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  • E-Commerce Patent Blackmail --- You May Be Next!
    Copyright 2002, Bill Platt

    Over the last eight years, the promise of the Internet has been 
    to level the playing field between small businesses and major 
    With a website, a small business could now sell their products 
    in the global market place without the overhead of additional 
    offices. To reap the benefits of e-commerce, one only needed 
    a website to attract and sell to customers, and one needed a 
    method to collect payments from their newly acquired customers. 
    Since the Internet is really just a network of computers, it 
    made perfect sense to merge electronic transfer of funds into 
    the website to simplify the purchasing process for the customer. 
    To date, the only real impediment to doing business online has 
    been the safety of the consumer's financial data. In March of 
    2002, this all changed. 
    Enter the U.S. Trademark and Patents Office. Over the last few 
    years, the USTPO has shown extreme ignorance of new Internet 
    technologies. The USPTO has approved some of the most ludicrous 
    patents to be presented to them.
    In 1997, AltaVista was granted a number of patents on search 
    engine technologies, even though search engine technology had 
    been in use as early as 1989.
    In 1999, Amazon was given a patent for "one-click purchasing."
    In 2001, McAfee was granted patents for "Auto-Downloading of 
    Software / Software as a Service (SaaS)", both of which had 
    been in use by others since before the creation of the global 
    In 2002, PanIP (Pangea Intellectual Properties L.L.C) of San 
    Diego, California entered the fray. They were granted two 
    patents: US Patent No 5,576,951 and US Patent No. 6,289,319. 
    The first patent covers the "use of graphical and textual 
    information on a video screen for the purposes of making a 
    sale." The second covers "accepting information to conduct 
    automatic financial transactions via a telephone line & 
    video screen."  
    Most Patent experts do not take these "junk patents" seriously 
    knowing full well that they will be overturned by the courts 
    and other processes set up to police the system. However, John 
    D. Trudel, the Founder and Managing Director of The Trudel 
    Group, pointed out that "this nonsense raises the cost of 
    business, since it takes years and costs $1 million or so 
    to break these junk patents."
    Herein lies the difference in PanIP's strategy. Big corporations 
    who have deep pockets settle most "junk patents" in court. 
    Amazon took their initial challenge to their primary competitor, 
    BarnesandNoble.com. B&N had the resources to fight this "junk 
    patent", so they fought.
    PanIP has instead directed their attacks at small companies 
    who simply do not have the resources to fight! In fact, PanIP 
    has currently sued 50 small businesses with no end in sight.
    Timothy Beere, the owner of DeBrand Fine Chocolates, had to 
    make a choice when he found himself in the crosshairs of PanIP. 
    Tim said, "I had to make a decision. Pay them the $5000 they 
    were asking for something I didn't think they had a right to, 
    or Fight Back!" He went on to say, "It was clear that PanIP's 
    strategy counted on the notion that few, if any, of the 
    businesses would be willing fight back. I was!"
    Tim proceeded to contact the other companies that have been 
    sued by PanIP to build a consensus to stand up and fight. 
    Many have joined together in the fight starting the PanIP 
    Group Defense Fund, Inc. 
    In building his website (http://www.youmaybenext.com), Tim 
    said, "I knew if I could get this on the radar screen, people 
    would be as disgusted by it as I was." 

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    This article was originally written: November, 2002

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