[Ecommerce] Amazon seeks patent for payment system

[James Love]

http://news.com.com/2100-1017-959046.html

Amazon seeks patent for payment system

By Troy Wolverton
Staff Writer, CNET News.com
September 23, 2002, 12:54 PM PT

Amazon.com is hoping to use more than the honor system to protect a payment
method it established online last year.

The e-commerce giant filed two patent applications related to its Honor
System, an online payment system that allows Web sites to accept small,
charitable donations and to charge for content.

Filed last year, the applications were published by the U.S. Patent and
Trademark Office Aug. 29.

Amazon has filed applications to protect its ideas through patents in the
past. The company has received patents on its 1-Click purchasing process,
its affiliates program and its recommendation service.

Other companies have imitated Amazon's strategy. Companies such as
Priceline.com CoolSavings and Keen have looked at the patent process as a
way to protect various business methods.

Yet the patent push has garnered criticism from technology advocates,
fearing obvious patent grabs could hinder the growth of e-commerce. Under
fire for his own company's e-commerce patents, Amazon Chief Executive Office
Jeff Bezos two years ago called for patent reform.

Amazon representatives did not return calls seeking comment. The attorney
representing Amazon with its patent applications declined to comment.

Patent challenges are often legally contentious. Auction leader eBay is the
subject of a patent lawsuit that could force it to significantly change its
business model. Amazon, CoolSavings and other companies have also filed suit
to protect their patents.

Whether patents are worth the fuss is still an open question, as so many
skirmishes are settled out of court, said Carl Oppedahl, a patent attorney
with Dillon, Colo.-based Oppedahl & Larson. Yet approved patents can carry a
lot of weight. Amazon, for instance, was able to gain a temporary injunction
that prevented Barnes&Noble.com from using a payment system similar to
Amazon's 1-Click, Oppedahl noted.

"A patent can make a difference," Oppedahl said. "It can be an asset that
really pays off."

Amazon filed patent application numbers 20020120567 and 20020120568 in
August 2001. The first application covers a system for collecting payments
on a content provider's site or for gaining access to individual digital
works, such as an online novel. The second covers a "user-to-user" payment
system that involves the use of hosted payment pages designed and maintained
by payment recipients.

Launched last year, Amazon's Honor System is used by sites such as the
Darwin Awards and Star Wars fan site TheForce.net to solicit donations or
charge for content. The system was modeled after a payment method Amazon
used to offer Stephen King's serialized online novel, "The Plant."

Even if Amazon is granted a patent, the language of the patent is likely to
be refined, said Neil Smith, a patent attorney with San Francisco-based
Howard, Rice, Nemerovski, Canady, Falk & Rabkin.

"It's hard to predict what will come out of the patent and trademark office
these days, but I don't think people will have to run for cover because of
these applications," Smith said.

Jeffrey Pwu, the patent examiner to whom one of the Amazon patent
applications has been assigned, said he has not yet looked at the application.

"I haven't gotten a chance to look at it at all," Pwu said.

The patent office typically publishes patent applications 18 months after
they are filed. In Amazon's case, the company filed provisional applications
related to its Honor System in October and December 2000.



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James Love, Consumer Project on Technology
http://www.cptech.org, mailto:love@cptech.org
voice: 1.202.387.8030; mobile 1.202.361.3040


-- 
------
James Love, Consumer Project on Technology
http://www.cptech.org, mailto:love@cptech.org
voice: 1.202.387.8030; mobile 1.202.361.3040