach of electronic marketing by cross-licensing their patents.
So what does all this mean? It's probably too early to tell, but here are some thoughts.
The companies have agreed to cross-license their patents, enabling a cross-distribution of their respective products. But how likely is it that Catalina would get into the frequent-shopper business? It would certainly be a switch for Catalina, whose focus has been anti-database and pro-"buy-o-graphics," -- targeting consumers based on what to buy, not who they are.The big question in my mind is, how would Catalina and APT work together in a store? Although APT has other components to its system, the component that created purchase-triggered coupons is essentially the same as Catalina's (which, of course, is what the lawsuit was all about). In addition to some detailed technical distinctions, the main difference between the two is that Catalina's coupons are automatic, as opposed to APT's system in which the consumer has to press a button to indicate "Yes, I want the coupon."
In any case, since the functions are so similar, how would a store have both? Would APT's system issue an optional coupon, and Catalina an automatic one? If so, the manufacturer gets a "second shot" at someone who says they don't want the coupon. But what if the customer takes the APT coupon? Would Catalina's system issue a second one? Highly unlikely that would work. Personally, I don't see any point in having both capabilities. Maybe APT would turn its off.
The other part of the technology of both companies involves what we call a "tap" device which monitors transactions on the scanner loop. Perhaps one of the taps would be eliminated if the companies worked together.
In my infinite wisdom and within my prerogative as writer of this column, I don't see it. I think the licensing fees make sense, but not the cooperative system installations.
The settlement has other implications in addition to the Catalina/APT relationship. One, Catalina's patents have been reinforced, and it should be easier to defend them in the future based on this precedent. Two, Catalina is issuing a licensing fee for the process for the first time.
Does this establish a precedent for other licenses in the future? Some manufacturers have been slightly disgruntled at Catalina's position as the "only game in town," and they may be pleased at the potential for other options. And I know retailers who would like to issue their own purchase-triggered "coupons" but haven't done it because of Catalina's patents.
The latest point-of-sale technology can do this, by printing a message similar to a coupon at the end of the regular scanner receipt -- how would Catalina handle that? Manufacturers and retailers must not be too disgruntled, however, because the Catalina network is installed in more than 8,600 stores and growing rapidly.
