Amazon, Netflix Hit With Patent Suit
British company claims four online retailers are using its patented technology.Scarlet Pruitt, IDG News Service
BTG, a London-based firm that focuses on intellectual property and technology commercialization, has filed suit against Amazon.com, Barnesandnoble.com, and two other Internet companies for infringing on patents related to the tracking of users on the Web.
The suit, filed in the U.S. Federal Court in Delaware, alleges that the companies use BTG's patented technology as part of their online marketing programs. The suit asks for unspecified damages for past infringement and injunctions against future use of the technology.
BTG has charged Amazon, Barnesandnoble.com, online movie rental service Netflix, and shopping site Overstock.com with infringing U.S. patent number 5,717,860. Additionally, it charged Amazon and Barnesandnoble.com with infringing U.S. patent number 5,712,979. Both patents relate to technology that enables the tracking of users between Web sites and were acquired by BTG from personalized Web information provider Infonautics in 2002.
BTG spokesperson Andy Burrows says that the company researched the patents before purchasing them and was aware that the technology was used by a number of companies. It made efforts to persuade the companies to license or buy the technology before it filed suit, he says.
"Litigation is part and parcel of doing business in the [intellectual property] technology spectrum," Burrows says. He adds, however, that "the floor was still open to reach commercial settlement."
The complaint against the four companies was filed Tuesday but BTG has not yet heard from the defendants, Burrows says.
A spokesperson for Amazon in the U.K. says that the company does not comment on pending litigation. Representatives for Barnesandnoble.com, Netflix, and Overstock.com, all based in the U.S., weren't immediately available to comment early Wednesday.
Similar Suits
Earlier this year BTG filed suit against Microsoft and Apple Computer for a patent related to Web-enabled software update technologies. Although the company is prepared to engage in litigation, BTG gets the majority of its income from licensing and royalty revenue, Burrows says. BTG holds some 3500 patents in its portfolio and brought in revenue of around $90 million in the last full year, Burrows says.
Gary Barnett, IT research director at consulting company Ovum, says that he has noticed an uptick in intellectual property lawsuits in the tech sector recently.
"They have become more important because people have run out of new ideas and they have started looking at old ideas and how to exploit them," Barnett says. He adds that there are fewer suits in periods of sector expansion and innovation.
Patent lawsuits are can prove lucrative, however. Earlier this year chipmaker Intel agreed to pay Intergraph $225 million to settle a patent suit over a parallel instruction computing technology. And last year, EBay was ordered to pay $35 million for infringing a patent related to online auctions.
Although Burrows declines to say how much money BTG is seeking in its latest patent suit, he says that the value of the patents are "significant" to the company's operations.