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<title>Techdirt. Stories filed under &quot;e-commerce&quot;</title>
<description>Easily digestible tech news...</description>
<link>http://www.techdirt.com/</link>
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<image><title>Techdirt. Stories filed under &quot;e-commerce&quot;</title><url>http://www.techdirt.com/images/td-88x31.gif</url><link>http://www.techdirt.com/</link></image>
<item>
<pubDate>Mon, 28 Jan 2013 12:48:46 PST</pubDate>
<title>Newegg's 'Screw Patent Trolls!' Strategy Leads To Victory</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20130128/10521621810/neweggs-screw-patent-trolls-strategy-leads-to-victory.shtml</link>
<guid>http://www.techdirt.com/articles/20130128/10521621810/neweggs-screw-patent-trolls-strategy-leads-to-victory.shtml</guid>
<description><![CDATA[ During CES, there was a panel discussion on patent trolling, and panelist Lee Cheng, Newegg's top lawyer, made some strong statements about how the company had made the decision that it will never give in to patent trolls, because if it does, more will just come knocking.  That strategy may be costly upfront, but it also may have just saved the public from paying a massive online shopping tax.  Joe Mullin, once again, has the fantastic story concerning Newegg's <a href="http://arstechnica.com/tech-policy/2013/01/how-newegg-crushed-the-shopping-cart-patent-and-saved-online-retail/" target="_blank">big victory over Soverain Software</a>, who claimed that its patents (<a href="http://www.google.com/patents/US5715314" target="_blank">5,715,314</a>, <a href="http://www.google.com/patents/US5909492">5,909,492</a> and <a href="http://www.google.com/patents/US7272639" target="_blank">7,272,639</a>) covered basically any online shopping cart.  As we noted back in 2010, Soverain was a pure patent troll which purchased the patents that had originally come from Open Market, and was <a href="http://www.techdirt.com/articles/20100813/12361610620.shtml">suing everyone</a> (with a ton of companies settling).
<br /><br />
However, Newegg chose to fight it, and despite losing at the district court level (in East Texas, of course), the Appeals Court has invalidated all three patents.  Incredibly, the East Texas court had <i>refused</i> to let Newegg make the argument that the patents were not valid.
<blockquote><i>
At district court, the judge hadn't even let those invalidity arguments go to the jury, stating there wasn't "sufficient testimony" on obviousness, and that it would be "very confusing" to them.
</i></blockquote>
That's fairly incredible.  The validity of a patent is a key issue in any patent trial, and for a judge to reject it even being brought up for being "too confusing" to a jury is astounding.  Thankfully, the appeals court completely rejected not only that idea, but the patents as well -- and it means that some other recent verdicts in favor of Soverain are now dead as well.
<br /><br />
Mullin's article also highlights some of the bogus nature of Soverain:
<blockquote><i>
<p>It's all a sham. Court records show Soverain hasn't made a sale&#8212;<em>ever</em>. The various voice mailboxes were all set up by Katherine Wolanyck, the former Latham &#038; Watkins attorney who is a co-founder and partial owner of Soverain. And the impressive list of big corporate customers on its Web page? Those are deals struck with another company, more than a decade ago. That was OpenMarket, a software company that originally created these patents before going out of business in 2001. It sold its assets to a venture capital fund called <a href="http://en.wikipedia.org/wiki/Divine_%28corporation%29">divine interVentures</a>, which in turn sold the OpenMarket patents to Soverain Software in 2003.</p>
<p>"Thank you for calling Soverain technical support," says Wolanyck, if you press option 2. "If you are a current customer and have a tech support question, please call us at 1-888-884-4432, or e-mail us at support@soverain.com." That number, like the "customer support" number on Soverain's <a href="http://www.soverain.com/asp/about/about_contact.asp">contact</a> page, has been disconnected.</p>

</i></blockquote>
Mullin also includes a <a href="http://arstechnica.com/tech-policy/2013/01/how-newegg-crushed-the-shopping-cart-patent-and-saved-online-retail/2/" target="_blank">fantastic interview with Lee Cheng</a> about why Newegg was willing to do this.  It's worth reading in full, but here's just a snippet:
<blockquote><i>
Patent trolling is based upon deficiencies in a critical but underdeveloped area of the law. The faster we drive these cases to verdict&#8212;and through appeal, and also get legislative reform on track&#8212;the faster our economy will be competitive in this critical area. We're competing with other economies that are not burdened with this type of litigation. China doesn't have this, South Korea doesn't have this, Europe doesn't have this.
<br /><br />
Just in our experience, we've been hit by companies that claim to own the drop-down menu, or a search box, or Web navigation. In fact, I think there's at least four that claim to 'own' some part of a search box.
<br /><br />
It's actually surprising how quickly people forget what Lemelson did. [referring to Jerome Lemelson, an infamous patent troll who used so-called "submarine patents" to make billions in licensing fees.] This activity is very similar. Trolls right now "submarine" as well. They use timing, like he used timing.
<br /><br />
Then they pop up and say, "Hello, surprise! Give us your money or we will shut you down!" Screw them. Seriously, screw them. You can quote me on that.
</i></blockquote>
Of course, once again, we wonder how companies like Amazon, who "settled" with Soverain, paying them tens of millions of dollars, feel about this.  Why is it that the companies who settled over patents later declared invalid aren't able to seek their money back?  Seems only fair.<br /><br /><a href="http://www.techdirt.com/articles/20130128/10521621810/neweggs-screw-patent-trolls-strategy-leads-to-victory.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20130128/10521621810/neweggs-screw-patent-trolls-strategy-leads-to-victory.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20130128/10521621810/neweggs-screw-patent-trolls-strategy-leads-to-victory.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>standing-up-to-bullies</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20130128/10521621810</wfw:commentRss>
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<pubDate>Wed, 14 Nov 2012 10:50:22 PST</pubDate>
<title>If You Read Just One Article About The Patent Mess, Make It This One</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20121114/03170321042/if-you-read-just-one-article-about-patent-mess-make-it-this-one.shtml</link>
<guid>http://www.techdirt.com/articles/20121114/03170321042/if-you-read-just-one-article-about-patent-mess-make-it-this-one.shtml</guid>
<description><![CDATA[ Steven Levy has always been a great writer covering the tech industry, but his article <a href="http://www.wired.com/opinion/2012/11/ff-steven-levy-the-patent-problem/all/" target="_blank">on "the patent problem" for Wired is a must read</a>, even if you're familiar with these stories.  He does a great job illustrating just how screwed up the patent system is, focusing on a few key trolls, and pulling in some important information and data to support the anecdotal claims.  Much of the story is about Mitchell Medina, who took a ridiculous patent that came from an idea about scanning medical documents into electronic format, and turned it into a belief that he held a patent on which practically every website infringed.  You really should read the whole thing, but a few tidbits: first off, Medina and the two other people named on the patent never actually could build a working product.
<blockquote><i>
Although the three had never tried to build a working model before they were granted the patent, they now set out to create a business based on the idea. Elias made a prototype, albeit one that Medina would later admit &#8220;didn&#8217;t work particularly well.&#8221; He claimed to have visited &#8220;every big player&#8221; they could think of in the computer industry to see if they would like to license his patent and build a commercial version themselves. He also claimed that he had attempted to raise venture capital to create a company of his own. But no corporation or VC would put money into it. According to Medina, they were particularly annoyed when, during a meeting, an executive from IBM&#8217;s Lotus division rudely dismissed the idea of paying to use the concept. &#8220;He acted as if these kinds of patents were somehow laughable,&#8221; Lech says.
</i></blockquote>
Eventually Medina cut out the guy who actually came up with the idea of scanning documents, and set himself up as a patent troll.  He sued over 100 companies -- and realized that as long as the "license" he asked for was cheaper than fighting him in court, everyone would pay up, and everyone did... except one company, Flagstar Bancorp.  Levy goes through details of the seven years spent fighting the case, including two separate district court judges who absolutely slammed the lawsuit (one said the case had "indicia of extortion") and told Medina he had to pay up for filing such a ridiculous lawsuit (in between all that, the appeals court, ridiculously, disagreed and sent it back).  Eventually the appeals court agreed with the lower court, and the Supreme Court refused to hear the case, but it was a massive waste of time and energy.  Amazingly, the guy who demanded payment from all those companies (and got it from most), for doing absolutely nothing to actually help with the development of e-commerce, claims he's a "victim."
<blockquote><i>
Mitchell Medina, who has sued more than 100 companies for infringing his patents, sees himself as a victim. &#8220;When Jobs and Wozniak or Hewlett and Packard start in a garage, they&#8217;re heroes and captains of industry,&#8221; he says. &#8220;If you apply for a patent first, you&#8217;re a troll.&#8221; Via email from Africa, he continues to attack the Flagstar decision, claiming that Martinez ignored key evidence and ruled incorrectly. (Medina felt it best not to talk by phone, because, as he put it, &#8220;I tend to speak my mind, and it would be unwise for me to do so without the self-censorship of writing.&#8221;)
<br /><br />
&#8220;We did nothing improper,&#8221; he writes. &#8220;The judges in this case comported themselves like spectators in a Roman coliseum who wanted to see plenty of blood on the floor in the form of litigant&#8217;s money before they considered the show worthy of their interest.&#8221;
</i></blockquote>
Really, this is just touching the surface.  Even if you're familiar with the Flagstar case (which we <a href="http://www.techdirt.com/articles/20110805/17230815417/patent-troll-lawyers-smacked-down-made-to-pay-sanctions-mass-lawsuits-followed-quick-settlement-offers.shtml">wrote about</a> last year when the final CAFC ruling came down), reading Levy's detailed piece is worth it.  The problem, of course, is that this kind of thing is happening over and over and over again -- nearly all of it taking money from productive purposes of building companies and products, and sending it to lawyers.  It's a massive drain on the economy and it's about time we fixed it.<br /><br /><a href="http://www.techdirt.com/articles/20121114/03170321042/if-you-read-just-one-article-about-patent-mess-make-it-this-one.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20121114/03170321042/if-you-read-just-one-article-about-patent-mess-make-it-this-one.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20121114/03170321042/if-you-read-just-one-article-about-patent-mess-make-it-this-one.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>infuriating</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20121114/03170321042</wfw:commentRss>
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<pubDate>Fri, 10 Sep 2010 10:41:54 PDT</pubDate>
<title>Ancient Online Shopping Cart Patent Still Biting Retailers</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20100813/12361610620.shtml</link>
<guid>http://www.techdirt.com/articles/20100813/12361610620.shtml</guid>
<description><![CDATA[ This one goes way back.  If you've been following the absolute ridiculousness of software patents for a while, you're probably aware of the infamous Open Market "online shopping cart" patents (<a href="http://www.google.com/patents/about?id=YPKBAAAAEBAJ&#038;dq=7,272,639" target="_blank">7,272,639</a>, <a href="http://www.google.com/patents/about?id=o8wLAAAAEBAJ&#038;dq=5,715,314" target="_blank">5,715,314</a> and <a href="http://www.google.com/patents/about?id=o8wLAAAAEBAJ&#038;dq=5,909,492" target="_blank">5,909,492</a>).  While Open Market failed, the patents have lived on.  There was an internet company in Chicago, called Divine, that went through more business models than you can imagine, and somewhere along the line it bought the remains of Open Market.  In struggling for some way (any way, please!) to make some money, the company realized it had Open Market's shopping cart patents and <a href="http://www.techdirt.com/articles/20021018/0939231.shtml">announced plans to sue</a> way back in 2002.  Next we heard of them, was in 2004, when <a href="http://www.techdirt.com/articles/20040226/0840200.shtml">Amazon was sued</a> over those patents, by a company called Soverain software -- who bought the patents in 2003 or 2004 out of bankruptcy from Devine.  Because fighting patent battles is costly, Amazon eventually just <a href="http://www.infoworld.com/t/business/amazon-resolves-patent-lawsuits-tune-40m-956" target="_blank">paid off Soverain</a>.
<br /><br />
I hadn't heard much about the patents, but it appears that Soverain has been busy again, and sued popular online tech retailer Newegg... and, unfortunately, as reader Ron Murphy let us know, <a href="http://www.internetretailer.com/2010/08/11/newegg-loses-latest-round-its-shopping-cart-infringement" target="_blank">a court in East Texas (of course) found that Newegg infringed</a>... though, the details show that the jury did <b>not</b> find "direct" infringement, but rather <a href="http://www.socaltrademarkattorney.com/2010/05/soverain-software-patent-infringed-by.html" target="_blank">"indirect infringement."</a>  However, last month, the judge's ruling sided with Soverain over Newegg, meaning that Newegg may have a huge bill facing it.
<br /><br />
Even if Newegg fights this, Soverain has been suing all sorts of companies over the years, with many of them just agreeing to license the patent to avoid having to go through a lawsuit.  And, because of that, Soverain has the ability to just keep on suing.  The Newegg case originally involved six other companies (including Zappos), though all of the others settled.  And since that lawsuit was filed, Soverain, more recently, <a href="http://www.internetretailer.com/commentary/2010/07/30/mother-all-patent-battles" target="_blank">sued a whole bunch more companies</a>, including J.C. Penney, Amway, HSN, QVC, Shutterfly, Victoria's Secret and more -- and that case is in front of the same judge who just ruled in Soverain's favor -- so it doesn't look good.
<br /><br />
I can't wait to see how our favorite patent system defenders defend this one.  They'll say that we can't really say that the idea of an online shopping cart was "obvious" back when these patents were filed, but that's pretty laughable.  It's pretty ridiculous to see anyone defend what has become a blatant tax on online retail now, from a company that did nothing to advance the space.<br /><br /><a href="http://www.techdirt.com/articles/20100813/12361610620.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20100813/12361610620.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20100813/12361610620.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>a-tax-on-online-shopping</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20100813/12361610620</wfw:commentRss>
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<pubDate>Mon, 15 Mar 2010 23:10:00 PDT</pubDate>
<title>E-Commerce Sites Realizing They're Media Properties Too</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20100309/0101028475.shtml</link>
<guid>http://www.techdirt.com/articles/20100309/0101028475.shtml</guid>
<description><![CDATA[ We've talked a lot about the fact that <a href="http://www.techdirt.com/articles/20080318/004136567.shtml">adveritisng is content and content is advertising</a>.  But, it seems worth mixing a bit of e-commerce into that story as well.  As we've been noting (separately), many of the <a href="http://www.techdirt.com/articles/20091119/1634117011.shtml">business models that work</a> today have a strong direct-to-consumer component -- giving them a "reason to buy."  And, in fact, here at Techdirt, we've begun to blur those lines ourselves -- with various community offerings, including unique opportunities for companies to participate and/or sponsor online conversations, but also with our own <a href="http://www.techdirt.com/rtb.php" target="_blank">CwF+RtB offering</a>, which is really an e-commerce setup.
<br /><br />
In the long run, business models are going to combine all these different elements.  As we've noted, one of the <a href="http://www.techdirt.com/articles/20100125/1631147893.shtml">key scarcities</a> out there is attention -- and that's been the arena that the media business has always been in.
<br /><br />
So perhaps it shouldn't be all that surprising to see traditional e-commerce players beginning to realize this themselves from the other direction.  That is, many large online retailers are suddenly recognizing that they get a lot of traffic and they can <a href="http://adage.com/digital/article?article_id=142652" target="_blank">sell that traffic to advertisers</a> (including advertisers from their own competitors) at a nice premium.  Of course, I'm not convinced that traditional banner/text advertising will really be all that lucrative in the long term, but it would be interesting to see online retailers work harder at giving people additional reasons to visit their sites beyond just the products alone.  We've seen some glimpses of this, such as when Amazon tried to do an <a href="http://www.techdirt.com/articles/20060119/029252_F.shtml">online talk show</a>, but I'd bet that we're going to start seeing some much more creative online retail efforts that introduce "content" into the mix more effectively to create other types of scarcities.<br /><br /><a href="http://www.techdirt.com/articles/20100309/0101028475.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20100309/0101028475.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20100309/0101028475.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>blurring-lines</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20100309/0101028475</wfw:commentRss>
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<item>
<pubDate>Thu, 27 Aug 2009 12:18:00 PDT</pubDate>
<title>Amazon Wins Lawsuit Saying It Didn't Infringe On One Click Patent (A Different One)</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20090827/0241206016.shtml</link>
<guid>http://www.techdirt.com/articles/20090827/0241206016.shtml</guid>
<description><![CDATA[ You probably recall that Amazon holds a rather infamous patent, on one-click ordering online, that has been involved in a fair amount of controversy (and ongoing review).  However, less well-known was that, back in 2006, another company, Cordance, claimed that <i>it</i> actually held a patent on one-click ordering and <a href="http://www.techdirt.com/articles/20060809/0329249.shtml">sued Amazon</a> for violating its patent.  I hadn't heard much else about the case since, but <a href="http://twitter.com/InternetLaw/statuses/3559319486" target="_blank">Michael Scott</a> alerts us to the news that <a href="http://www.bloomberg.com/apps/news?pid=20601103&#038;sid=aebrPHM21kHg" target="_new">Amazon has won the lawsuit</a>, after a jury found that the company didn't infringe on two of the patents in question, and that the third patent was invalid.  The key to victory?  Apparently, Amazon explained that the patents in question actually <a href="http://legalpad.typepad.com/my_weblog/2009/08/amazoncom-wins-ironic-patent-lawsuit-against-cordance.html" target="_blank">described a process that involved two clicks</a> rather than one.<br /><br /><a href="http://www.techdirt.com/articles/20090827/0241206016.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20090827/0241206016.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20090827/0241206016.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>keep-it-straight-now</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20090827/0241206016</wfw:commentRss>
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<item>
<pubDate>Wed, 4 Jun 2008 03:47:53 PDT</pubDate>
<title>Online Auctions No Longer Fun?</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20080603/1424291302.shtml</link>
<guid>http://www.techdirt.com/articles/20080603/1424291302.shtml</guid>
<description><![CDATA[ Lately, whenever we post about eBay, a huge crowd of folks shows up to complain about eBay.  Many of the changes that eBay has implemented over the past few years haven't gone over well -- but a Business Week article suggests something else is up also: <a href="http://www.businessweek.com/technology/content/jun2008/tc2008062_112762.htm?chan=top news_top news index_top story" target="_new">buyers just aren't interested in the "auction" model</a> as much as they used to be.  Personally, I know that's true for me.  I remember bidding on a variety of auctions on eBay, but I doubt I've done so in at least five years -- mostly because I can find whatever I'm looking for a decent price and just buy it elsewhere, without the hassle of the auction.  When it first came along, the auction process was novel and fun -- and it offered up products that just couldn't be found elsewhere.  But, these days, that's very rarely the case.  The auction process seems like a pain and most of the products are available in a more convenient manner.  
<br /><br />
That certainly doesn't mean the end of eBay, or even the end of auctions (as Mathew Ingram notes, auctions are good for a <a href="http://www.mathewingram.com/work/2008/06/03/not-everything-needs-to-be-auctioned/">certain class</a> of products).  And, as the original article notes, eBay's business has been shifting increasingly to fixed-price sales rather than auctions.  But many people still do think of eBay as an auction site, and its biggest near-term challenge may be convincing people that it's more than that.<br /><br /><a href="http://www.techdirt.com/articles/20080603/1424291302.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20080603/1424291302.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20080603/1424291302.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>just-not-worth-the-hassle</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20080603/1424291302</wfw:commentRss>
</item>
<item>
<pubDate>Tue, 27 May 2008 14:35:44 PDT</pubDate>
<title>Can Borders Actually Compete With Amazon With Virtual Bookshelves?</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20080527/0208581227.shtml</link>
<guid>http://www.techdirt.com/articles/20080527/0208581227.shtml</guid>
<description><![CDATA[ Back in 1998 when I worked at an e-commerce startup, I spent a few months working on a project to try to rethink the online retail "browsing" experience.  The idea was simple: the experience of browsing an online store was still inherently different than walking into a book or music store, where you would browse across many items on shelves and maybe discover a totally unexpected gem.  That process doesn't seem to work as well online.  We were unable to solve it a decade ago, but I'm always interested in ways that others try to solve the same problem.  However, so far, no one has really been able to do something amazingly useful in the browsing department... and that includes the new Borders website.  For years, Borders, the well-known bookstore chain, had handed over its entire online operations to Amazon.com.  Basically, if you went to the Borders website, you just saw Amazon.com with a Borders logo.  However, a little while ago, the company decided to end that deal and strike out on its <a href="http://www.techdirt.com/articles/20070716/085812.shtml">own</a>.
<br /><br />
The <a href="http://www.borders.com/online/store/Home">new site</a> has now launched with its main selling point apparently being <a href="http://hosted.ap.org/dynamic/stories/B/BORDERS_GOES_ONLINE?SITE=CADIU&#038;SECTION=HOME&#038;TEMPLATE=DEFAULT" target="_new">a shelf-browsing interface using Flash</a>.  Unfortunately, it seems that whoever built the website modeled it almost <i>too much</i> like a real physical bookshelf.  That is, it includes all of the inefficiencies of a real bookshelf, without adding in many benefits.  It's a neat little gimmick, but unless it adds more functionality quickly, it's difficult to see this putting much of a dent into Amazon's efforts. <b>Update</b>: In sort of, but not entirely, related news -- a judge has <a href="http://seattlepi.nwsource.com/business/364752_amazonbrf28.html?source=rss">dismissed</a> an antitrust lawsuit filed against Borders and Amazon for working together.  The court found that there was no evidence that the guy filing the suit ever paid more than marketprice for a book due to the two companies working together.<br /><br /><a href="http://www.techdirt.com/articles/20080527/0208581227.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20080527/0208581227.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20080527/0208581227.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>the-magic-shelf-ain't-gonna-do-it</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20080527/0208581227</wfw:commentRss>
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<item>
<pubDate>Tue, 13 May 2008 11:55:00 PDT</pubDate>
<title>Shoe Store DSW Sues Zappos For Activities Of Affiliates</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20080513/1136541102.shtml</link>
<guid>http://www.techdirt.com/articles/20080513/1136541102.shtml</guid>
<description><![CDATA[ There's an interesting lawsuit coming out concerning the popular online shoe store, Zappos, that has built up a large business in part by being <a href="http://www.techdirt.com/articles/20070716/093618.shtml">extremely focused</a> on providing an excellent customer experience.  DSW is a large shoe retailer with many brick and mortar stores and also (not surprisingly) an e-commerce operation (<b>Update</b>: the e-commerce part just launched recently, which has many thinking that this whole event appears to be something of a reverse Streisand Effect situation, where it's suing Zappos to get media attention).  Late yesterday, DSW <a href="http://biz.yahoo.com/prnews/080512/clm147.html?.v=41" target="_new">filed a lawsuit against Zappos</a>, charging the company with infringing on DSW intellectual property.  What was odd, though, was that DSW never contacted Zappos at all -- preferring to inform it of the lawsuit via press release.  Zappos CEO, Tony Hsieh, explained all of this via <a href="http://twitter.com/zappos/statuses/809919310">Twitter</a>, which he's used (quite successfully) to connect and communicate with fans of Zappos.  
<br /><br />
What came next is quite interesting.  Various Twitter followers began investigating the matter, and noticed that a guy using the Twitter name <a href="http://twitter.com/seocolumbus">SEOColumbus</a> was defending DSW for filing the lawsuit, while also raving about how much better DSW was than Zappos.  Carlo Longino responded to those claims, and then did a quick search discovering that the LinkedIn page of the guy said that he just happened to be <a href="http://twitter.com/caaarlo/statuses/810367068">DSW's E-Commerce Operations Manager</a> -- something he declined to mention.  Soon after Carlo called him on it, though, Carlo noticed that he <a href="http://twitpic.com/119x">deleted his LinkedIn profile</a>.  The guy claims that he just <a href="http://twitter.com/SEOColumbus/statuses/810376210">contracted</a> at DSW for a few months -- but it still seems like he should have disclosed that while bashing Zappos and praising DSW. <b>Update</b>: This part of the story is getting <a href="http://mobhappy.com/blog1/2008/05/13/todays-lesson-in-social-media-sometimes-its-better-to-keep-your-trap-shut/">even more bizarre</a>, with claims that the SEOColumbus Twitter account is actually controlled by someone else (which doesn't make much sense, given what the accountholder was saying).  And, on top of that, the SEOColubmus Twitter account has now been shut down (temporarily?). <b>Update 2</b>: I've removed the guy's name from this post following a polite request, claiming that the Twitter account really was controlled by someone else.  There are numerous inconsistencies in his story that are hard to square up, but at this point we'll take him at his word and thus have removed his name.
<br /><br />
As for the lawsuit itself, from the information provided by whoever owns the Twitter account, it seems like it's not due to any actions by Zappos, but by a Zappos affiliate.  Just like many e-commerce companies, Zappos lets affiliates sign up and basically drive traffic to Zappos.  One of those affiliates set up a site called dsw-shoes.net -- which pretty clearly does infringe on the DSW trademark (which, again, is really about consumer protection, not ownership).  It seems reasonable to think that dsw-shoes.net could create some confusion in the customer's mind, even though it has (in tiny print, at the bottom of the page) a note claiming it's not affiliated with DSW.  It does, however, <i>link</i> to Zappos using an affiliate code.  Given the various safe harbors out there, it certainly seems like DSW went after the wrong target.  The complaint <i>should be</i> against whoever operates the affiliate -- not Zappos.  An affiliate linking to Zappos should not create liability for Zappos itself.  It appears that in DSW's rush to sue Zappos, it didn't bother to understand Zappos is protected against the actions of its affiliates, as it most certainly was not encouraging them to pretend to be DSW.  A quick call or letter to Zappos probably would have educated them on this (though, honestly, it should have been obvious from the website in question), but instead, DSW just rushed into a lawsuit, informing Zappos by press release.<br /><br /><a href="http://www.techdirt.com/articles/20080513/1136541102.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20080513/1136541102.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20080513/1136541102.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>safe-harbors...</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20080513/1136541102</wfw:commentRss>
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<pubDate>Mon, 21 Apr 2008 09:05:00 PDT</pubDate>
<title>New York Tries To Rope Amazon Into Playing Tax Collector</title>
<dc:creator>Timothy Lee</dc:creator>
<link>http://www.techdirt.com/articles/20080419/155520896.shtml</link>
<guid>http://www.techdirt.com/articles/20080419/155520896.shtml</guid>
<description><![CDATA[ <p>The <i>New York Times</i> reports that the state of New York is demanding that Amazon and other e-tailers <a href="http://bits.blogs.nytimes.com/2008/04/14/new-york-state-girds-for-war-with-amazon/">begin collecting sales taxes from customers in the state</a> by June 1 or face audits and bills for unpaid taxes. Under federal law, a state can only require a business to collect sales taxes for it if the business has a physical presence in that state. So Amazon collects sales taxes in Washington state, where it has its headquarters, but not in most other states, including New York. But New York has hit upon a novel legal theory: Amazon might not have a physical presence in New York, but many of Amazon's affiliates do, and New York argues that those affiliates constitute a "physical presence" sufficient to require Amazon to collect taxes for the state. It's a novel theory, and one that Amazon will almost certainly challenge in court. It doesn't make a whole lot of sense to me. Amazon's affiliates are essentially selling Amazon advertising space on their websites. They're not employees of Amazon any more than I become an employee of any site that purchases advertising space on my blog. If New York's interpretation is accepted by the courts, it would spawn endless litigation about which types of relationships establish a "physical presence." There's also a good chance Amazon would just cut off New York residents from participating in the affiliates program to save itself the headache of potentially having to comply with <a href="http://www.techdirt.com/articles/20071025/155710.shtml">thousands of different taxing jurisdictions</a>. Either way, nothing good is going to come from this.</p><br /><br /><a href="http://www.techdirt.com/articles/20080419/155520896.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20080419/155520896.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20080419/155520896.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>bit-of-a-stretch</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20080419/155520896</wfw:commentRss>
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<pubDate>Mon, 17 Dec 2007 16:53:00 PST</pubDate>
<title>Should eBay Merge With Amazon?</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20071214/181023.shtml</link>
<guid>http://www.techdirt.com/articles/20071214/181023.shtml</guid>
<description><![CDATA[ Saul Hansell over at the NY Times has a thought-provoking piece asking <a href="http://bits.blogs.nytimes.com/2007/12/14/why-amazon-should-buy-ebay/index.html?ex=1355288400&#038;en=04a954462bc13351&#038;ei=5090&#038;partner=rssuserland&#038;emc=rss">if Amazon should buy eBay</a>.  While the two have been competitors for some time, Hansell is exactly right in pointing out that Amazon has continued to innovate and adapt, while eBay has basically held steady.  eBay built up a tremendous business and has basically managed to keep that going without killing it -- but has done little of note that's new or interesting in a long time.  It's recent purchases have been rather hard to understand, from Skype to Stumbleupon, and so far, haven't <a href="http://www.techdirt.com/articles/20071001/105737.shtml">helped</a> eBay very much at all.  Meanwhile, Amazon keeps on innovating, improving its overall shopping experience while successfully moving into offering a variety of compelling <a href="http://www.techdirt.com/articles/20060824/110814.shtml">web services</a> (made even more compelling with the recent addition of its new <a href="http://www.news.com/8301-13580_3-9834061-39.html?tag=nefd.top">database offering</a>).
<br /><br />
The real question might be what would Amazon do with eBay if it controlled it.  There's something to be said for just having access to all those eBay users -- but could Amazon then turn them (and eBay itself) into something even more compelling?  Or would tinkering with eBay be more trouble than it's worth?  It might also raise questions about what Amazon would do with Skype.  If anything, it seems like any such move would be quite risky.  Merging two large companies with unique cultures is astoundingly difficult and often causes a lot more problems than bargained for.  Amazon has been trying out a lot of innovative things lately, and trying to digest a company like eBay would risk a tremendous distraction that could hurt those projects.<br /><br /><a href="http://www.techdirt.com/articles/20071214/181023.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20071214/181023.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20071214/181023.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>growth-strategy-or-trouble-ahead?</slash:department>
<wfw:commentRss>http://www.techdirt.com/comment_rss.php?sid=20071214/181023</wfw:commentRss>
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<pubDate>Fri, 26 Oct 2007 16:57:08 PDT</pubDate>
<title>Low Taxes Aren't A Subsidy</title>
<dc:creator>Timothy Lee</dc:creator>
<link>http://www.techdirt.com/articles/20071025/155710.shtml</link>
<guid>http://www.techdirt.com/articles/20071025/155710.shtml</guid>
<description><![CDATA[ Economist Dean Baker thinks that Amazon owes its profits to the fact that it <a href="http://www.prospect.org/csnc/blogs/beat_the_press_archive?month=10&#038;year=2007&#038;base_name=amazon_another_success_of_welf">doesn't have to collect sales taxes</a> for customers in states where it doesn't have a physical presence. The absence of sales taxes on Internet purchases, he says, is a &quot;subsidy that Amazon gets from taxpayers.&quot; This is silly. Some states don&#39;t have sales taxes at all, but no one would consider that a taxpayer subsidy. My local Wal-Mart benefits from a variety of state and local government services here in the St. Louis area, such as police and fire protection, and roads and other infrastructure. At least in part, sales taxes go to cover the costs of providing those services. Amazon uses few if any services from state or local governments in Missouri, so it&#39;s hard to see anything unfair about the fact that it doesn't have to collect sales taxes here.<div><br /></div><div>On the other side of the ledger, sales tax collection would be far more burdensome to Internet-based businesses than to their brick-and-mortar competitors. A mom-and-pop retail store only has to learn about the tax rules in one jurisdiction. Most likely, there&#39;s just one tax rate, one set of rules about which goods are taxable at that rate, and one set of reporting requirements. In contrast, a small e-commerce site would have to familiarize itself with the rules in thousands of different jurisdictions. The state of Missouri, for example, allows municipal governments to tack a variety of local taxes onto the state sales tax. As a result, the tax rate varies from city to city. Even worse, different states have different rules about which goods and services are taxable. Missouri, for example, <a href="http://dor.mo.gov/tax/business/faq/exempt.htm">exempts</a> custom software (but not boxed software), farm equipment, and medical grade oxygen, among other things. Colorado <a href="http://www.revenue.state.co.us/taxstatutesregs/salesindex/salesusetaxexemptions.html">has exemptions</a> for bingo equipment, cigarettes, food, fuel and oil, machinery and machine tools, newsprint, precious metal bullion and coins, and more. Each of the other 40-some states with sales taxes have their own lists of what&#39;s taxable. Many states exempt food and clothing from taxes, but the precise definitions of &quot;food&quot; and &quot;clothing&quot; varies from state to state. For example, in Wyoming, bagels are considered tax-exempt food <a href="http://www.wheatlandwy.com/Sales%20Tax%20on%20Food%20Exemption.htm">unless they&#39;re sold with cream cheese and a knife</a>, in which case they become taxable &quot;prepared foods.&quot; Not surprisingly, small online retailers are <a href="http://www.techdirt.com/articles/20030221/article_lite.php?sid=20030221/102231">worried</a> about the administrative burden of complying with so many different requirements. Some states have banded together to create a unified, <a href="http://en.wikipedia.org/wiki/Streamlined_Sales_Tax_Project">&quot;streamlined&quot; sales tax system</a>, but e-tailers are <a href="http://deseretnews.com/article/1,5143,695220117,00.html">skeptical about how much the system can be simplified.</a> Unless states first radically simplify and harmonize their sales tax rules (which might be a good idea anyway), I don&#39;t think it&#39;s going to be feasible to &quot;streamline&quot; the system enough to make it affordable for small e-tailers.</div><br /><br /><a href="http://www.techdirt.com/articles/20071025/155710.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20071025/155710.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20071025/155710.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>logistical-nightmare</slash:department>
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<pubDate>Thu, 20 Sep 2007 19:54:43 PDT</pubDate>
<title>E-Commerce Still Sucks When It Comes To Customer Experience</title>
<dc:creator>Mike Masnick</dc:creator>
<link>http://www.techdirt.com/articles/20070918/024844.shtml</link>
<guid>http://www.techdirt.com/articles/20070918/024844.shtml</guid>
<description><![CDATA[ Back in the early days of e-commerce, it wasn't too surprising to see the various studies saying that people often had bad e-commerce experiences, but you would hope that these days it wouldn't be so common.  Unfortunately, a new study suggests that <a href="http://www.pcworld.com/article/id,137284-pg,1/article.html">plenty of people are still having terrible customer service experiences</a> with various e-commerce sites.  And, of course, those bad experiences are leading them to do less business with the companies.  Obviously, things fall through the cracks here and there and not every customer experience is going to be perfect -- but you wouldn't expect it to be so bad that nearly 90% of people surveyed said they'd had a bad e-commerce experience lately.<br /><br /><a href="http://www.techdirt.com/articles/20070918/024844.shtml">Permalink</a> | <a href="http://www.techdirt.com/articles/20070918/024844.shtml#comments">Comments</a> | <a href="http://www.techdirt.com/articles/20070918/024844.shtml?op=sharethis">Email This Story</a><br />
 ]]></description>
<slash:department>still?</slash:department>
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