Amazon hits back at IBM over patents

A patent feud between IBM and Amazon.com took a new twist this week as the e-commerce giant countersued Big Blue for infringement and blasted its earlier accusations as "meritless and misleading."

In Thursday filings with the U.S. District Court for the Eastern District of Texas, the Seattle-based Internet retailer denied infringing on five IBM patents and claimed that just the opposite situation was occurring.

"IBM has chosen to infringe Amazon.com's patents willfully and to obtain the commercial benefits of Amazon.com's technology without authorization or compensation," attorneys for the company wrote in their responses to IBM's patent infringement allegations.

Amazon in its response said IBM never should have earned the patents in question because they were not novel and nonobvious, and their specifications were not crafted in the "full, clear, concise and exact terms" required by federal patent law.

"IBM's broad allegations of infringement amount to a claim that IBM invented the Internet," Amazon's lawyers wrote. "If IBM's claims are believed, then not only must Amazon.com pay IBM, but everyone conducting electronic commerce over the World Wide Web (indeed, every Web site and potentially everyone who uses a Web browser to surf the Web) must pay IBM a toll for the right to do so."

An IBM representative on Friday dismissed the new assertions and said the company wasn't about to drop its earlier suits. "The evidence in these two lawsuits will show Amazon's infringement of IBM's leading-edge technology, plain and simple," spokeswoman Kendra Collins said.

Furthermore, Amazon's counterclaims "ring hollow" and represent "nothing more than a transparent litigation ploy," Collins said, because Amazon never brought up concerns over those patents during four years of cross-licensing discussions with IBM.

In court filings, IBM said it first approached Amazon in 2002 to seek licensing fees for use of its technology. IBM, which holds more than 40,000 patents worldwide, filed its pair of complaints after encountering what it characterized as "stonewalling" from Amazon on that front.

Amazon in its latest response said it refused to pay licensing fees because it believed the IBM patents in question were obtained through deceptive means and were thus invalid. The e-tailer also questioned why IBM waited until just after Amazon's first profitable quarter to "demand money" for alleged infringement when it had held the disputed patents since the mid-1990s.

Amazon's filing also sought to portray Big Blue as a patent speculator, or "troll," suggesting that three of the patents at issue were "not even developed at IBM but rather were bought from a now-defunct company for the apparent purpose of threatening other companies with litigation like this to extract licensing payments."

IBM's Collins said Thursday's complaint "relies on caustic rhetoric rather than facts to distract attention from (Amazon's) own infringement of IBM's patents."

Amazon, which currently owns more than 60 U.S. patents, has endured criticism over the years for patenting features--most notoriously its 1-Click checkout system--that some have deemed too obvious to warrant protection. At the same time, CEO Jeff Bezos has been among the high-tech executives clamoring for changes to patent law such as limits on how long software and business method patents can be held.

Online ordering seems to be well covered by IBM...

System for ordering items using an electronic catalogue

*******************EXCERPTS************************8

Abstract

The disclosed system facilitates the user in electronically ordering items from suppliers. The system is comprised of an Electronic Catlogue and an Electronic Requisition facility. The Electronic Catalogue includes a Public Catalog and a Private Catalogue. The Public Catalog is stored on a publicly available database for access by customer/Requestors. The Private Catalogue is resident on a Customer's computer system and may contain unique pricing data based on pricing agreements. The Electronic Requisition facility is used by the Customer/Requestors to electronically create purchase requisitions based upon the information provided in the catalogues and route the requisitions through the appropriate approval process within he enterprise. Requisitions are then processed through the customer's procurement system and transmitted electronically as purchase orders to Suppliers.

Inventors:

King, Jr.; John E. (Warrenton, VA), Nilsen; John R. (Reston, VA)

Assignee:

International Business Machines Corporation (Armonk, NY)

Appl. No.:

07/589,353

Filed:

September 27, 1990

****************************

U.S. Patent Documents


3899775	August 1975	Larsen
4799156	January 1989	Shavit et al.
4984155	January 1991	Geire et al.
4992940	February 1991	Dworkin

Primary Examiner: Envall, Jr.; Roy N.
Assistant Examiner: Tran; Khai
Attorney, Agent or Firm: Abzug; Jesse L. Bruzzone; Lauren C.

Regarding One Click checkout:

Obstacles ahead for Amazon's 1-Click checkout?

***************************************EXCERPTS**********************************

By Anne Broache
Staff Writer, CNET News.com

Published: October 4, 2005, 12:21 PM PDT

********************************

WASHINGTON--A federal appeals court has indicated that Amazon.com's famous 1-Click checkout system might be covered by another company's patent on electronic transactions.

Amazon and a one-person Virginia company called IPXL Holdings on Tuesday made their cases before the U.S. Appeals Court for the Federal Circuit. Last August, Amazon won before a trial judge in the U.S. District Court in Alexandria, Va., who decided that because the 1-Click feature was designed for processing orders and shipping, and not paying for goods, no infringement took place.

Patent 6,149,055, held by IPXL, covers an "electronic financial system" dealing with storing, predicting and presenting information about users engaging in electronic transactions.

In an ironic twist for the online retailer, the 1-Click feature is no stranger to court action. Amazon gained notoriety years ago for attempting to enforce its own patent on that system against Barnes & Noble's Web operations--resulting in a now-ended boycott by the Free Software Foundation and an unusual "open letter" from CEO Jeff Bezos acknowledging flaws in the patent system.

Jan Conlin, the attorney for IPXL, on Tuesday urged a three-judge panel at the U.S. Appeals Court for the Federal Circuit to overturn the lower court's decision. "It's not simply ordering a book and arranging its shipment," Conlin said of the Amazon system, "which is why the button says 'Buy now with 1-Click.'"

The courtroom discussion involved sharp questioning of both sides and centered on whether the 1-Click process is an electronic fund transfer system--such as the one described in IPXL's patent--or if it's just one component of a product ordering system that would not necessarily be covered by the patent. Amazon maintains that because Visa or another third party actually carries out the fund transfer, the patent should not apply.

IPXL's argument seemed to garner some sympathy from the bench. "If you went to Amazon's annual stockholders meeting and told them 1-Click had nothing to do with payments...you'd be laughed out of the meeting," said Judge Raymond Clevenger III. "Of course (Amazon's) system involves payment. Otherwise (the) system would be bankrupt."

And if the system doesn't "obligate" one's funds, could someone order a book, decide he disliked it, and then get away with not paying for it? Judge Randall Rader asked Amazon's attorney.

Arguing for Amazon, attorney David Callahan countered that the system, unlike IPXL's, does not actually move any money out of the customer's account. Instead, he said, third-party credit card processors take care of that job after the order placed via 1-Click is shipped.

"It's as if my wife sent me an e-mail and said, 'You have my ATM card and PIN. Withdraw $200 and bring it home to me," Callahan said.

But it doesn't matter whether the payment takes place through backend processing, IPXL's Conlin argued. The critical distinction, she said, is, "from the user's perspective...you think you've paid."

After the arguments, which lasted about 30 minutes, the court adjourned without indicating when it would rule on the case.

CNET News.com's Declan McCullagh contributed to this report.

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