IBM Sues Amazon Over Web Commerce Patents - InformationWeek
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10/23/2006
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IBM Sues Amazon Over Web Commerce Patents

IBM claims the patents are core to Amazon's business, including functions such as its product recommendation engine.

IBM has filed two lawsuits against Amazon.com Inc., alleging that the Internet retailing powerhouse knowingly violated IBM patents governing the presentation of online advertising and other e-commerce techniques that are "at the core" of Amazon's multibillion-dollar business.

"We filed this case for a very simple reason. IBM's property is being knowingly and unfairly exploited," said IBM senior VP John Kelly in a statement. The lawsuits were filed in two U.S. courts for the Eastern District of Texas. IBM says it's seeking unspecified damages. Officials from Amazon weren't immediately available to comment.

IBM claims Amazon has violated five patents stipulating ways to present applications "in an interactive service," store data on an interactive network, present advertising in an interactive service, and adjust Web links with "weighted user goals and activities," according to IBM's statement.

An IBM spokesman says those patents define technologies that are "at the core" of Amazon's multibillion-dollar Internet retailing business. For example, Amazon used technology protected by the "weighted user" patent to create its well-known feature that provides book recommendations to customers based on previous purchases by other, similar customers, the spokesman alleges. "They've built their business on these patents," says the spokesman. That implies that IBM might eventually seek damages in the billions of dollars. Amazon posted sales of $8.49 billion in 2005.

IBM says it has been trying to resolve the dispute with Amazon for the past four years. Amazon has "shown no willingness to have meaningful discussions," IBM claims. IBM says many other companies have licensed the five patents in question, but Amazon has refused to do so. IBM declined to name any of the companies licensing the technology.

It's not the first time IBM or Amazon has been at the center of heated intellectual property disputes. Unix vendor SCO has in recent years charged that some of IBM's contributions to the Linux community contain SCO's intellectual property. Amazon, meanwhile, has used the courts to jealously protect the e-commerce techniques it credits for its blockbuster success. In 1999, the company sued BarnesandNoble.com for allegedly purloining its so-called one-click ordering method. The lawsuit was settled out of court.

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