E-Commerce Patent Blackmail – You May Be Next!

    November 19, 2002

To date, the only real impediment to doing business online has been the safety of the consumer’s financial data. In March of 2002, this all changed.

Enter the U.S. Trademark and Patents Office. Over the last few years, the USTPO has shown extreme ignorance of new Internet technologies. The USPTO has approved some of the most ludicrous patents to be presented to them.

In 1997, AltaVista was granted a number of patents on search engine technologies, even though search engine technology had been in use as early as 1989.

In 1999, Amazon was given a patent for “one-click purchasing.”

In 2001, McAfee was granted patents for “Auto-Downloading of Software / Software as a Service (SaaS)”, both of which had been in use by others since before the creation of the global Internet.

In 2002, PanIP (Pangea Intellectual Properties L.L.C) of San Diego, California entered the fray. They were granted two patents: US Patent No 5,576,951 and US Patent No. 6,289,319. The first patent covers the “use of graphical and textual information on a video screen for the purposes of making a sale.” The second covers “accepting information to conduct automatic financial transactions via a telephone line & video screen.”

Most Patent experts do not take these “junk patents” seriously knowing full well that they will be overturned by the courts and other processes set up to police the system. However, John D. Trudel, the Founder and Managing Director of The Trudel Group, pointed out that “this nonsense raises the cost of business, since it takes years and costs $1 million or so to break these junk patents.”

Herein lies the difference in PanIP’s strategy. Big corporations who have deep pockets settle most “junk patents” in court. Amazon took their initial challenge to their primary competitor, BarnesandNoble.com. B&N had the resources to fight this “junk patent”, so they fought.

PanIP has instead directed their attacks at small companies who simply do not have the resources to fight! In fact, PanIP has currently sued 50 small businesses with no end in sight.

Timothy Beere, the owner of DeBrand Fine Chocolates, had to make a choice when he found himself in the crosshairs of PanIP. Tim said, “I had to make a decision. Pay them the $5000 they were asking for something I didn’t think they had a right to, or Fight Back!” He went on to say, “It was clear that PanIP’s strategy counted on the notion that few, if any, of the businesses would be willing fight back. I was!”

Tim proceeded to contact the other companies that have been sued by PanIP to build a consensus to stand up and fight. Many have joined together in the fight starting the PanIP Group Defense Fund, Inc.

In building his website (http://www.youmaybenext.com), Tim said, “I knew if I could get this on the radar screen, people would be as disgusted by it as I was.”

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