by John Gaffney on Monday, May 3, 2010

It was most certainly the most profitable dream Randy Jaramillo has ever had. The self-described “serial entrepreneur was taking a nap back in the Internet’s promising but bubble-threatened year of 2000 and he had a dream that everyone could use a mobile phone to find businesses in their neighborhood and even buy from them. A yellow pages for the phone. He thought so much of the dream that when he woke, he typed it and mailed it to himself.

After starting a company called HotHand and applying for a patent in 2004, that idea was patented on April 6. That patent has raised one very important question for every company that creates local ad or content for the mobile Internet: How restrictive will the enforcement of that patent be? For HotHand there is no question on the effect it has had and will have on HotHand. “It makes us a different company,” Jaramillo says. “No doubt about it.”

Independent sources are hard to get on the record for the patent’s effect. One source told digiday:Daily that the enforcement of patent within an industry usually depends on how companies agree to cooperate going forward. Past infringements are usually not a factor. But a company that wants to walk a very close line to what Hothand does, and what the patent specifies will probably have to reckon with HotHand. And Hothand lawyers say it is a broad definition. “The patent’s claims are pretty broad,” said Michael Van Loy, an attorney at Mintz Levin Cohn Ferris Glovsky and Popeo PC, San Diego. “It is basically centered around the method for getting an advertiser to target ads to users that are interested in that advertiser and also it’s about getting a consumer local to your point of sale.” Van Loy says the patent will affect wireless carriers, mobile marketing and advertising, mobile coupon providers, search engines, advertising, location-based advertising, local directories (mobile and online) and technology providers.

“We were the first to market with it, but we don’t want people to be afraid of it or afraid of doing business with us,” Jamarillo says. “We want to help build the mobile business.”

HotHand also has patents pending for referral transactions from a mobile device and a “Mobile Collegiate Commerce System.” Up to this point HotHand has signed more than 70 colleges and universities to its core business, which is creating mobile communities within the student populations. All HotHand communities are done in cooperation with the institution and revenue is shared. Now Jamarillo wants to go one more level. This fall the company will launch a “social media incentive” for students to connect with each other, not just the community and its merchants. When you’re dealing with schools the size of the University of Arkansas (14,600 students) the possibilities for HotHand get very big very fast. Just the way Jamarillo likes it.

“So far the mobile communities have about a 70 percent acceptance rate,” he says. “When students see the app on their mobile phones they know we have credibility because the university is behind us. That credibility also helps us with local merchants. We’re excited about the sustainability of that.”

Jamarillo hopes that new community model will lead to a nationwide footprint for HotHand. In the meantime, he has a smartphone with a voice recorder for the next dream.

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