The Law of the Line

The pros and cons of patents.

This month, we’ll look at the controversy in light of one specific patent— the Amazon.com Inc. “1-Click” patent, U.S. Pat. No. 5,960,411. Amazon’s 1-Click patent covers a method and system for a single-action ordering of items in a client-server computer environment. It was developed in response to problems with the “shopping cart model” of purchase systems, in which users would add items to a virtual shopping cart and then proceed to check out, where billing and shipping information was collected. Many purchasers would abandon their shopping cart before completing the transaction. Using the 1-Click method, a purchaser who has previously visited the Web site and entered into the merchant’s database requires check-out information to perform a single action to complete a purchase. If you have used this feature on Amazon, you know it is convenient.

In September 1999, the Patent and Trademark Office granted Amazon its patent, and within months it had filed suit against Barnes and Noble and secured a preliminary injunction against its use of its “Express Lane” technology. This ignited a storm of controversy within the Internet and Intellectual Property communities. The basic concern – which even Amazon’s chief executive officer shared to some degree – was that such business method patents would stifle, rather than encourage, innovation in the rapidly changing technology of the Internet. Some argued that business method patents themselves were flawed, while others simply said that the patent and trademark office was not yet capable of evaluating the prior art.

Earlier this year, the Court of Appeals for the Federal Circuit vacated the District Court’s order and held that Amazon was not entitled to a preliminary injunction. The Court of Appeals agreed with the District Court that Amazon had shown that it was likely to succeed in proving that the Barnes and Noble Express Lane service infringed Amazon’s 1-Click patent. The Court of Appeals concluded, however, that Barnes and Noble had “mounted a substantial challenge to the validity of the patent in suit,” and therefore reversed the grant of a preliminary injunction and remanded the case back to the District Court for further proceedings. There was no question raised that the subject matter of the patent was not proper – the parties and the courts focused only on the traditional issues of the scope of the claim and whether or not the patent was valid and infringed.

The matter will ultimately need to be resolved at trial. At least from this initial ruling, however, it appears that the Court of Appeals has shown some sympathy toward the view that the patent office (and the District Court) failed to consider adequately the importance of the prior art that would tend to show the 1-Click patent was not novel or was obvious to one skilled in the art.

One interesting result of the controversy is that the Internet has responded to this new challenge in a new way: the perceived problem was a lack of access to the prior art in computer science, and the response was a new Web site, BountyQuest.com, which offers a cash bounty to persons who can find prior art on certain patents. A variety of investors, including critics of Amazon and Amazon’s chief executive officer himself, provided start-up funding for BountyQuest. And recently BountyQuest paid a $10,000 bounty to three persons who provided prior art relevant to the Amazon 1- Click patent.

The controversy over patents and the Internet highlights a basic tension in Intellectual Property law. How do you provide enough legal protection to encourage creation and invention without providing too much and discouraging competition in the free market? It is a question that is never easy to answer, and perhaps most difficult to address in a dynamic market like the Internet.

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