Domino’s intellectual property case drags on

dominos-cheltenhamThe bitter legal dispute between Domino’s Pizza Enterprises and Precision Tracking is impacting Domino’s’ share price and proving an unwelcome distraction for the ASX-listed pizza chain.

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The ASX-listed Domino’s Pizza Enterprises holds the exclusive master franchise for the Domino’s Pizza brand in Australia, New Zealand, France, Belgium, the Netherlands, Monaco, Japan and Germany, making it by far the largest Domino’s franchisor in the world.

It is also arguably the most innovative pizza business in the world. The Don Meij-led QSR business reached that feat by not thinking or acting like a pizza business, but more like a tech start-up. The Brisbane-based business prefers to work in more of a “Silicon Valley way”, as Meij puts it. Meij has said that at any one time there are countless tech innovation projects on the drawing board for Domino’s.

“We live in a disruptive world and the age of the internet has bought such an immediacy to solution finding,” Meij told Inside Retail Weekly in September last year. “We’ve got projects that we’re building for this year, next year, and even some that are potentially three to five years away. For example, GPS Driver Tracker started four years ago with the need to think about safety, and here we are getting the fruits of the benefits this year.”

Those fruits have soured in recent weeks, as the intellectual property legal case between Domino’s and Sydney IT firm, Precision Tracking, has escalated, with both sides suffering wins and blows in the ongoing furore. In 2012, Domino’s engaged Precision Tracking for development work on a vehicle tracking system to enable Domino’s and its customers to monitor delivery drivers during deliveries.

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After 24 months of testing, which included installing Precision Tracking’s solution in around 50 its stores back in 2014, Domino’s pulled the pin on the working relationship with Precision and chose to instead partner with Navman on the project. Working with Navman, the pizza chain developed what would become the much-loved GPS Driver Tracker solution it launched in July 2015.

Precision Tracking, led by Alex Green, Nathan Parrott, Vlad Lasky and Evan Karjalainen, claims GPS Driver Tracker is the result of Domino’s and Navman reverse engineering its own Delivery Command solution, which the Sydney start-up markets to QSR businesses.

Domino’s Pizza Enterprises strongly refutes what it calls, “repeated false and misleading claims” made by Precision Tracking over the past year, with Meij claiming the company has been falsely accused.

Domino’s said it worked with several GPS-based solutions in the development phase for GPS Driver Tracker, and in Navman’s solution they picked what they deemed to be the superior technology.

DonMeij“We are a transparent company and have absolutely nothing to hide,” Meij said. “Unfortunately, we have a disgruntled potential supplier making false claims against Domino’s and its team members in an effort to try to latch on to Domino’s highly successful and innovative GPS Driver Tracker.”

While Domino’s has been entangled in this patent dispute Precision Tracking since 2014, the fight has gained traction in recent weeks. Sydney-based Phoebe Stuart-Carberry, who has taken charge of publicising the stoush for Precision Tracking with a, ‘big business versus the little guy’ tact, circulated an email in late January pushing in no uncertain terms claims that Domino’s blatantly stole intellectual property.

“Domino’s stole the prized GPS tracking technology from a small Sydney IT firm … Domino’s are in an ugly patent dispute which they cannot win,” Stuart-Carberry claimed. “I have all the documents to every aspect of this case. I will also be releasing an exclusive video interview with the CEO and company directors of the wronged IT business.”

A Domino’s spokesperson told Inside Retail Weekly that Stuart-Carberry has since made repeated threatening remarks to Domino’s across a number of channels, including emails and via social media. Domino’s said Stuart-Carberry threatened to publish on social media the above-mentioned video – a documentary arguing Precision Tracking’s case – unless the dispute with Precision Tracking was resolved to their satisfaction.

Following Stuart-Carberry’s refusal to provide a copy of the short documentary to Domino’s for review, Domino’s was granted by the NSW Supreme Court an injunction to prevent Stuart-Carberry from publishing the documentary until further notice, while being required to provide a copy of the documentary to Domino’s to view.

Domino’s were eventually given access to the video and concluded that there was no need to keep it from the public view. The court ordered that Stuart-Carberry pay Domino’s legal costs for refusing to hand over the documentary, which nearly landed her in contempt of court.

Share price stumble

Domino’s Pizza Enterprises, a star performer on the ASX since going public back in 2005, suffered a rare drop of its share price earlier this month as a result of the publicising of its legal fight with Precision Tracking. And this could be a lingering theme for Domino’s as Precision Tracking and Stuart-Carberry continue their efforts to raise awareness about the ongoing case.

And to that end, it almost doesn’t matter where the truth lies in the case – as public opinion is easily swayed when it’s small business up against a large corporation.

The latest setback for Domino’s came last week when the Australian Patent Office denied its request to summon Precision executives for cross-examination to a patent hearing application that the pizza chain is challenging. Deputy patent commissioner, Phil Spann, told Domino’s it did not have the right to cross-examine individuals, but he said he would reconsider summonsing witnesses should Domino’s provide a list of specific questions for Precision’s executives to answer.

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One thing Domino’s does have on its side in terms of public opinion and how it presents itself is the fact that it appears to be inclusive and supportive of entrepreneurs and start-ups in the tech space. Last month Domino’s opened DLAB, a new international innovation lab at its headquarters on Brisbane’s north side. Domino’s said the open plan space will spearhead a new model of innovation that embraces and captures emerging technology and innovation created by both its employees and external parties.

“This is a dedicated innovation space set to encourage out of the box thinking both internally to benefit Domino’s customers and externally supporting start-ups, entrepreneurs and disruptive thinkers,” Meij said in opening the facility in early February.

While a noble initiative on the face of it, it remains to be seen what obligations exist for external parties who use DLAB in terms of the ownership of IP and solutions produced in the facility.

Reputation at risk

Precision Tracking’s claims hit at the heart of Domino’s position as a leading tech innovator in QSR because the GPS Driver Tracker solution has been so well received by its customers and ushered in a myriad of improvements and efficiencies within the business.

“GPS Driver Tracker has so transformed our business,” Meij told Inside Retail Weekly in 2015. “We wanted to make our drivers safer. And that single thing four years ago led to improvements in productivity, which then led to transparency to customers, which led us to improve our behaviour and focus on execution and knowledge.”

Meij added that the GPS Driver Tracker solution is constantly being tweaked and refined, with more than a dozen new elements being introduced in 2015/2016.

The GPS Driver Tracker patent dispute between Domino’s and Precision Tracking remains before the Patents Office. While Domino’s has a lot going for it in the case and is throwing its sizeable legal resources behind it, Precision Tracking is pursuing the pizza chain with gusto and it is far from over. And should it be found wanting, the damage to Domino’s reputation as a technology innovator in the QSR industry will be called into question.

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