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IBM sues Amazon over Web patents
2006-10-23
International Business Machines Corp. (NYSE:IBM) said on Monday it had filed two lawsuits accusing Amazon.com Inc. (Nasdaq:AMZN) of violating patents on features used in its online shopping network. The suits say Amazon violates IBM patents covering such features as allowing users to order items from an electronic catalog, displaying advertising in an interactive service and storing data in an interactive network. "We believe that Amazon's entire business model is built upon these patents and that damages could be substantial," said IBM spokesman Scott Brooks. Brooks said IBM was interested in striking a licensing deal with Amazon, which is the world's biggest online retailer and had $2.14 billion in revenue for its second quarter. "Many companies that do e-commerce have worked with us on license agreements, and frequently these are cross-license agreements," Brooks said. "It gives both companies greater freedom of action." IBM, which files more U.S. patents than any other company, said it had first notified Amazon of the infringement more than four years ago, but that the Seattle-based company had "shown no willingness to have meaningful discussions." Amazon was not immediately available for comment. Amazon sued Barnesandnoble.com, the online unit of the Barnes & Noble (NYSE:BKS) book chain, in 1999 for allegedly infringing its "1-Click" patent that lets shoppers order an item with a single mouse-click. The companies settled in 2002. Other services IBM maintains are covered by its patents deal with presenting applications in an interactive service and adjusting Web links with weighted user goals and activities, which IBM said would apply to Amazon's popular feature that recommends products to users. The suits were filed in two separate U.S. District Courts for the Eastern District of Texas, known in technology and legal circles for the large number of patent cases it hears. "We filed this case for a very simple reason. IBM's property is being knowingly and unfairly exploited," John Kelly, IBM's senior vice president of technology, said in a statement. Amazon shares rose 13 cents to $32.7 in morning trade on Nasdaq. IBM gained 1.2 percent to $91.6 on the New York Stock Exchange. (Additional reporting by Michele Gershberg in New York)
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