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M-Qube’s Zong suit might be headache for carrier billing

August 2, 2011

Contactless payments not a focus of m-Qube suit

M-Qube is suing Zong for patent infringement in the U.S. District Court for the Central District of California over a mobile trigger messaging system.

The company  claims Zong infringed its patent by enabling companies to interact with consenting customers via mobile communications and by processing content charges via a mobile device account.  Zong was recently acquired by eBay $240 million in cash.

“This looks like a mcommerce issue and not a mobile payments issue,” said Drew Sievers, CEO of mFoundry, Larkspur, CA. 

“In other words, if you were buying some media through your phone, e.g. wallpaper, you identify your phone, and then agree to the purchase – a double opt-in,” he said.

“NFC solutions don’t work that way. Starbucks is scanning their phone at point of sale, so you don’t have the double opt-in issues that companies like Zong, Boku and others might have when facilitating transactions through the phone.”

Content sales at issue
Zong declined to comment for this story because the case is ongoing. PayPal did not respond to a request for comment.
M-Qube is a leading messaging and billing aggregator that serves all of the major wireless carriers. It is wholly owned by Mobile Messenger, Los Angeles.

The company’s main business is to offer content providers and media companies the ability to interact with consenting consumers through mobile marketing communications and to sell premium content to customers, with purchases charged to mobile device accounts.

Zong offers a carrier billing solution that allows consumers to pay for purchases from their mobile phones through direct carrier billing. Consumers enter their mobile phone numbers and Zong then verifies that number and clears payment on the customer’s existing wireless service account.

Similarly to m-Cube, content providers and media companies can sell premium content to Zong’s customers.

The two patents in question in the m-Qube suit are titled “System and Method to Initiate a Mobile Data Communication Utilizing a Trigger System.”

M-Qube is seeking, among other things, an injunction against Zong and those working with it from continued acts

EBay acquired Zong, in part, as a way to open up transactions for people who are not customers because they do not have bank accounts.

Zong could also enable physical world mobile transactions for PayPal through merchant accounts that would enable shoppers to make an in-store purchase and charge it to their mobile phone bill instead of a credit card.

Mobile payments is a quickly growing space with several different technologies competing for consumers’ wallets.

More than 8 million customers make purchases on their mobile phones through PayPal to the tune of $10 million in mobile payments per day, according to eBay.

“I’m guessing that m-Qube went after Zong now because it has deeper pockets than it did prior to PayPal deal,” Mr. Sievers said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily

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