Amazon hit by 'shopping cart' patents lawsuit
Published: 26 Feb 2004 13:40 GMT
Amazon is being sued for allegedly violating three infamous patents for online shopping processes that were granted to e-commerce software company Open Market in 1998.
The lawsuit is revealed in Amazon's latest financial filing with the US Securities and Exchange Commission, which also notes a separate lawsuit, filed in July 2003, for alleged violation of another other e-commerce technology.
The Open Market 'shopping cart' patents were heavily criticised when they were granted, both because of claims from other companies such as NetMarket that they had demonstrated the techniques previously and because of general controversy as to whether business processes could be patented at all. Many observers feared that the Open Market patents could be used to close down e-commerce sites unable or unwilling to pay licence fees.
Just one year later Amazon also came under heavy fire for its own 'One-click' patent, which sparked a boycott of Amazon.com and prompted so many letters of complaint that chief executive Jeff Bezos was prompted to write an open letter calling for patent reform -- but not before launching an unsuccessful action against barnesandnoble.com.
Open Market was bought in 2001 by Divine Inc., an enterprise application integration tools and services vendor, which subsequently went bankrupt. The assets of Divine were bought in May 2003 by investment firm Saratoga Partners, which then sold on most of the assets. This included the Open Market intellectual property, which was bought by Soverain Software -- an e-commerce software company. It is Soverain Software that is now taking Amazon to court over the 'shopping cart' patent.
Amazon says it is now being pursued by Soverain over patent number 5,708,780 for Internet Server Access Control and Monitoring Systems. This is also known as the "session identifier patent," and not only lets online retailers analyse how users browse through content on a Web site, but also can be used to limit access to specific content, including subscriptions or account information. The patent does not cover cookies but could affect other methods of tracking customers, including digital certificates.
Amazon also faces action for patent numbers 5,909,492 and 5,715,314, which cover network sales systems. These won infamy in 1998 as the "shopping cart" patents, which cover processes that allow buyers to accumulate items before checking out of a Web storefront, how payment and purchase data is passed through a URL, and the use of "digital offers" for purchasing on the Web, via email, CD-ROM, or even broadcast media.
Soverain Software is seeking injunctive relief, said Amazon in its filing, together with damages that would equate to a "reasonable royalty". The Soverain Software lawsuit is seeking triple damages for "alleged willful infringement".
Amazon said in its filing that it "disputes the allegations of wrongdoing and intend to vigorously defend ourselves" against the Soverain lawsuit and against the July 2003 lawsuit filed by Pinpoint Inc., which covers personalisation technologies.
When Open Market won the patents, it claimed their reach was extremely broad, covering much of the software in common use for Internet shopping and credit card payments.
That includes software implementing the emerging Secure Electronic Transactions (SET) protocol for Internet credit card purchases; other forms of instant Internet payments including sending a credit card number over the Internet using Secure Sockets Layer (SSL) encryption; any application that uses a "shopping cart" to collect multiple purchases from a Web storefront; and even "session identifiers", which allow Web merchants to track how visitors move through their sites.
The patents allow such broad coverage because the US Patent and Trademark Office issues patents based not on specific technical implementations, but on broad categories, including "secure, real-time payment using credit and debit cards over the Internet," Open Market spokeswoman Beth Winkowski said at the time the patents were first granted.
Open Market's chief executive at the time, Gary Eichhorn, said the company intended to make its patents widely available, but he did not specify licensing terms or indicate its licensing philosophy. No licences were ever widely offered.
Amazon did not immediately respond to request for comment.
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