[FYI] Business method patent prevails in US case

["Axel H Horns" <horns@ipjur.com>]

http://www.out-
law.com/php/page.php3?page_id=businessmethodpate973599755

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Business method patent prevails in US case

07/11/2000

A US federal appeals court has ruled in favour of a company that owns
a business method patent that it claims covers the basic distribution
of information over the internet. It is one of the first decisions by
an appeals court on e-commerce business method patents.

In 1985, E-Data Corporation (also known as Interactive Gift Inc.)
obtained a patent that lets companies sell directly to consumers at
remote locations without having to stock warehouses full of products
at those locations. E-Data claims that this patent also covers the
basic process for selling software or documents on-line. On these
grounds, it sued Comuserve, Broderbund Software, Waldenbooks and
seven other companies for patent infringement and recovery of
royalties. If ultimately successful, E-Data is expected to claim
royalty payments from thousands of e-commerce web sites.

E-Data lost the first round of its case. A New York district court
judge, Judge Barbara Jones, ruled that the company’s patent could not
be extended to internet-based technologies. E-Data has now won its
appeal before the federal court which said last week that Judge Jones
interpreted the patent too narrowly. The appeals court ordered that
she review the case again.

E-Data President, Scott Hillstrom said, “this case represents a
strong victory for E-Data. While we didn't win every point, and some
questions remain to be decided, E-Data's position in the digital
product distribution marketplace is strengthened substantially.”

An E-Data statement added:

“The ruling construed the patent's claims in such a way that its
application to virtually all US kiosk businesses selling digitally
downloadable products (e.g. music, video games, books, etc.) is
clear. The ruling also clarifies the issues that may now be addressed
in further litigation relating to the sale of software, video games,
music and other products downloaded by businesses and consumers to
offices and homes.”

The appeals court limited the patent's effect by upholding Judge
Jones' view that the patent does not cover downloads to PC hard
drives. Further, Judge Jones has still to determine whether the
patent was actually infringed. Even if she does find infringement,
the defending companies could still argue that the patent is invalid
on the grounds that the processes it covers were in use prior to the
grant of the patent.

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