November 21, 2002, 12:00 AM — Patents. They protect us when we come up with a great piece of
technology, and allow us to reap the rewards from our hard work and
intellectual property. As a creator of intellectual property myself, I
thoroughly understand and support the need for patent and copyright
laws. Without them, innovation and creativity would be severely stifled.
But they can be abused.
A company called PanIP holds patents that it claims apply to any web
site that contains text and graphics, and can obtain credit card and
financial information from a user. That means just about anyone doing
business on the web is infringing on its patent. PanIP's vision of
E-business is that it is like a utility, and they are the only game in
town. What's next? That's like claiming you have a patent on air, and
charging people to breathe it.
What's most disturbing about this (even more disturbing than the fact
that the US Patent Office granted these patents in the first place) is
that PanIP has filed suit against dozens of small to mid-size companies
and is actually collecting money from them. They haven't gone after any
larger companies which is logical, I guess. If you're going to be the
classroom bully of the Internet, it makes sense to only pick on those
that are smaller than you lest you get your corporate nose bloodied.
There's no rhyme or reason in PanIP's selection of victims. They range
from an online candy company, to plumbing supply firms and a variety of
mom 'n pop operations. The only thing these companies have in common is
that they probably don't have enough money to defend against such a
ridiculous lawsuit. Defending against a patent lawsuit is incredibly
expensive, no matter how far-fetched the claim. It could easily cost
millions of dollars and bankrupt the defendant. Several of the
defendants have decided to settle, seeing no other alternative than to
give in. In the meantime, PanIP is collecting settlements and building
up a war chest, perhaps in anticipation of going after bigger fish.
A few others have decided to fight. A group led by Indiana-based DeBrand
Fine Chocolates has set up a site, http://www.youmaybenext.com, to keep
people
up to date on the latest developments.
Should PanIP get its way, the fate of the web and the future of
E-business would be entirely in their hands. Another company, Divine,
Inc., holds a patent on electronic shopping carts. Although unlike
PanIP, Divine's entire business model doesn't revolve around extorting
money from small companies - they do produce valuable goods and
IT-related services that are highly regarded in the marketplace - the
potential is there for the same sort of abuse. Almost everyone doing
E-commerce uses an electronic shopping cart, and they've become almost
generic. They're widely available cheap or even free, and come as part
of almost any E-commerce package on the market. Another company tried to
claim a patent on hyperlinks.
Given the unorganized nature of the Internet, it was inevitable someone
would try to claim ownership of its vital processes and try to cash in.
If they're successful, the results could be devastating to E-business
everywhere.
