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9/17/2004
04:35 PM
John Soat
John Soat
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IT Confidential: Intellectual, Yes, But Whose Property Is It?

'Certain people in the computer industry have to face the music.'

George Bush is a great man except that he's got the patent law wrong." Another fusillade from opposition candidate John Kerry? Nope. That's Tom Woolston, founder and CEO of MercExchange, speaking. In two weeks, Woolston has a date in court with eBay, which is appealing a lower-court ruling last year that told eBay to pay Woolston $29.5 million for violating two of his patents, in particular one covering eBay's popular "Buy It Now" feature. Woolston isn't worried about the appeals case--he's expecting a packed house in the Virginia courtroom because of all the publicity the case has received: "Every time we get sunshine on [eBay's] arguments, they fall apart." MercExchange, which technically owns the patents, is lobbing in its own appeal against a ruling by the judge in the first case that threw out Woolston's third patent, his most significant one, which covers the process of online auctions. What makes Woolston mad at George Bush is that after the ruling in the lower court, eBay appealed to the U.S. Patent and Trademark Office to review the validity of the MercExchange patents, which the agency agreed to do. Woolston says it's a violation of at least the spirit of the law for the Patent Office to review the patents after a court has already ruled on them. The head of the Patent Office, Jonathan Dudas, is a Bush appointee. Of course, it probably doesn't help that eBay chief executive Meg Whitman is out stumping for George Bush.

Many people think the patent process has gotten seriously out of whack, especially when it comes to Internet-related patents. But Woolston says the rights of Internet pioneers need to be protected. "The rights are sorting themselves out," he says. "What's the big deal?" It's a big deal, I suppose, if you're on the wrong end of that equation. Last week, a U.K. company, BTG, sued Amazon.com, Barnes & Noble.com, Netflix, and Overstock.com for infringing on patents BTG owns "covering technologies related to tracking the navigational path of a user through the World Wide Web," according to BTG. The patents, No. 5,717,860 and No. 5,712,979, were granted by the Patent Office in 1998 to a company called Infonautics, and acquired by BTG in 2002. BTG is asking for unspecified damages and an injunction to stop the Internet companies from using the patented technology.

Lawson Software, which has figured prominently in the Oracle-PeopleSoft takeover battle as an example of a viable competitor in the enterprise-applications software marketplace, has a message for visitors to PeopleSoft's user conference in San Francisco this week. A banner on the side of a building near Moscone Center, which is where the conference is being held, reads like this: "There's nothing hostile about letting Lawson take over."

And there's nothing funnier than software-industry jokes. Except maybe funeral-industry jokes. But I won't laugh at an industry tip, which you can send to jsoat@cmp.com or phone 516-562-5326. If you want to talk about intellectual property, Internet patents, or hostile takeovers, meet me at InformationWeek.com's Listening Post: informationweek.com/forum/johnsoat.

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