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Originally published October 23, 2006 at 12:00 AM | Page modified October 23, 2006 at 7:46 PM

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IBM sues Amazon over patents, says Web retailer won't negotiate

IBM Corp. filed two lawsuits against Inc. today, claiming key aspects of the Internet retailer's Web sites violate patents held by Big Blue.

The Associated Press

BOSTON – IBM alleged in two lawsuits today that important components of's massive retailing Web site were developed and patented many years earlier at IBM.

Seattle-based Amazon, which this year will sell $10 billion worth of everything from books and CDs to pet supplies and jewelry, is accused of infringing on five IBM patents. IBM says the technologies covered by the patents govern how the site recommends products to customers, serves up advertising and stores data.

Some of the patents were first filed in the 1980s, when IBM created back-end technology for Prodigy, an early online service that grew out of a joint venture between IBM and Sears. One such patent is titled "Ordering Items Using an Electronic Catalog."

"Given that time frame, these are very fundamental inventions for e-commerce and how to do it on the network," said John E. Kelly III, IBM's senior vice president for intellectual property. "Much, if not all, of Amazon's business is built on top of this property."

Hundreds of other companies have licensed the same patents, and IBM has tried to negotiate licensing deals with Amazon "over a dozen times since 2002," Kelly said. Amazon has refused every time "while pretending to desire resolution," the lawsuits state.

Amazon declined to comment.

IBM is not specifying the damages it seeks. It filed its lawsuits in federal court in the Eastern District of Texas, one in Tyler and one in Lufkin. Texas has become a frequent site for patent cases because districts there move quickly and are perceived as relatively responsive to intellectual-property claims.

IBM is the world's leading patent holder, spending $6 billion a year in research and development and earning about $1 billion a year in royalties.

Amazon's relationship with patents has been more heavily contested; the company's patent of the "one-click" checkout method in 1999 was famously derided as overly broad and obvious. The U.S. Patent and Trademark Office is re-examining that patent.

Marc Kaufman, a Nixon Peabody partner who specializes in patent law, said some of the IBM patents at issue are widely known in technology legal circles to have been frequently licensed. Kaufman said it appears that "Amazon is the first potential licensee to dig in their heels."

IBM's Kelly would not disclose how much other companies have paid to license these patents, though he added: "We are not unreasonable people."

There appears to be no sensitive customer relationship at stake in the IBM-Amazon tussle. Traditionally a big customer of Hewlett-Packard, Amazon does little if any business with IBM.

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