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    Perl Archive : TLC : General Interest : Amazon vs. Barnes and Noble - A Lesson in Dealing with Patents
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    Date Published: 2000-02-01

    by Michael J. Persson, Esq.
    Lawson, Philpot & Persson, P.C.

    The recent patent infringement suit brought by Amazon.com against Barnesandnoble.com (BN) has rekindled the debate, in many circles, over whether, and to what extent, software should be patentable. This article will attempt to provide an overview of the legal issues raised in this case, a discussion of the 1-Click patent, and some basic considerations when deciding how to deal with Internet related patents.


    Overview

    On October 21, 1999, Amazon sued BN for infringement the claims of United States Patent No. 5,960,411, covering its "1 -Click" method for processing on-line shopping orders. In its complaint, Amazon alleged that BN "meticulously copied Amazon.com's 1-Click process, dubbed it "Express Lane" and introduced it on their barnesand noble.com website". Amazon requested that the court award damages and to grant an injunction to prevent BN's continued use of "Express Lane". On December 2, 1999, the court issued a preliminary injunction against BN's use of the patented process until the suit is resolved.

    Since the issuance of the injunction, controversy has surrounded the validity of Amazon's patent and the propriety of Amazon enforcing it. Some have seen it as a sign of things to come, pointing to the huge software portfolio's amassed by Microsoft and IBM. Others, like F.S.F. Founder Richard Stallman, have called for a boycott of Amazon for its patent policies. However, throughout the debate, little has been said about what Amazon's patent really covers.


    The 1-Click Patent

    A patent covers only what is set forth in its claims. These claims, like a description in a deed of land, define the "metes and bounds" of the invention. In the Internet world, the two predominant types of claims are method claims, which set forth a series of steps to perform a desired operation, and product claims, which set forth a series of hardware and software "structures" that perform a certain function. Claims are further broken down into independent and dependent claims, with independent claims offering the broadest scope of protection.

    Amazon's patent claims two independent method and two independent product claims utilizing the '1-Click' feature in question. Amazon did not identify a particular claim to be infringed. However, the broadest of these claims, independent claim 11, claims the following:

    11. A method for ordering an item using a client system, the method comprising: displaying information identifying the item and displaying an indication of a single action that is to be performed to order the identified item; and in response to only the indicated single action being performed, sending to a server system a request to order the identified item whereby the item is ordered independently of a shopping cart model and the order is fulfilled to complete a purchase of the item. A method claim is infringed if each and every claimed step, and each and every claimed limitation placed upon each step, is also found in the method that is said to infringe.

    Claim 11 includes three steps:

    (1) displaying the item
    (2) displaying the action to be performed, and
    (3) sending an order request to a server

    Claim 11 also includes three limitations:

    (4) that the sending of the order request be in response only to the displayed single action being performed,
    (5) that the item is ordered without the use of a shopping cart, and
    (6) that the order is actually fulfilled.

    On its face, this claim appears to be extremely broad, covering any ordering process for any type of product or service. Given this apparent breadth, it would appear that Amazon could mount an "attack against the World Wide Web and against e-commerce in general" as suggested by Mr. Stallman in an email reproduced in a December issue of Wired. Given such an attack, what can BN, or another Web retailer, do to defend themselves?

    The first defense would be to "design around" the patent by making sure that your process does not meet all of the steps and limitations fo the claim. Despite its apparent breadth, a closer look at the claim reveals a number of viable alternatives for avoiding infringement. In fact, one of the points raised by Judge Marsha Pechman in her injunction was that "(t)he evidence indicates that Barnesandnoble.com can modify its 'Express Lane' feature with relative ease to avoid infringement".

    One alternative available to BN, or other e-retailers, would be to utilize a variation of the 1-Click system that avoids a claim step or limitation. In such a variation, a user could, for example, provide shipping and payment information in advance, like the 1-Click system, perform a single click to choose an item, again like 1-Click, but would need to make a final "check out" click to process the order. Such a system would require only one more purchaser interaction than "1-Click", yet would avoid limitation (4), which requires that the sending of the order request be in response only to a single action. Just such a variation was proposed by Judge Pechman, who noted in her injunction that "infringement can be avoided by simply requiring users to take additional action to confirm orders placed by Express Lane."

    A second alternative would be to use a traditional shopping cart system. Such a system is an obvious and available alternative and has the benefit of being explicitly excepted from the claim by limitation (5). Although available, such a system is said by Amazon to be undesirable due to the number of interactions required by the user and, thus, would most likely no be acceptable to BN or other e-retailers.

    Finally, any other variation in between the first and second alternatives may be utilized, provided that it requires more than a "single interaction" to send an order and/or utilizes a shopping cart system.

    The second defense would be to attempt to invalidate the patent by finding prior art that was not considered by the Patent Office. For example, if evidence of a prior sale, use, or publication of a "one click" ordering system were uncovered, then a company being sued by Amazon could present this evidence to the court in hopes of persuading it that the claim should not have been allowed in the first place. This strategy would be very expensive, however, due to the legal costs associated with litigation, which in some cases may be over $1 Million. Further, there is no guarantee that the court wouldn't uphold the patent and award damages for infringement before and during the period of the litigation.

    A less expensive alternative for invalidating the patent would be to submit a prior art publication or publications to the Patent Office and request that the patent be reexamined. This strategy requires only the payment of a $2,520.00 filing fee. However, it creates the risk that the patent will be strengthened by its being upheld by the Patent Office. Further, the chance of invalidating the patent through reexamination is lessened due to the fact that the requesting party plays no part in the proceedings and cannot refute arguments made by the patent holder to the Patent Office.

    Finally, prior art publications may be submitted to the Patent Office for inclusion in the patent file. These submissions are not examined and will not, by themselves, invalidate the patent. However, by including such submissions in the patent file, companies like BN are made aware of their existence. This knowledge may prove invaluable in their efforts to invalidate the patent should they decide that the costs and risks of litigation are outweighed by its potential rewards..


    Dealing with Patents

    Although some may rail against them, Internet related patents, and e-business patents in particular, appear to be here to stay. As this is the case, developers and e-retailers need to understand these patents and decide how best to deal with them. The following are three considerations that may be helpful in making these decisions:

    1. Do you find out what is out there before investing time and energy in a product?

      Traditional businesses keep informed of the actions of their competitors and e-businesses should do the same. When conducting this type of competitive intelligence, Web based documents, such as data sheets, product descriptions, competitive patents, and the like should be printed with the time and date of printed, signed, and filed for future reference. Such a file may later be invaluable in invaliding a competitor's patent. Further, it may serve as a knowledge base for reference during product development.

      When starting a project, it is worthwhile to review your competitive intelligence files and to search the Web for similar programs or business methods. In addition, patent searches may be conducted for free over the Web at the US Patent and Trademark Office site or at the United Kingdom Patent Office site. These sites both provide the ability to search patent files dating back to the early 1970's and allow a searcher to view and print patent images. However, you should bear in mind that U.S. patent applications are confidential and, therefore, will not be uncovered, and that European patent applications are not published until 18 months from the date of initial patent filing. Therefore, there is always that risk that a patent will "pop-up" after you have performed your "clearance" search and invested your time in the project.

    2. What do you do when a competitor obtains a patent on a similar technology?

      The first step in deciding how to deal with a competitor's patent is to understand the patent's claims. As noted above, a method will not infringe a patent claim unless each and every step and limitation of the claim is found in the method. Likewise, a product will not infringe unless each and every structure and limitation of the claim is found in the product.

      When performing your own review, you should give each and every step, structure, and limitation its broadest possible meaning. For example, the step of sending an order to the server in the Amazon patent should be read as including sending a signal directly to the server, sending a signal to a the server via an employee data terminal, or even printing a confirmation sheet for manual entry by an employee who subsequently sends the signal to the server. If a step, structure or limitation of the claim is not found in your method or product, you should also determine whether that step or structure is a functional equivalent of the claimed step or structure. This involves a consideration of whether your step or structure performs substantially the same function, in substantially the same way, to produce substantially the same result as the claimed step or structure.

      If your method or product falls within the scope of the claim, one obvious option is to stop using the infringing method or making the infringing product. However, if a large amount of time and money has already been invested, it may be worthwhile to consider consulting with a competent attorney who can issue an infringement opinion or offer advice on designing around the patent claims. Such an opinion will typically cost between $1,000 and $10,000, depending upon the complexity of the claims, the size of the patent file to be ordered, and whether an opinion is rendered as to the validity of the patent. However, if you continue to use the method or make the product without a favorable infringement opinion, you run the risk of being found liable for willful infringement and be forced to pay treble damages and the patent owner's attorney's fees.

    3. What do you do when you develop a new product or process?

      New software products and methods are constantly being developed and, more and more, are being protected via patents. The software patent explosion raises two questions to be answered by developers: (1) should I be patenting my products or processes, and (2) if I don't file for patent protection, how do I prevent others from patenting the same or similar products or processes?

      A patent is a right to exclude others from making, using or selling what is covered by the patent's claims. Accordingly, there is no need to file for a patent in order to use an invention. However, this right to exclude may be valuable to you, or to other companies who may wish to license your rights. If a patent is desired, the total cost to obtain such a patent will typically be between $5,000 and $15,000, depending upon the law firm who prosecutes the application, the complexity of the technology, and the number of Official Actions issued by the Patent Office. Once the patent is obtained, the Patent Office requries that fees be paid after 3. 7 and 11 years to maintain the patent in full force. Finally, as was the case with Amazon, it may be necessary to go to court in order to enforce your patent. Although many law firms accept patent cases on a contingent fee basis when the potential exists for a large damage award, these cases are usually handled on an hourly basis and can cost over $1 million to complete.

      If the prospects for licensing your product are low and you are uncomfortable with the potential costs of obtaining and enforcing a patent, you may wish to consider publishing your work as a defensive measure. Once an invention is made public, through a sale, use or publication, that publication becomes prior art against all foreign patent applications filed subsequent to the date of publication and against all U.S. patent applications filed more than one year after the date of publication. As this is the case, your publication of the idea may prevent competitors from obtaining a patent that excludes you, while avoiding the costs associated with obtaining patents.

      If you decide you publish rather than patent, you should keep meticulous records of the dates of conception, completion and publication of your invention in order to prove that you were the "first to invent". A comprehensive discussion of proper record keeping is beyond the scope of this article. However, the best form of proof is a stitch bound "inventors" notebook that contains chronological entries by the inventor which are signed, dated, and witnessed by at least two other people who have read an understood its contents. Because software inventions do not lend themselves to handwriting in a notebook, printing, signing and notarizing computer printouts will provide similar evidence in the event that it is needed at a later date.


    Conclusions

    Amazon's recent lawsuit provides further evidence that Internet patents are out there and need to be dealt with. Given the potential for liability, developers and e-retailers should reevaluate how they look at these issues and develop strategies for dealing with them when they arise.


    Michael J. Persson (Mike) is a Director in the firm of Lawson, Philpot & Persson, P.C., in Laconia, New Hampshire. Mike specializes in patent and trademark prosecution, licensing and related matters in the mechanical, electrical and computer field . In addition to his private practice, Mike serves as an Adjunct Professor of Law at the Franklin Pierce Law Center where he teaches courses in Patent Practice and Procedure . For more information on this topic, or on intellectual property in general, you may contact Mike directly at mike@lawson-philpot.com, or check out their web page at www.lawson-philpot.com.

    2000, Lawson, Philpot & Persson, P.C.; All rights reserved.
    Reproduced with permission by The Perl Archive.

     
     


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