[Patents] Fwd: Amazon Tastes Its Own Patent-Pending Medicine

[PILCH Hartmut phm@a2e.de]

http://www.forbes.com/2000/10/13/1013amazon_print.html

Amazon Tastes Its Own Patent-Pending Medicine

Live by the sword, die by the sword.

That's the lesson Amazon.com (nasdaq: AMZN) may learn the hard way,
thanks to OpenTV (nasdaq: OPTV), a company that makes software and
infrastructure for interactive TV (iTV) set-top boxes.

OpenTV is the latest to file for patent rights to the "one-click"
shopping tool that Amazon has fought so bitterly over with
Barnesandnoble.com (nasdaq: BNBN). This dispute between the Web's two
biggest booksellers is still in litigation. Barnesandnoble.com has
been barred from using the technology since a U.S. District Court
issued an injunction against the company in December 1999.

In late September OpenTV applied to the U.S. Patent and Trademark
Office to broaden the scope of a patent originally awarded to the
company in 1998 so it includes "one-click" shopping. This tool lets
repeat customers make purchases without having to re-enter address and
credit card information each time. Amazon first made one-click
shopping available on its site in September 1997 and was awarded the
patent for it in September 1999.

Should the Patent Office decide in OpenTV's favor, Amazon could be
forced to either pay licensing fees for one-click shopping or abandon
it altogether. Ironically, that's the same position Amazon has been
trying to put Barnesandnoble.com into for the past year.

OpenTV wants to put one-click shopping to use on interactive TV. The
industry hopes that shopping applications will be as big a part of iTV
as entertainment, with viewers able to easily buy CDs, for example,
while watching a Madonna video.

OpenTV was formed in 1994 by a partnership between Sun Microsystems
(nasdaq: SUNW) and Thomson Multimedia. The company's customers include
EchoStar's (nasdaq: DISH) Dish Network and BskyB in the U.K., and it
claims to have its technology in 10 million homes.

Its $25 million in 1999 revenue may be dwarfed by Amazon's 1999 sales
of $1.6 billion, but with backing from heavyweights like America
Online) and Time Warner (nyse: TWX), OpenTV should have no problem
finding the resources to fund a legal battle.

Although the company has its eye on the iTV market, executives claim
that its patent applies to electronic commerce of any kind. "We have
claims on one-click shopping in any client-server environment," says
OpenTV Chief Intellectual Property Officer Craig Opperman.

Opperman says that OpenTV originally applied for this patent, covering
the area of "interactive content signal delivery," in 1994. When the
executive joined the company four months ago, his first order of
business was to examine its existing intellectual property. "That's
when I saw that this patent discloses very valuable technology about
storing personal data within a set-top box, which OpenTV did not
specifically claim originally," says Opperman.

By law, patent holders have the right to apply to make additional
claims within two years of the date the original patent was issued,
and OpenTV made it just under the wire, since that two-year period
expired Oct. 6, 2000.

The Patent Office may or may not approve OpenTV's additional claim,
depending on the evidence submitted. "We don't expect to hear anything
for three to five months," says Opperman.

If OpenTV wins its claim, it won't just be Amazon and
Barnesandnoble.com that would have to pay up. OpenTV competitors like
Liberate and Canal+, which are also interested in enabling iTV
shopping, would have to as well. Opperman says he has yet to research
whether any other set-top box software currently has one-click
shopping capabilities. OpenTV would not be able to demand any
retroactive payments from sites that used one-click shopping prior to
the new ruling. The licensing would only begin as of the day the new
claim was approved.

As to whether he intends to make other companies pay up, Opperman is
coy, saying only: "The more people that buy our software, the
better. We're certainly not interested in getting into online retail
ourselves."

The legal patent issues could take years to iron out. "There's a lot
of confusion here," says Brian Hopkins, a New York City-based
intellectual property attorney. "Amazon could do anything from trying
to narrow its own claim so it doesn't overlap with OpenTV to producing
evidence that it invented one-click shopping before OpenTV even
applied for its first patent."

Jonathan Zittrain, director of the Berkman Center for Internet and
Society at Harvard Law School, thinks the whole notion of patenting a
particular means of doing business is just a passing fancy. The
concept was largely unheard of until the onset of the Internet. Since
then, companies such as Priceline.com (nasdaq: PCLN), Pitney Bowes
(nyse: PBI) and CarOrder.com have filed for these business method
patents.

"This whole [trend] is just a barely modulated form of insanity," he
says. "Business method patents are generally a joke. I think it's only
a matter of time before we see legislation barring any further
business method patents and possibly casting doubt upon the ones that
already exist."

By then, the new media lawyers will probably have dreamed up another
way to milk the e-commerce cash cow.