Nuance Slaps Vlingo With False Advertising Lawsuit As Latest Move In Legal Battle

6/24/11Follow @xconomy

The patent litigation between Burlington, MA-based Nuance Communications (NASDAQ: NUAN) and Cambridge, MA-based Vlingo is nothing new.

A false advertising lawsuit is, though. Earlier this week, Nuance filed such a lawsuit against Vlingo in Suffolk County Superior Court. The suit asserts that Vlingo, on its website and elsewhere, “makes numerous false and misleading representations of fact to induce consumers to purchase or use Vlingo products and services,” according to court documents provided to Xconomy by Vlingo.

[Disclosure: the brother-in-law of Xconomy Boston editor Greg Huang is a co-founder of Vlingo. Mr. Huang was not involved in the planning, directing, reporting, or editing of this story.]

These allegedly false and misleading claims include the statement that Vlingo’s technology achieves unprecedented accuracy, that it applies “automatic adaptation” to pronunciation and vocabulary, that it learns for example, “over time that a particular user tends to ask for Mexican food,” and that the adaptation process is “new technology.” Nuance calls these claims unfair and deceptive—for instance, at one point the suit says “Vlingo claims that certain technology is ‘new’ when in fact it is not”—and has sought unspecified monetary damages for the harm Vlingo has caused it as a result. Nuance also states that the claims “harm the consuming public and are contrary to the public interest.”

A representative from Nuance said that the company does not comment on matters of litigation.

Here is the PDF of Nuance’s false advertising complaint against Vlingo and supporting documents.

Nuance says in its suit that it became aware of the false advertising as part of the discovery process—specifically when it deposed key Vlingo employees—in one of the pending patent infringement cases. Nuance says a protective order issued in that case prevents it from using at least some of the information in the new false advertising suit at this time, but that it is seeking ways to do so.

“To me it looks like a real sign of desperation,” Vlingo CEO Dave Grannan told me on a call Thursday. “It’s just a measure of the fact that they’re trying to increase our legal expenses and create some sense of uncertainty and doubt against our customer base.

“It’s continued to be part of the Nuance strategy to compete in the courtroom rather than in the market,” he says.

Vlingo offers a mobile app that consumers can buy themselves and also powers voice recognition features for device makers like Samsung. Grannan says his company has recently inked some big customer deals —which he didn’t name—in which it went head to head with Nuance. “Every time we have a market victory, they sue us again,” he says.

The false advertising lawsuit is the latest step in the three-year legal wranglings between the two software companies. Earlier this month, Nuance hit Vlingo with another lawsuit surrounding a few more patents, TechCrunch reported.

Grannan says the cases aren’t as much about the specific patents Nuance claims Vlingo has infringed on as about keeping Vlingo in court. “The patents they’ve alleged against us are very poorly chosen, some of which have nothing to do at all with what we do,” he says.

Nuance first sued Vlingo in 2008 surrounding a patent covering technology that adapts to a speaker’s voice over time. That one goes to trial July 18 in Massachusetts, Grannan says. The two companies are now involved in seven open lawsuits, with Nuance asserting 17 patents against Vlingo, and Vlingo charging Nuance with infringing on six patents, Grannan says. Last year, Vlingo made a deal with Bellevue, WA-based Intellectual Ventures to acquire patents it knew Nuance would need a license to, Grannan says. It made a similar deal with defensive patent firm RPX.

Vlingo’s ultimate hope is that Nuance will come to an agreement to cross-licenses patents with Vlingo.

That could take three more years, though, he says. And a lot more money. Grannan didn’t specify exactly how much Vlingo has spent on legal expenses, but said that each patent trial can cost $2 million to $3 million.

“Generally what I’d say to you is that our perception is that Nuance doesn’t care if we win or lose. They just want to get us into court to cost our startup time and money,” Grannan says.

Ultimately, the damage could extend beyond Vlingo, he says.

“We think this kind of litigation is bad for the entire industry,” says Grannan. “It slows down technology innovation and it makes the technology more expensive.”

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