NEW YORK-Take heed wireless telecommunications carriers! The chickens have come home to roost, and royalties are due for the systems that run up to 90 percent of all prepaid telecommunications services in the United States.
After a seven-year review, the U.S. Patent and Trademark Office last month accorded Patent No. 5,790,636 to Marvin E. Marshall, a native of central Michigan whose formal education ended when he was 16. The patent rights, which are not retroactive, became effective Aug. 4 and run through 2011.
The Marshall Patent for prepaid calling covers a system the inventor developed between 1988 and 1990 that enables telecommunications carriers to program a switch through computers and software so the system completes, cuts off, reroutes or refuses to complete calls, as predetermined by prepaid calling services providers and their customers.
The Marshall, Mich., native grew up on a cattle farm. At an Amish dairy farm near Goshen, Ind., Marvin Marshall developed his first software invention in 1981. Widely licensed for use, it allows farmers to determine and revise at will the proper mix for cattle feed based on crops grown and silage quality at their farms.
The new Marshall Patent for prepaid telecommunications services “is a process patent that applies to all facilities-based carriers getting revenues … if they’re using it, no matter how they got it,” said Doyal Bryant. Bryant is a Charlotte, N.C.-based member of the Society of Telecommunications Consultants and an adviser to Centreville, Va.-based Alpha 2010 L.L.C., the patent licenser company.
When the PCS ’98 show opens in Orlando, Fla., Sept. 22, Alpha 2010 and a Big Five accounting firm it hired will have completed development of royalty rates for wireless carriers. Identification of the accounting firm requires its permission, which Bryant said he had not obtained at the time of his interview with RCR.
“We’re not asking for even 5 (percent) to 10 percent of a company, even though up to 25 percent of a company’s valuation can be done. This is a creative, sliding scale percentage of revenues based on usage … (taking into account) tier one, two and three companies,” Bryant said.
“Wireless prepaid also has a whole different margin structure than wireline. [Wireless carriers] get more revenues, but that doesn’t necessarily mean they’re using more of [Marshall’s] technology.”
That’s the carrot. Here’s the stick. Alpha 2010 has retained the advisory services of Arland T. Stein, co-founder of the Intellectual Property Group of Pittsburgh, Pa.-based Reed Smith Shaw & McClay L.L.P., a 400-member law firm.
Volume discounts and other sweeteners available for companies that reach voluntary royalty-payment agreements with Alpha 2010 won’t be available to those it must sue, Bryant said.
“Alpha 2010 isn’t a big company like a Cable & Wireless plc, but it is able to do fast-track litigation,” he said.
“Telecommunications companies doing mergers and acquisitions will find those difficult to do because it’s hard to establish valuations when there’s a patent-infringement case outstanding.”
The system allows customers to curtail calling-card fraud and abuse, to modify in real time the authorization for using the system and to receive billing information in real time or on another pre-selected basis. The ability to terminate service on a real-time basis is considered one of the most, if not the most, important features of a prepaid system, according to Alpha 2010.
For domestic telecommunications companies, another critical characteristic of the Marshall Patent system is its ability to integrate with any standard switch used throughout the United States, Alpha 2010 said.
The system also provides efficiently and at low cost features including: card validation and account status control, termination of service during a call, real-time validation of personal identification numbers or alterations to PIN-enabled calling areas.
The Marshall Patent system uses voice response and also permits system access through cellular telephones and personal computers.
“There is no other more convenient and comprehensive telephone technology currently out there that can better service the prepaid phone card market,” Marshall said.
“We have given the service provider and the card issuer all of the controls to control usage automatically and run a successful calling card business very efficiently at low cost.”
