Introduced in the mid ‘90s and then exploding at HITEC 2000, hotel guest networks (HSIA) became an integral part of the hotel industry. Cais Networks, Darwin, and Wayport took the industry by storm.  Of course, by storm didn’t mean anyone was buying.  The original business model was free with a revenue share. Some installed computers in the rooms, some just installed a network. The premise was based on take rates.  While all their theories may have been on the right track, they were 10 years ahead of their time. The bottom line, customers were not buying and the bleeding edge companies crashed. More than 14 years later doesn’t seem so long ago, but HSIA has progressed light years since that first introduction.  

The technical issue in the infancy of the product was getting people online through a portal.  The industry leader quickly became Nomadix. They developed the patents to create the redirection from the walled garden out to the Internet, giving guests VPN access and assigning static IP addresses along with a few other necessary technology advancements at the time. If you didn’t have Nomadix, everything was manual.  Guests would have to call into customer service in order to accomplish any of these tasks, many of which would include the customer taking step-by-step instructions to change settings on their computer – a long, painstaking process that then had to be corrected once the session was complete. This was the IT equivalent to early days of medicine. We think back now and can’t believe that was the way it was done. Nomadix was one of the technologies that made networks work.  

In January 2008 DOCOMO interTouch made a strategic acquisition of Nomadix in an effort to be a one-stop shop and take control of the patents owned by Nomadix.  DOCOMO interTouch, owned by NTT DOCOMO, is a $39 billion Japanese mobile phone giant with over 22,000 employees worldwide. As with many industries, foreign money entered the United States to dominate a certain market. Within a year DOCOMO interTouch had initiated patent infringement suits against IP3, HP, Wayport, iBAHN, SuperClick, LodgeNet, Aruba, Solutions Inc., and Guest-tek to name a few inside the industry. The suits were not specific to the hotel industry suppliers as companies from other verticals were served as well. Most of the suits ended in undisclosed settlement agreements, but included licensing deals, according to news reports. 

This is a common practice in the United States. Companies buy smaller companies with old or expiring patents and start the offensive. In many of these cases companies argued that the patent infringement was erroneous but did not have the money to fight large billion dollar corporations. To settle becomes the only option to stay in business.  Patent infringement is less about who is right and more about the dollars to defend your position. For large corporations with deep pockets, this is easy money. The common term is patent trolls (which technically is a non-practicing entity, however in this case the results are the same).    

So who pays for this? If you look in your IT budget under the costs to provide Internet to the guestroom you likely will find that you have been paying a hidden tax (typically in the form of annual license fees and bloated gateway costs). Now 14 years forward of HITEC 2000 the technology has advanced, guests network intelligence has developed, and guest devices have become much more intelligent and user friendly. Much of the technology we needed in the past has become obsolete as we continue to evolve. Yet the companies who support the industry have seen costs rise in an era where the time involved to support the more intelligent network has gone down. It’s not a fair market economy when the fees we are paying go to foreign companies not relevant to the current network. It’s a hidden tax.

Recently, Nomadix served the small but quickly growing company Blueprint RF with an infringement lawsuit. Founded in 2011 and located in Norcross, Ga., Blueprint RF is a hotel Internet service provider with less than 100 employees. The suit claims that Blueprint’s Dominion network gateway infringes on its patents and has allowed the company to take in financial gains at Nomadix’s expense. Each of the 10 patents involved in the lawsuit relates to networking and router technologies such as portal page redirection, Internet billing options, and other hospitality-specific functionality.

We asked Blueprint RF for comment. According to Ron Peterson, CEO of Blueprint RF, the Dominion gateway is based on open-source software that is fundamentally different from the Nomadix patents. So the small U.S.-based company has decided to draw the line and fight the foreign giant. “While we respect the intellectual property rights of others, including Nomadix, we should not be held to pay for patents that we do not utilize,” Peterson said. “We purposely set out to steer clear of these patents by developing our own platform utilizing open-source software and we expect to be vindicated on all accounts.” 
Congress has legislation in the works to fight patent trolls. It is estimated that patent trolling costs the technology sector $80 billion per year. It’s been a growing problem in the United States that is costing consumers hidden fees that generate significant income to foreign businesses. The hotel industry is not immune. Given what seems like ever-increasing costs to hotels for providing simple Internet access to hotel guests (and a company like Blueprint RF does not charge an annual license fee), we will be watching this latest Nomadix suit with interest.