Innovate or Perish: Managing the Enduring Technology Company in the Global Market

Litigation of Business Methods

In 1999, in AT&T v. Excel Communications, the federal circuit reinforced State Street Bank as to the patentability of the business and financial methods claimed in U.S. patent 5,333,184. The Court noted that the criteria of usefulness, concreteness, and tangibility of the claimed invention is decisive for patentability, not the technicality of the underlying invention.

Further in 1999, Amazon.com was granted U.S. patent 5,960,411, covering its “one-click” ordering method. Amazon sued Barnes and Noble, and after a hearing, was granted a preliminary injunction barring Barnes and Noble from conducting online activity during the busy Christmas season. While this action spawned national controversy, the potential value of such patents was indelibly etched into the IP landscape. When Priceline.com sued Microsoft for infringement, it was unable to stop the competing Expedia “name-your-own price” service; however, Microsoft reportedly agreed to pay a royalty.

The value of such patents and related technology has been confirmed by the courts and in numerous settlements. On June 4, 2001, it was announced, essentially on the steps of the courthouse, that Hewlett-Packard would pay Pitney Bowes $400 million for both the imaging technology and rights expressed in U.S. patent 4,386 272. This further illustrates the value of covering technology, via patents and know-how, maintained as trade secrets in an integrated IP strategy.