Interactive files federal patent suit against competitor

Indianapolis-based Interactive Intelligence Inc. has filed a federal patent lawsuit against Avaya Inc., a competitor with which Interactive Intelligence also had a long-standing patent license agreement.

The suit, filed Monday in U.S. District Court for the Southern District of Indiana, involves a patent license agreement that the two companies signed in 2002 and amended in 2006. Both Interactive and Avaya provide services to the call-center industry, and the patent license agreement gave Interactive a license to use Avaya’s patented call-center products in exchange for payment.

According to the suit, the 2006 amendment provided Avaya with a flat license fee, in addition to a royalty based on Interactive Intelligence’s global sales if its sales topped a certain threshold. Monday’s court filing does not specify the fee or the threshold amount.

Interactive argued that Avaya used an “overbroad” means of calculating global sales, including revenue sources that are not related to the patent agreement.

“From 2002 until the present, the sources of Interactive’s revenue have grown significantly from primarily call center software sold within the United States to now include many other sources, including hardware resales, software maintenance and support, training, subscription services for cloud-based hosting and many others which aren’t directly related to call centers and are not relevant to the licensed patents,” Interactive Intelligence said in its suit.

Interactive also said it now derives “a sizeable portion” of its business outside of the United States, where the licensed patent coverage is “significantly absent.”

Interactive said it has overpaid by “significantly more than $1 million” under the license agreement.

The company said it notified Avaya in November 2015 that it believed the current patent license agreement was unenforceable because of “patent misuse” on Avaya’s part. If the agreement were to continue, Interactive said, the terms would need to be amended to “provide for an appropriately tailored royalty base,” and also to reflect the fact that many of the licensed patents covered by the agreement had expired.

The two companies had a series of discussions about the issue, and Avaya representatives visited Indianapolis twice for meetings.

Avaya “unilaterally terminated” the patent licensing agreement on July 29, the suit says.

In its suit, Interactive asks the court to declare that the patent licensing agreement and the licensed patents are unenforceable because Avaya engaged in patent misuse.

Among other things, Interactive is also asking for awards of restitution and/or damages; and compensatory damages and/or statutory damages.

IBJ was unable to reach representatives of either the plaintiff or the defendant Tuesday morning.