Amazon.com Inc. has agreed to pay an unspecified patent-licensing fee to International Business Machines Corp. to settle a patent dispute that challenged some of the core technology underpinning its e-commerce site. The companies also said they have reached a long-term agreement to cross-license patents over whether and how broad ‘business method’ patents apply to commerce on the Internet. The agreement has resolved a long standing unusual legal dispute that broke out late last year, as IBM moved to enforce part of its extensive holdings of intellectual property.
The world’s largest computer services company, IBM, had challenged that Seattle-based Amazon developed its business on technology owned by IBM and demanded royalties ‘on the billions in revenue that Amazon has received.’ In October last year, IBM had filed two lawsuits in different federal courts in eastern Texas after four years of talks failed to yield result in a licensing agreement.
The IBM lawsuit alleged that Amazon has infringed on five long-standing patents that dealt with many fundamental aspects of networking and e-commerce. Amazon.com, an Internet retailer, had accused IBM of waiting until it had started making a profit in 2002 to ask for money on patents issued in the 1990s. Amazon had earlier refused to pay and objected to the validity of the IBM patents. In response Amazon had launched a counter-lawsuit against IBM claiming that two of its own patents had been breached by IBM.
Experts are of the view that Amazon may have feared a probable defeat at trial, especially after Microsoft Corp., the world’s biggest maker of computer software, lost a $1.52 billion jury verdict in an unconnected case in February.
For the moment, the US patent system itself is experiencing growing pains as Congress continues to delve into the prospect of revising it to better suit the requirements of the 21st-century business world.
Image Source: China Daily/AP
