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Amazon seeks patent for payment system

The online giant looks to patent its "Honor System" payment program. Yet Amazon has been under fire for its patent grab strategy before.

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.