BT preps defense of Web-surfing patent

British Telecom will present its case in court next week claiming it holds a patent on hyperlink technology and has the right to demand license fees for use of the ubiquitous Web feature.

Hyperlinks allow people to surf from one Web page to another by clicking on highlighted text. At a one-day hearing in federal court in White Plains, N.Y., on Monday, BT will seek to show that a patent it filed in 1976--well before the rise of the Internet to the mainstream--applies to standard use of hyperlinks today. The patent expires in five years.

Also at the hearing will be Internet service provider Prodigy, the defendant in the lawsuit the U.K.-based telecommunications giant filed more than a year ago charging the company with patent infringement.

BT has a tough case, according to Jeff Schwartz, a patent lawyer at McKenna & Cuneo.

"To a certain extent, it looks like they're kind of stretching the envelope to apply (their patent) to the Internet," he said. "They're going to have to somehow argue that what they were doing in 1976 applies to what came 10 or more years later." The judge's decision, which will establish the scope of the patent claim, should follow in a month or two, said Robert Perry, a partner at Kenyon & Kenyon, the law firm representing BT.

If the claim is too broad, patent lawyers say, it runs the risk of being invalidated by evidence that hyperlink technology was in use before BT filed the patent, or in legal lingo "prior art." Web developers and computer scientists outraged by the BT suit point to 1968 film footage of a Stanford Research Institute computer scientist demonstrating the first computer mouse and technology he called hyperlinks.

If BT were to win the suit, there could be enormous damages against Prodigy and other ISPs, which could be liable for six years of prior use of hyperlinking.

Gartner analyst Debra Logan says BT Group's lawsuit forms part of a larger strategy within the company to get the most out of its intellectual property. see commentary

"It could have a substantial impact on the Internet as we use it today" by raising costs for consumers if Internet service providers have to pay a license fee, Schwartz said.

Greg Aharonian, operator of the Bustpatents.com Web site, said he doesn't think BT will win the right to lay claim to all hyperlinking.

"They're not going to get a piece of every company using hyperlinks out there. That's just too silly," he said.

More likely, he said, a judge will narrow BT's claim to a specific type of hyperlinking that doesn't affect most Web sites. He said many Web-related patents were overly broad when first issued but have since been narrowed to a more realistic scope. As an example, he cited Amazon.com's patent on one-click technology.

BT, which spends $450 million a year on research and development, said it has every right to pursue the lawsuit.

"Intellectual property is real property," said BT spokesman Jon Moggridge. "We are looking for what is fair and reasonable based on revenues others have enjoyed with that property."

A spokeswoman for Prodigy, which is a subsidiary of SBC Communications, said the company does not comment on pending litigation.

BT Group on Thursday reported a third-quarter profit of $539 million (381 million pounds), before taxes, exceptional charges and goodwill amortization.