Amazon Cries 'Uncle' to End IBM Patent Feud

theodp writes "Amazon will pay an undisclosed amount to IBM to settle a long-running patent feud, and the two companies have agreed to a long-term patent cross-licensing agreement. Information Week wonders if an insurance dispute prompted Amazon's settlement, noting that Atlantic Mutual sued Amazon back in March to escape any obligation to reimburse the e-tailer should it lose the case brought by IBM. Amazon had relied on Atlantic Mutual's backing in an earlier legal battle it waged against tiny InTouch. 'Amazon, whose chief executive, Jeff Bezos, is a vocal advocate of patent reform, has had numerous patent issues in the past. In 2005, the technology used in its 1-Click checkout system came under scrutiny as potentially infringing upon a similar product made by a small Virginia-based company called IPXL Holdings. Meanwhile, the US patent system itself is experiencing growing pains as Congress continues to explore the possibility of updating it to better serve the needs of the 21st-century business world.'"

Comments

Bullies, take heed

[Weaselmancer]

There is always someone bigger than you.

Re:Bullies, take heed

[ushering05401]

Everyone take heed. The patent lawsuit is not such a huge deal in the case of Amazon because they are not going away, but all the big players use selective lawsuits which is what bugs the hell out of me.

Under the current system big companies wait for smaller companies to become profitable and then they pounce. If one company sues another for patent infringement they should be obligated to sue all infringers. So as the owner of a small company I should be able to name co-defendants who also appear to use similar technology, and with how broad patents are these days it should not be hard to find big players who might be committing similar patent infringements.

If those bigger players are found to be implementing technology similar to what I am being sued for then they should be required to join the defense.

No more assassination through selective lawsuits.

Regards.

Re:Bullies, take heed

[kripkenstein]

Under the current system big companies wait for smaller companies to become profitable and then they pounce. If one company sues another for patent infringement they should be obligated to sue all infringers.

Sure you thought that one through? By what you're suggesting, only the very largest corporations would be able to assert patents, because small players couldn't afford it. This would make the patent system even worse: in essence, only really big companies could own patents (smaller companies could own them, but not use them, so they may as well not own them at all).

The patent system is bad enough as it is, please don't give them any ideas how to make it worse.

Re:Bullies, take heed

[ushering05401]

I disagree. My view is that patent enforcement would become almost impossible for anyone. A a small developer all I want is the freedom to innovate in my niche market by pursuing my own development schemes I shouldn't have to worry about who may have patented a concept that I hacked out in my home office and was completely unaware was patented.

My opinion is that the system cannot be broken any worse than it is. My opinion is based on patent reviews I have done that cover such a broad range that many commonplace task implementations are technically open to lawsuit. Any enterprise level system I develop is liable to be crushed if it takes off.

Regards.

Re:Bullies, take heed

[Chris Burke]

Under the current system big companies wait for smaller companies to become profitable and then they pounce. If one company sues another for patent infringement they should be obligated to sue all infringers. So as the owner of a small company I should be able to name co-defendants who also appear to use similar technology, and with how broad patents are these days it should not be hard to find big players who might be committing similar patent infringements.

If those bigger players are found to be implementing technology similar to what I am being sued for then they should be required to join the defense.

No more assassination through selective lawsuits.

The owner of the patent will just grant licenses to the bigger players that they don't want to have to face in court, so that they will not be infringing but the smaller company will. Unless you're planning on compulsory licenses too, then this idea will not stop selective lawsuits. Plus it would completely prevent any small company from ever enforcing a patent.

Besides, I don't think the problem is selective enforcement. Being allowed to not care about a given instance of infringement is a good thing. I don't want patents to become like trademarks, where companies must aggressively pursue all infringement just to keep the trademark. The problem in the common scenario you describe isn't the selectivity, it's the way in which they wait for the infringement to continue such that the infringing company is not just profitable but completely reliant on the patent for profits, and then they get attacked. They company with the patent knows the other is infringing, but allows it to continue so as to increase the damage done by their eventual attack.

So what I propose is that for someone to bring a patent infringement suit against someone, they must bring the suit within some reasonable time after first learning of the infringement. If it can be shown that the plaintiff knew about the infringement but just sat on the issue, then the case would be dismissed. The patent owner can still selectively enforce the patent based on who infringes, but not when. I'm thinking there would still be major implementation problems, such as what happens when a company is bought by another, does the infringement immunity get transfered? So it may not be practical. But it would have for example completely shut down the RAMBUS DDR patent suit, because simply by being aware that JDEC was implementing things covered by their patents they would have had to bring the issue up immediately (in which case JDEC would have changed the standard) or forfeit their ability to sue later. No more waiting until the "open" standard becomes ubiquitous then turning around and claiming you own it.

Re:Bullies, take heed

[Anonymous Coward]

My own introduction to the realities of the patent system came in the 1980s, when my client, Sun Microsystems--then a small company--was accused by IBM of patent infringement. Threatening a massive lawsuit, IBM demanded a meeting to present its claims. Fourteen IBM lawyers and their assistants, all clad in the requisite dark blue suits, crowded into the largest conference room Sun had.

The chief blue suit orchestrated the presentation of the seven patents IBM claimed were infringed, the most prominent of which was IBM's notorious "fat lines" patent: To turn a thin line on a computer screen into a broad line, you go up and down an equal distance from the ends of the thin line and then connect the four points. You probably learned this technique for turning a line into a rectangle in seventh-grade geometry, and, doubtless, you believe it was devised by Euclid or some such 3,000-year-old thinker. Not according to the examiners of the USPTO, who awarded IBM a patent on the process.

After IBM's presentation, our turn came. As the Big Blue crew looked on (without a flicker of emotion), my colleagues--all of whom had both engineering and law degrees--took to the whiteboard with markers, methodically illustrating, dissecting, and demolishing IBM's claims. We used phrases like: "You must be kidding," and "You ought to be ashamed." But the IBM team showed no emotion, save outright indifference. Confidently, we proclaimed our conclusion: Only one of the seven IBM patents would be deemed valid by a court, and no rational court would find that Sun's technology infringed even that one.

An awkward silence ensued. The blue suits did not even confer among themselves. They just sat there, stonelike. Finally, the chief suit responded. "OK," he said, "maybe you don't infringe these seven patents. But we have 10,000 U.S. patents. Do you really want us to go back to Armonk [IBM headquarters in New York] and find seven patents you do infringe? Or do you want to make this easy and just pay us $20 million?"

After a modest bit of negotiation, Sun cut IBM a check, and the blue suits went to the next company on their hit list.

Serve the needs of the business world

[spun]

That's what patents are for, right? Serving the needs of the business world. Not fostering innovation amongst Citizens of the United States. Nope. Serving the needs of the business world.

Just like Congress itself, I suppose.

Re:Serve the needs of the business world

[spun]

Yep. But that's not how it's supposed to work. Stakeholders in a capitalist system include not just business owners, but employees and customers as well. That is why I have a problem with capitalism, it's inherently anti-democratic.

LINK TO PATENT FILING

[hexed_2050]

http://appft1.uspto.gov/netacgi/nph-Parser?Sect1=P TO1&Sect2=HITOFF&d=PG01&p=1&u=%2Fnetahtml%2FPTO%2F srchnum.html&r=1&f=G&l=50&s1=%2220050156873%22.PGN R.&OS=DN/20050156873&RS=DN/20050156873

Advice for survivors

[russotto]

Don't play cards with a man named Doc
Don't eat at a place called Mom's
Never make a wager with a Sicilian when death is on the line
Never pull on Superman's cape
Don't spit in the wind
Don't pull the mask off the old lone ranger
Don't mess with Jim (unless you're Slim)
Mess not with the mouse

AND FOR CRYING OUT LOUD, DON'T GET IN A PATENT WAR WITH IBM.

the patents in question?

[Vasco Bardo]

"The e-commerce patents in question ranged from hyperlink technology to electronic ordering." Hyperlink technology? Electronic ordering? Sweet jesus, these guys at IBM are geniuses, are there any alienware nobel prizes for this kind of incredible breakthroughs?

Re:the patents in question?

[2nd Post!]

Considering IBM created these patents in the 1990s. Some as early as 1993.

Prior art is kind of hard to find.

Re:"Obvious" results?

[drinkypoo]

Especially since IBM has a literally unparalleled ability to generate legal paperwork. Only company to ever bury the DOJ under so much paperwork that they got lost. The funny thing about it all (funny in a modern, corporate context anyway) is that IBM at least seems to be relatively scrupulous. In a world in which people are suing people left and right for patent infringement, IBM is mostly using their portfolio defensively. While others are still trying to maintain vendor lock-in (Apple, Microsoft, I'm looking at you) IBM is promoting Open Source, Free Software, you name it. IBM used to be a great satan, now they're our last best hope for peace or something.

Minor clarification

[Alsee]

Congress continues to explore the possibility of updating it to better serve the needs of the 21st-century business world.

In case anyone was wondering, unsure, or confused about that, it means that Congress is talking about streamlining and further entrenching software patent insanity. That they want "better" and "more enforcible" stupid software patents.

-

Re:Minor clarification

[kansas1051]

It's pretty clear you haven't even looked at the "Patent Reform Act of 2007." Among its highlights include a quick post-grant opposition procedure and serious limitations on the damages an infringer may be liable for. Both of these will make all patents "less enforcible."

Here are some more informed opinions on the legislation:
http://www.law.com/jsp/article.jsp?id=117809668258 1
http://www.eetimes.com/news/semi/showArticle.jhtml ?articleID=199400075

Can a leopard change its spots?

[Bozdune]

I'm old, so I remember. I remember when IBM was so clearly the Great Satan. Like suing IBM clone mainframe peripheral vendors in the 60's and 70's. Like trying to push the PS/2 down our throats in the 80's.

Bastards.

Now they are good guys. Why? Because having lost the OS battle, they turn to open source for succor. Not sure this makes them good guys, exactly. They got sued by SCO, but that doesn't make them good guys either, although it is fun watching them pound SCO into paste.

I'm very nervous about their patent portfolio. I'm nervous about everyone's patent portfolio. A time will come when you can't write a line of code without stepping on someone's software or process patent. And that will be the end of a creative era that has known no equal in human history.

Software should not be patentable. Processes should not be patentable. Period.

Re:Can a leopard change its spots?

[drinkypoo]

I'm very nervous about their patent portfolio. I'm nervous about everyone's patent portfolio. A time will come when you can't write a line of code without stepping on someone's software or process patent. And that will be the end of a creative era that has known no equal in human history.

it makes me nervous too, but the fact that they have one of the biggest patent portfolios on the planet and yet don't do that kind of thing now (when they are probably the only company around that could both get away with it and do it profitably) speaks well of them.

Unfortunately, a shift of executive management could potentially send them in a completely different direction - but I do think that they are entirely cognizant of the fact that goodwill is valuable.

I think it's clear IBM is the 'better guy.'

[Kadin2048]

Well, I guess I might be exposing my pro-IBM bias here (good God, I can't believe I just said that -- I remember when you pretty much had to curse or spit after saying that name), but I think that IBM would probably be hurt a lot less due to the 'obviousness' ruling than Amazon would.

Just look at the two companies -- IBM has a vast research division, which basically exists to invent stuff and turn out patents (and other things useful to IBM). Amazon is an online bookstore. Whatever patents they have, were probably found/invented/discovered more or less accidentally, while building themselves up. I think that there's a far greater chance that Amazon's patents would be ruled obvious than IBM's, because many of Amazon's patented inventions might be perfectly obvious to anyone else who was engaged in what they were doing ... they just happened to be there first because of their positioning during and following the dot-com boom.

To be frank, I think the type of thing that IBM does these days is really what the patent system is supposed to encourage and protect -- IBM probably wouldn't spend the billions of dollars that it does on original research, if it wasn't able to capitalize on and monetize the inventions produced. If you look at the history of that company, they've produced a lot of pretty neat stuff. Leaving aside their past anticompetitive behavior, the world is probably a better place for IBM Research; any patent reform which eliminates the impetus to do what they're doing, would be IMO a mistake. However, Amazon, in contrast, seems to just be patenting stuff in order to protect their business model from competition. While that difference may not seem particularly important, I believe that creating a patent system that rewards original research while not rewarding blatant business-model protectionism is the key to reform.

So, patents are going to be fixed..

[YetAnotherBob]

So, the patent mess is going to be fixed by the same people who fixed the copyright mess with the DCMA?

Fixes by Congress have never done anything but make things worse. In my lifetime I've seen them fix campaign funding, pornography availability, fuel shortages, inflation, and several foreign governments. Every time, they just made things worse. Isn't the patent situation here bad enough already??

Easy way to patent reform....

[cuppett]

Change the filing fee to $250,000. This will drop patent application rates tremendously to only those applications protecting a truly lucrative and unique business idea or invention. If the idea or innovation isn't worth $250,000 to you, then it doesn't need protection. In addition, I would re-assess all existing patent holders $250,000 for each patent they wish to keep. This would allow the government to revoke all prior frivolous patents. Could also be a nice jolt to the government revenue stream, as well as a way to reduce the patent trolls as well.

Re:"Obvious" results?

[cyborg_zx]

IBM used to be a great satan, now they're our last best hope for peace or something.

*AHEM* In the year(s) of the patent war it became our last best hope for victory.

Re:"Obvious" results?

[Jherek Carnelian]

In a world in which people are suing people left and right for patent infringement, IBM is mostly using their portfolio defensively. Sorry to be so blunt, but that's just plain ignorant.

Maybe back in the early 80s that was true. But since then, under the guidance of Marshall Phelps, IBM turned their patent portfolio into a $2B+/yr revenue stream. IBM's patent licensing has become so onerous that it is often referred to as the "IBM Tax."

And just so you know what to expect in the future - and maybe who to blame for the Novell patent licensing fiasco - Marshall Phelps joined Microsoft a few years back, explicitly to do for MS what he did for IBM.