One click lands book vendor in cart

Article written by: Wes Jones    |   Thursday 1st May 2008

There is an ongoing debate around the world on whether software or business-method patents should be patentable in the US and other countries.

Amazon’s controversial “one click” technology could soon be patented in New Zealand. The Intellectual Property Office of New Zealand (IPONZ) has recently accepted a New Zealand patent application made by Amazon.com Inc for its controversial “one click” technology (patent application no. 503311 on the IPONZ website: www.iponz.govt.nz).

This application corresponds to US Patent No. 5,960,411, which was granted to Amazon in the United States in September 1999. Three weeks after receiving its US patent, Amazon.com sued Barnes & Noble, a large US bookseller, for patent infringement. Amazon sought a preliminary injunction against Barnes & Noble’s use of its on-line purchase system.

What is one-click technology?

The technology is for a method of doing business over an electronic network. More specifically, it is a method for completing a purchase order over a client or server system using only a single action. This action may be a single mouse click, key stroke, voice command or something similar. Amazon claims the one click method overcomes problems with the shopping cart method, the previous business model for Internet shopping. When the US patent was granted it was viewed with considerable scepticism by the internet community, which believed that it should not be the subject of a patent and was too broad in scope.

Amazon’s preliminary injunction application was successful, but Barnes & Noble immediately appealed. The appeal court considered that existing systems known at the time Amazon applied for its patent raised serious questions about the patent’s validity, so it reversed the trial court’s decision on the preliminary injunction. The parties apparently settled the matter rather than proceeding to a full trial. As a result, there is still no clear determination on whether Amazon’s US patent is valid. Business methods are however considered patentable in the US.

Are business-method patents valid?

There is an ongoing debate around the world on whether software or business-method patents should be patentable in the US and other countries. In fact, a review of patent history shows resistance to the expansion of patentable subject matter is not new. For example, in the 1880s there was a rapid increase in the number of patents filed as a result of the new telegraph and electrical technology being developed. Inventors such as Thomas Edison and Alexander Graham Bell sought patents, over which companies fought for control, resulting in many high profile law suits which captured the imagination of the public and stimulated debate about the desirability of the monopolies afforded by patents for these new technologies and those who controlled them.

At various times critics have warned that new kinds of patents such as the telephony processes of 120 years ago, biotechnology patents of 20 years ago and software patents in the last decade or so, stifle innovation but history shows that innovation and discovery have continued and have arguably intensified.

The business method controversy derives partly from the scope of the business method patents that are being issued in the US. This is a separate issue to whether or not the subject matter should be patentable. The lack of well indexed prior art, together with overworked and perhaps under skilled examiners at the US Patent and Trademark Office (USPTO), have led to many overly broad patents being issued.

Substandard patent examination

The USPTO is taking steps to improve examination of the e-commerce related patent applications, but vocal critics such as Gregory Aharonian (see www.bustpatents.com) consider that examination is still not up to scratch. A problem in the US with substandard examination is that US patents, once granted, have a presumption of validity and the US does not have an opposition process. This means that the expensive process of a revocation action before the Courts is necessary to invalidate a US patent. The effect of this is well illustrated by the Amazon and Barnes & Noble litigation. Since

Amazon was so quick off the mark with its injunction application, which was also heard quickly, Barnes & Noble did not have sufficient time to locate all the information necessary to conclusively question the validity of the Amazon patent, so the patent was presumed valid and a preliminary injunction was granted. It was not until the appeal was heard some two years later that Barnes & Noble had the further opportunity to provide enough evidence to cast doubt on the validity of the Amazon patent. In the meantime Amazon was able to exercise its monopoly.

Situation in New Zealand

In New Zealand, as in a number of other countries including Australia, an opposition procedure exists whereby an application, once accepted by the Patent Office, is advertised after which a period of time is allowed for interested parties to oppose the application. Opposition provides an opportunity for an overly broad patent application to be reduced in scope or invalidated on a number of grounds for example by raising further prior art that has not been located by the examiner. Interested parties have until 30 August 2003 to oppose Amazon’s New Zealand patent application. New Zealand has not seen any litigation in relation to business method patents, so it will be interesting to see whether an opponent takes up the challenge.

Indications, at least in the US, are that business-method patents are here to stay. So it is important for innovators in this area to conduct patent searches to minimise business risk before committing to a new venture, and to carefully consider protecting truly innovative ideas.


This article was also published in The independent, 16 July 2003

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