Gary Eichhorn, CEO of Internet commerce software vendor Open Market, last week pulled the pin out of a hand grenade in front of the e-commerce world. Let's see what he does with his explosive.
Appropriate for the virtual world of the Net, Open Market's new ammunition is abstract but powerful: three U.S. patents for its Internet commerce technology. One could affect most anyone making or receiving Internet card payments, one covers the common "shopping cart" at most Web stores, and one lays claim to tracking visitors passing through a Web site.
The patents could affect hundreds of software vendors with Internet commerce or payment software, scores of companies that built their Web storefronts in-house, and thousands of Web merchants.
Expect the inevitable lawsuits, the frenzied anguish, the likely coalition of companies resisting the patent claims, and so on.
But most of all, watch Eichhorn and how he pursues the licensing strategy Open Market professes to want.
Software patents don't always boost the patent holder. Five or so years ago, a software patent was granted for screensavers used for advertising. Its patent holders never benefited. Compton's New Media sprung its patent for CD-ROM technology on other CD-ROM publishers at a breakfast at one fall Comdex. That company exists no more.
E-Data bought a patent covering online software distribution and then threatened or filed nuisance lawsuits, eventually licensing the patent to the likes of IBM, Adobe Systems, and Cybersource for something less than the cost of defending a lawsuit.
Good outcomes sometimes happen. Stac won a sizable sum from Microsoft over Stac's patented method of data compression in software. And RSA Data Security's patented algorithms made it the best brand in cryptography.
Unfortunately, the U.S. Patent and Trademark Office remains ill-equipped to handle software patent claims.
Open Market's payment patent, the most important of the three, doesn't just cover a specific way or specific software code to make secure, real-time electronic payments with a credit card over the Internet. No, patent number 5,724,424 covers the whole concept of paying securely with a card over the Net, no matter what software code is used.
That's too broad. So are the other two.
Patent number 5,715,314 covers electronic shopping carts, a device used in virtually every piece of e-commerce software. Server-side shopping carts let buyers earmark an item for purchase but then continuing to browse a Web storefront before check-out.
Open Market's "session identifier" patent, number 5,708,780, relates to tracking visitors on a Web site. Open Market isn't claiming it covers the common "cookie," but it may cover digital certificates. The tracking patent could impinge on any Web site that engages in "one-to-one marketing."