Patents used by Charlotte-based LendingTree to protect its methods for matching borrowers with lenders are invalid, and competitors did not infringe on them, a federal jury said Wednesday.
Ballantyne-based LendingTree, an online lending marketplace, had sought to convince the jury that three competitors, Adchemy, NexTag and Zillow, had infringed on patents filed beginning in the late 1990s. In its 2010 lawsuit, LendingTree sought damages, including profits it said it lost as a result of the alleged infringement.
The jury found the defendants didn’t infringe on the patents and that the patents were invalid because they failed to identify the correct inventors.
In a statement, parent company Tree.com said it is disappointed with the verdict. Tree.com “believes it has strong grounds for appeal.”
The company also said the verdict “will not impact its ability to offer LendingTree’s current suite of products and services.”
Industry analysts had said that other companies could try to compete directly with LendingTree if its patents were found invalid.
The case pitted the online lending marketplace against some of its major competitors, including Internet giant Zillow, a real estate database.
Charlotte attorney Mark Henriques, the local counsel for the companies sued by LendingTree, said the defendants are pleased with the jury’s decision.
“They found the type of business that the defendants have operated does not infringe on LendingTree’s patents,” said Henriques of law firm Womble Carlyle Sandridge & Rice.
LendingTree allows customers to comparison shop for various types of loans, such as mortgage and auto, on its website, Lendingtree.com.
Lenders pay LendingTree to generate leads for them. Borrowers submit information, such as the size and type of loan they are seeking, to LendingTree. The information is then sent to lenders, who make offers to borrowers, who pick the best deal.
LendingTree founder Doug Lebda and former Chief Technology Officer Richard Stiegler filed for patents beginning in 1998, during the days of the dot-com boom. Two patents for “Method and Computer Network for Co-Ordinating a Loan over the Internet” were awarded in 2002 and 2003. Stiegler died in 2004.
According to LendingTree’s lawsuit, the patents cover the computer hardware and software “used in facilitating business between computer users and multiple lenders on the Internet.”
In a partial victory for LendingTree, the jury ruled against counterclaims that were filed against it, alleging inequitable conduct and antitrust violations.
The trial began Feb. 10 in uptown Charlotte, and the jury began deliberating Tuesday.
The case highlights the flurry of patent litigation that has popped up in the Internet age. LendingTree and Tree.com are defending themselves in two separate federal civil cases over alleged patent infringement.