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More Patent Issues Could Crop Up

EPlus holds a patent for the fundamentals of electronic sourcing. It hasn't alleged infringement of it yet.
The question of intellectual property and patents is very much top of mind these days, what with the SCO Group's pursuit of licensing fees for Unix code it says has been misappropriated, and eBay Inc.'s being ordered to pay $35 million in compensatory damages to MercExchange LLC for violating three patents that its founder and CEO filed for in 1995.

Now vendors of electronic sourcing software may start to look a little more closely at supply-chain management specialist ePlus Inc., which earlier this year was awarded a patent that covers the fundamentals of electronic sourcing, nearly a decade after it was originally filed.

Although ePlus has yet to file a lawsuit alleging infringement of the patent, "we're keeping our eyes and ears open, and we'll make an appropriate decision to defend our rights," president Ken Farber says.

The patent, Farber says, establishes the basis for electronic sourcing systems with the capability of searching multiple vendor catalogs to compare pricing and product features, as well as make purchases. The technology is used in the company's Procure+ software, which lets customers track corporate disbursements and manage purchasing administration, as well as Content+, an automated method of aggregating catalog content.

Pierre Mitchell, an analyst with AMR Research, says the ePlus patent is strong, but he's not sure that having it affirmed will result in revenue through litigation. "It's very broadly applicable," he says. But "these things are very hard to enforce. Basically, probably over half of the E-procurement implementations out there are in violation of this patent. It is unlikely to generate any revenues just because of the amount of effort you have to put in to something like this to extract money from any one."

Having the patent in-house should, however, provide ePlus with greater visibility in the industry, and potential customers may be likely to give greater consideration to ePlus' offerings versus competitive solutions going forward, Mitchell said.

Farber says the technology has been instrumental in the company's overall business, and ePlus will continue to enhance it and provide the ability to do more sourcing of products. The company plans to provide analytics so customers can really monitor and manage what they're purchasing and from whom, "while maintaining a complete vendor table of record within a single catalog so that they can reconcile all their transactions with various vendors," Farber says.

The company in June reported record earnings of $9.7 million on revenue of $300 million for the fiscal year ended March 31. That compares to earnings of $9 million on revenue of $205 million in the previous fiscal year.