[Ecommerce] Story about patents on domain names and other Internet/software patents

[James Love]

Good example of the problems and social costs of allowing patents on
software and methods of doing business.  Jamie


http://thewhir.com/features/subdomain.cfm

Subdomain Patent Sparks Concerns

By Dennis McCafferty

March 26, 2004 -- (WEB HOST INDUSTRY REVIEW) -- In astonished postings
to Web hosting discussion forums last week, several hosting providers
announced that they had received letters from a party representing
Stateline, Nevada-based Ideaflood Inc. (ideaflood.com). The letter
stated that Ideaflood has patented the idea of assigning users
subdomains, such as AutomotiveWidgets.hostingcompany.com.

According to the discussion postings, the letter said that, since
Ideaflood has patented the concept, further subdomain service for
customers would require the purchase of a license through Ideaflood.

"We have utilized this idea for years," wrote the letter recipient,
Sergei Geler, owner of San Francisco-based Freehomepage.com, in a
posting to WebHosting Talk (webhostingtalk.com) "Isn't this general
knowledge? How can it be patented?"

In an interview with WHIR, Geler indicated said he is already taking
steps to protect himself and his small business. "I'm not sure how
enforceable this patent is," he says. "But I know that the company that
services the back-end of my services has been providing subdomain name
hosting well before this patent was issued, which was in 1999. I hope
that small business owners who do not have extensive legal support are
not being targeted. I have contacted the company that services back-end
for my company, and they informed me that their legal counsel is in the
process of preparing a defense and that my service will be under the
umbrella of their guidance."

Ideaflood did not respond to repeated requests from theWHIR for comment.
But the revelation has sparked much discussion among Web hosts about the
legal framework behind such a development - not to mention the
enforceability of Ideaflood's intent. After all, if they can go after
user subdomains, what's next, Host-provided email accounts?

"This is like Al Gore claiming he invented the Internet," wrote one
discussion group participant. "Somebody help me here... Am I reading
this wrong or am I going to have to pay royalty fees to somebody to be a
Web host?" wrote another.

The sense of outrage and caution was palpable, given the stakes.

"This is a patent on what is an obvious 'thing' to do," says Gary
Harris, owner of Toney, Ala.-based Dixie Systems LLC (dixiesystems.com),
who found an online version of the claimed patent. "It's not a new idea,
or new concept, or even a rebuild of an old concept in a new way. It's
just a patent on the automatic creation of subdomains. If they really
want to go after someone, they should go after the companies selling the
software that allows them to do this. But this company apparently just
goes after the small fish who don't have money to fling at lawyers."
Harris suggested better public dissemination of patents during the
request process, so more people can see it (and raise objections) before
it's given the green light by government officials.

Ideaflood secures many Internet-based patents, according to its own Web
site. It describes itself as an intellectual property holding company.
On Feb. 10, 2003, it announced that it was looking for a buyer for its
"Patent No. U.S. 6,389,458, covering exit traffic on the Internet,"
which is "one of the most widely infringed patents ever issued by the
U.S. Patent & Trademark Office." Ideaflood also has claimed patents on
addressee-defined mail addressing systems; managing ownership of virtual
property; aggregating information over a wide-area network; and a host
of other Internet-based methods, systems and practices.

Web host industry representatives question whether everything they do
can be patented and sought for licensing compensation.

Christopher Falkowski, a legal specialist in these topic areas for
Bloomfield Hills, Mich.-based Rader, Fishman and Grauer
(raderfishman.com) says a number of key requirements must be met to
obtain a patent, whether that patent is in the area of Web hosting
operations or any other technical field: The invention must be new or
novel. It must be non-obvious. The persons claiming the patent must be
the inventors. And the patent application must be filed within one year
of a public disclosure or sale.

"The short answer is that there are no special rules for Web hosting
patents," Falkowski says. "The challenge with Web hosting and other
IT-related patents is that the determination of what is novel and
non-obviousness requires a good search, and it can be difficult for the
U.S. Patent and Trademark Office to conduct searches where so much of
the prior art is not in the form of a patent." This pretty much puts the
Web host in the position of having to battle in court if the patent
holder want to enforce its rights.

"Respond," says Susan Kohlmann, an intellectual property litigator for
the New York-based firm of Pillsbury Winthrop (pillsburywinthrop.com).
"Never ignore a cease and desist letter, even one that you believe is
ill-founded. Rather, we would suggest responding by seeking more
information - only then can you assess the validity of any claim they
might have, and, if the claim is valid, whether the licensing fee is
appropriate or some other negotiated solution makes sense."

Much of the problem is that the Patent and Trademark Office often grants
patents on software without investigating fully what related technology
is in the public domain, says patent lawyer Mary Dicig, of the
Chicago-based firm, Schwartz Cooper Greenberger and Krauss (scgk.com).

"Business method patents that cover software programs weren't legal
until a few years ago," Dicig says, "so there is no comprehensive way
for the PTO to search for software and computer-related technology
that's already been invented, other than that described in patents and
published applications. For instance, if the patent office didn't know
about WordPerfect 1, it could issue a patent on word processing because
it has no way to know that word processing was already invented."

Says Eric Prager, a Seattle-based partner at Darby and Darby
(darbylaw.com), an intellectual property firm: "Yes, you can be sued.
And you probably will be. Many industries face the same issue. Patents
take years to work their way through the U.S. Patent and Trademark
Office. Industries, especially in the information technology space,
often develop more quickly than the applicable patents come to light.
This can be a rude awakening for companies that have not already
factored into their business plans the likelihood that someone will come
knocking with a patent they may infringe. Lots of great inventions seem
obvious in retrospect. About 30 years ago, one of our clients realized
that if you attach a small pom-pom to the back of a short tennis sock,
the sock won't slip down into your tennis shoe. The idea sounds obvious,
but designers had wrestled for years with the problem until our client
solved it. He patented the idea - and retired."