As we enjoy great advantages from the inventions of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously. —Benjamin Franklin
Patents are mines. They lay buried in the marketplace, doing nothing until their owners blow them up under an enemy. That's what Amazon.com founder and CEO Jeff Bezos did last fall, when Barnesandnoble.com stepped too close to Amazon's “1-click” patent (No. 5,960,411). Amazon pressed a charge, and a court injunction followed.
The bomb worked. It stopped Barnesandnoble.com from copying Amazon's work on the 1-click feature. It also blew Jeff's clothes off. Time magazine's Man of the Year—the leading entrepreneur of the New Economy—was exposed as an old-fashioned emperor of industry: a hard-ball player, a pointy-haired litigator.
At least, that's the way it appeared to the Open Source world, where captains of industry get the benefit of little doubt in any case. Calling almost immediately for a boycott, the conscience of free software, Richard Stallman, said:
This is an attack against the World Wide Web and against e-commerce in general. The idea in question is that a company can give you something which you can subsequently show them to identify yourself for credit. This is nothing new: a physical credit card does the same job, after all. But the U.S. Patent Office issues patents on obvious and well-known ideas every day. Sometimes the result is a disaster.
Not much happened after that, at least on the surface. Behind the scenes, however, Tim O'Reilly of O'Reilly & Associates began a correspondence with Jeff Bezos.
Then, on February 23, all hell broke loose. The United States Patent & Trademark Office assigned Amazon patent No. 6,029,141 for an “Internet-based customer referral system”. This covered Amazon's popular associates program, by which thousands of sites mount “bookstores” with sales fulfilled by Amazon.com. (To witness the program's popularity, search for the phrase “in association with amazon.com”.) There are many such programs operating on the Web, but Amazon's was the first and easily the most successful.
Amazon had applied for the patent back in 1997, but that didn't cut much ice with the open-source folks. A roar went up, and this time the press joined in. “Loss-making Amazon turns to bullying”, wrote the Irish Times. For the first time in its short life, Amazon.com was getting bad PR. If they hadn't sued Barnesandnoble.com over a different patent, it is unlikely anyone would have cared. In total, Amazon holds only seven patents. By contrast, IBM obtained 2,697 patents in 1998 alone.
Amazon's patents were all applied for prior to the land rush on “business process” and software patents after the floodgates were opened by State Street Bank & Trust Co. vs. Signature Financial Group Inc. On July 23, 1998, the Federal Court of Appeals upheld a lower court ruling that threw out what little discretion remained on the patenting of, well, nearly every marginally original way of doing business, including “processes” conducted by software. The Supreme Court later declined to review the case.
So Amazon stood alone in the spotlight. Yes, other Internet companies had sued to protect patents, but Amazon was the leading e-commerce innovator. Their patent policy mattered.
Enter Tim O'Reilly. In a series of “Ask Tim” columns and open letters, O'Reilly both challenged Bezos and invited him into the growing patent reform movement. A series of private conversations followed, culminating on March 10 with “An open letter from Jeff Bezos on the subject of patents” (http://www.amazon.com/patents/).
Crediting influence by O'Reilly, Bezos declared both his intent not to harm software development and a newfound commitment to patent reform. He did not hedge on his own patent policies, but neither did he appear to push them off the negotiating table. He also included a number of concrete proposals for reforming patent law.
Suddenly, the PR turned around. Columnist Dan Gillmor of the San Jose Mercury News, who had labeled Bezos one of technology's “villains” after the lawsuit against Barnesandnoble.com, wrote, “Bezos has a point on patents...” and “...it's a heartening sign of the Internet's power, and Bezos' management style, that this conversation is taking place at all.”
Will Bezos continue to straddle the fence? He faces a clear choice between his lawyers and his market. As both he and O'Reilly point out (crediting The Cluetrain Manifesto), markets are conversations. If he stops talking, we'll know his choice.
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Pick up any e-commerce web or mobile app today, and you’ll be holding a mashup of interconnected applications and services from a variety of different providers. For instance, when you connect to Amazon’s e-commerce app, cookies, tags and pixels that are monitored by solutions like Exact Target, BazaarVoice, Bing, Shopzilla, Liveramp and Google Tag Manager track every action you take. You’re presented with special offers and coupons based on your viewing and buying patterns. If you find something you want for your birthday, a third party manages your wish list, which you can share through multiple social- media outlets or email to a friend. When you select something to buy, you find yourself presented with similar items as kind suggestions. And when you finally check out, you’re offered the ability to pay with promo codes, gifts cards, PayPal or a variety of credit cards.Get the Guide