Ancient Online Shopping Cart Patent Still Biting Retailers

from the a-tax-on-online-shopping dept

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 (7,272,639, 5,715,314 and 5,909,492). 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 announced plans to sue way back in 2002. Next we heard of them, was in 2004, when Amazon was sued 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 paid off Soverain.

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 court in East Texas (of course) found that Newegg infringed… though, the details show that the jury did not find “direct” infringement, but rather “indirect infringement.” However, last month, the judge’s ruling sided with Soverain over Newegg, meaning that Newegg may have a huge bill facing it.

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, sued a whole bunch more companies, 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.

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.

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Companies: newegg, open market, soverain software

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Comments on “Ancient Online Shopping Cart Patent Still Biting Retailers”

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47 Comments
Jeremy7600 (profile) says:

This thread needs RJR!

Where the fuck is RJR when you need him for some good entertainment?

Geez, I miss that guy. I’m no good at impersonations, can someone whip up a psuedo-RJR post if he doesn’t come out of hiding? Please?

Anyway, since Newegg rocks, I hope they win. I’m sure even if they lose they will do everything in their power to make it a good thing for the consumer, as they consistently do.

NY State wants Newegg to collect state taxes? Ok, they did that for a few months and then told NY State to fuck off. Thank you for that one, Newegg.

jc (profile) says:

Re: This thread needs RJR!

Okay, here goes my best RJR impression.
———————————————–

“While Open Market failed, the patents have lived on.”

Even Mike admits that the real problem is big corporations stealing the ideas of the little guy and using their fat corporate bank accounts to steam roll them.

Maybe if TechDUD could understand facts they would know that Open Market only failed because big companies like Amazon stold their ideas and never paid them the money they deserved for TEACHING people how to create shopping carts.

Every new idea seems easy when you never come up with any yourself.

Ronaldo J. Really,

I am speaking only on my own behalf.
Affiliations:
President – http://www.paymenow.org
Executive Director – http://www.IndependantLitigants.com
Senior Fellow – http://www.BadPatentPolicy.org
President – Alliance for American Ideas You Can’t Use
Gatekeeper of Intellectual Property Created on behalf of someone no one knows
Washington, DC
Direct (555) 555-5555 / (555) 555-5555 – 9 am to 8 pm EST.

Louis Smith (profile) says:

When the Prior Art is in a book....

I believe that close to a decade prior to these that Selena Sol and Gunther PUBLISHED their seminal work on scripts for the web (Instant CGI) – and that book had a web store with shopping cart as its core.

These patents need to be thrown out – along with the examiner who approved them, the people doing the suing, and all the lawyers – preferably from a very high window.

Somebody being sued needs to take that book to court with them to show how invalid the patents are.

that_id (profile) says:

Re: When the Prior Art is in a book....

“and that book had a web store with shopping cart as its core.”

Not certain I understand. There was a web-store depicted in the book with a shopping cart? Or was there an actual website upon which the book was sold (via shoping cart?)

If it was just depicted in the book, it could be argued ‘fiction’ unless there was a detailed process on creating it live, with an example website to prove it.

Otherwise, I’m going out and patenting the flux-capacitor just like in the movie, just in case anyone ever actually makes one.

Louis Smith (profile) says:

Re: Re: When the Prior Art is in a book....

The book contained all the CGI scripts for a fully operational webstore, with flat-file database, the flat-file database manager, web chat… all the early perl versions of what are still popular tools. There was an accompanying website where you could also download the files. The book was published after Selena Sol had built up quite a following from his open scripts archive.

Evil Attorney (profile) says:

Where is the prior art?

When any company is sued for patent infringement they immediately do the following:
1. Review their product and the claims of the patent to see if their product falls into the scope of the patent claims.

2. If their product falls anywhere close to the claims, they perform detailed prior art searches to asses the validity of the claims.

3. If there is invalidating prior art, they either take it to court or more likely file a reexam on the patent.

Either NewEgg has horrible attorneys or there is more to the claims than simply a “shopping cart”. Can anyone point us to the actual opinion?

Evil Attorney (profile) says:

Re: Re: Where is the prior art?

Prior art searches and analysis can typically be performed for under $5k. Drafting and filing a reexam request is typically about the same.

The settlement offer would need to be VERY low for a company to consider doing that. Most settlement offers for cases like this are much, much higher (e.g., hundreds of thousands of dollars).

Derek Kerton (profile) says:

Re: Where is the prior art?

Well. You may have a good 1-2-3, but remember RIM and NTP? RIM filed for re-exam at the USPTO, but it didn’t matter. That process takes years and years as it gets appealed on both sides. Meanwhile, you lose the patent trial because your judge won’t wait for the patent review. RIM fought, and ended up paying half a billion, instead of the 25 Million they could have paid if they just settled.

Rich says:

Re: Re: Where is the prior art?

I thought it was like 230 mill.. no pittance, but 1/2 of 1/2 a Bill ๐Ÿ™‚ for email to a mobile device!!! how novel ๐Ÿ™

I recall endless posts in web biz mags talking up the “idea economy” which were all touting the ruling as the harbringer of the new world. One where you get rich rich rich with your imagination! Only old world stooges take risk and execute business plans.. pfft

Anonymous Coward says:

Divine... Ah yes...

I actually worked for a company that was bought out by a company that was bought out by Divine, so for a couple of years I worked for and was paid by Divine, and even received a redundancy settlement from them when they went bust in the UK.

I still have a Divine laptop bag in my garage…

The execs, as far as us engineers could work out, were basically crooks. The division we worked in took money from customers in advance, in trust for purchases due to be made from suppliers in the following year, but Divine spent the money on operating expenses instead and then couldn’t either supply the promised goods or refund the advance, trading while insolvent much!?

I certainly recall reading web reports of Jude Sullivan (general counsel for Divine) answering questions about that on the basis of “cash is cash…” with the implication (and we spent it…).

First time I ever learned to read a balance sheet, and look at the market performance of a company I worked in, the employees at the lowest level knew it was going into the ground long before it actually happened.

And yes, I remember the “shopping cart” patent that Divine supposedly owned, and of which much was made about how the company would be “cash-positive” next month, next year, next decade… while every month more of the skilled engineers who really kept the divisions they acquired running were let go and the revenue kept falling…

Thanks very much for mentioning them, you brought back some memories ๐Ÿ™‚

ComputerAddict (profile) says:

Prior Art: An Actual Shopping Cart

Prior Art.. you know those metal cages on wheels… Who says the prior art needs to be digital? Natural evolution of the physical shopping cart would be a computerized / internet one. Just like books turning into ebooks. in fact some grocery stores have digital carts in their physical stores. where they hand you a handheld scanner that holds the contents of your cart till your ready to checkout.

There has to be some specifics about their shopping carts that have them on the hook.

Evil Attorney (profile) says:

Re: Prior Art: An Actual Shopping Cart

Yes, it’s basically one message sent from the buyer’s computer that includes a product code, payment info and a digital signature that authenticates the message. The digital signature is a hash of the info in the message based on a network key.

NewEgg is a great company. If someone has slam-dunk prior art for this, they should forward it on to them. Just yesterday I ordered a hard drive enclosure from them and it came the same day with the cheapest shipping! Outstanding.

Here is a sample claim:

A network-based system for processing payment messages, comprising:

a buyer computer; and

payment computer;

the buyer computer and the payment computer being interconnected by a public packet switched computer network;

the buyer computer being programmed to send to the payment computer a payment message for purchasing a product in response to a user request,

the payment message comprising a product identifier identifying the product,

the payment message comprising a universal resource locator containing all information required by the payment computer for authorizing purchase of the product and an authenticator that comprises a digital signature based on a cryptographic key;

the payment computer being programmed to receive the payment message and to authorize, based on the payment message, purchase of the product.

Anonymous Coward says:

“Indirect infringement” is a misnomer. One is either a “contributory infringer” (defined by the statute in detail) or one who has “induced infringement” (also defined by the statute). Importantly, one who is alleged to have committed one of the forms of infringement can only be held liable if a third party is found to have “directly infringed” a patent. What is missing from this story is information about direct infringement and who committed same.

I see that once more you are on your “it’s obvious” pedestal. How nice it is to look at a broad idea and immediately deprecate the inventors, USPTO, federal judge and the members of a jury, who actually dealt at one time or another with relevant evidence and drew conclusions at odds with your opinion. Perhaps the difference can be explained because these various people actually examined the facts and issues in detail. Seems to me a lot of time and effort was wasted since all these groups needed to do was mosey on down to your office and entreat you to render your opinion without the slightest attempt to roll up your sleeves and get involved with the nitty gritty of those silly things we call “evidence”.

Did they come to the right conclusion? Don’t know. Did the follow a process by which they could come to an informed conclusion? Apparently they did, something that is regularly eschewed here by article writers and commenters alike. As some are want to say, one should never let facts get in the way of forming an opinion.

Does this make me a “patent defender”? No. Does this make me one who defends the legal process by which decisions are made? Yes. Do I always agree with decisions that come out of this process? No, but at the very least an effort has been made to craft an informed opinion.

vivaelamor (profile) says:

Re: Re:

“Apparently they did, something that is regularly eschewed here by article writers and commenters alike. As some are want to say, one should never let facts get in the way of forming an opinion.”

Why is it apparent that they followed a process by which they could come to an informed conclusion? What facts could the people involved possibly have that might convince Mike, or any other commenter, to change their opinion?

The issue seems to be over whether shopping carts were obvious. I can’t imagine what evidence they might have to suggest that shopping carts weren’t obvious. Perhaps you have a better imagination, in which case I look forward to your ideas.

Ric says:

Re: Re:

How much does that chip on your shoulder weigh? Must hurt when you walk no?

So your point here is that…. You don’t understand how Jurymen come to bad conclusions on a regular basis? How they’re instructed, or how they’re selected. If you had any idea how ridiculous you’re argument sounds.. you might not waste your time being such an ambiguous sour puss.

Anonymous Coward says:

Perfectly Simple Fix

Just get rid of the part of the law which says patent infringement is illegal. Dispose of the concept. The former “patent infringement” is now called “patent use”, which is encouraged as promoting competition and helping the economy. Bingo, patent trolls are out of business overnight, the junk patent problem goes away. Patents become a method for inventors to claim inventor status, not owner status. Anybody who wants to implement some technology can do it for themselves, if it really is obvious. If it genuinely is novel and non-obvious, then they check the patent, then hire the inventors to help. All lovely and friendly.

Gene Cavanaugh (profile) says:

Software patents

As a patent attorney, I do believe there is a place for IP laws, such as patents and trademarks – in rare cases, even copyright.
However, as to software patents, I fully agree with the tenor of this article. There is no justification for them.
In fact, this particular set of patents, to me, represent an egregious abuse of the system.

Andrew D. Todd (user link) says:

When the Prior Art is in a book.... To: Louis Smith, #5, #28:

I take it you mean this book:

———————————–
http://portal.acm.org/citation.cfm?id=548116&dl=ACM&coll=ACM

Selena Sol and Gunther Birznieks, _Instant Web Scripts with CGI PERL, 1st edition_, IDG Books Worldwide, Inc. Foster City, CA, USA, 1996, ISBN:1558514902, 832 pages

——————————-

The filing date of the patents is 1998-1999, more than a year after the book’s publication, so whatever the book contains may be considered prior art.

Andrew D. Todd (user link) says:

When the Prior Art is in a book.... To: Louis Smith, #5, #28:

I have in front of me a CompuServe manual, dated 1986, which I obtained as part of a user kit when I subscribed to CompuServe in 1988. There is a chapter on Shopping, which refers to an “Electronic Mall,” having multiple merchants, and a standardized procedure for viewing and ordering goods. The manual instructs one how to visit a particular merchant, browse the stock, and type the letter O [for order] in a menu to do the equivalent of putting the item in the shopping cart. The user is further instructed to continue browsing, and then to type CHECKOUT to go to a screen in which the user edits and completes the order blank.

(CompuServe Information Service, _User’s Guide_, Stock Number CS-597 (09/86), 1986, pp. 109-114

CompuServe used different language that Amazon. What Amazon called a Shopping Cart, they called an Order Blank, according to customary mail-order practice, a more accurate description. However, the system is basically the same.

What is necessary to get from there to Amazon’s ordering procedure is to automatically add information about the customer which is known by virtue of his being logged on. I think you would find that by 1990, mail-order houses were commonly assigning customer numbers, and using them as a basis for telephone transactions, eg.

Me: “Hello, this is Andrew D. Todd, and my customer number is XXXX”

[sound of keyboard clicking]

Clerk: “Ah, yes, Mr. Todd, and do you still live at ——, and is your phone number —-“

[and so on]

I am not sure when i first dealt with a mail-order firm which tied the order process to Caller ID, so that they knew who I was and were I lived, and even my credit card number, when the clerk came on the line.

Again, for a very long time, people in the mail-order industry have been cleverly designing printed catalogs so that the mailing label is on the same page as the order blank, and it is economically feasible to provide the customer with an order blank already bearing his, name, address, and customer ID number.

The whole point about KSR v. Teleflex is that you don’t have to locate prior art in specifically website-oriented technologies. If you find the same business process in older telecomm technologies such as CompuServe, or even in mail-order industry practices, that is good enough.

Andrew D. Todd (user link) says:

When the Prior Art is in a book.... To: Louis Smith, #5, #28:

What matters is what the prior art references contain, not what the patent office did– or failed to do. I know that the patent office has often taken an arbitrary view about not admitting error, and has refused to admit that examiners sometime sign off on references they have not actually read, but all that means is that, at some point, it will become necessary to drag some patent examiners into court and cross-examine them. I anticipate that many of them will simply disintegrate under questioning. Alternatively, a senator or representative sympathetic to the anti-patents movement can subpoena the examiners before a subcommitee. That will make very good television, like an episode of Perry Mason.

Two of the patents were issued before KSR v. Teleflex. The third was filed well before KSR v. Teleflex, and issued shortly after KSR v. Teleflex. It is problematic to what extent this patent was re-examined according to the standards of KSR v. Teleflex. The Patent Office’s immediate response to KSR v. Teleflex was to read it in the most limited possible fashion, and only later was the reading expanded, reflecting derivative cases decided in the Court of Appeals for the Federal Circuit.

Here is a recently issued set of guidelines:

http://www.patentlyo.com/patent/2010/09/uspto-guidelines-for-determining-obviousness.html
http://edocket.access.gpo.gov/2010/pdf/2010-21646.pdf

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