Patently Bezos

The main U.S. lobbying forces that might spur Congress to action -- corporations -- have not been keen to remove protections that benefit them. "There's too much of a vested interest," says Gregory Aharonian, publisher of a newsletter called the Internet Patent News. "Companies like things the way they are."

Now the question is whether the political punch packed by Bezos, a new economy billionaire and Time magazine's person of the year, is enough to create a change. If he's serious about patent reform, he'll probably need the support of e-commerce peers like Priceline CEO Jay Walker, who has patented his site's reverse-auction business process and filed for more than 250 Internet business patents, as well as folks in the financial services sector -- who started patenting business processes even before the commercial Net existed.

Lawrence Lessig, director of Harvard's Berkman Center for Internet and Society and the former "special master" in the Microsoft antitrust case, sounds hopeful. Bezos' plan "signals an important difference about this generation of e-commerce [business people] vs. those of IBM or AT&T," says Lessig. In other words, while traditional technology companies that have spent well on R&D have a lot invested in patents, the more nimble software-based companies might have more motivation to change the system.

For Bezos the motivation came directly from the Net. In January when Amazon sued rival (and Salon.com bookselling partner) BarnesandNoble.com for infringing on its "1-click" patent -- a purchasing system that uses cookies to identify repeat customers and let them use previously entered credit card numbers and addresses for new purchases -- Netizens called for a boycott of Amazon. Then in February, Amazon won a patent for its affiliate program, which hundreds of other retailers use to encourage partner sites to refer customers in exchange for a percentage on any sales made.

Apparently, it was all the Net could take. Within days, Tim O'Reilly, CEO of O'Reilly and Associates, a publisher of computer books and software, posted a letter denouncing Amazon's patents. Less than a week later, 10,000 people had added their own screeds to O'Reilly's site. Bezos relented, a little; he didn't offer to give up the patents, but he did set forth on his ideas for reform.

Bezos may gain some points with the Net crowd for listening, but its not just the help of tech types that Bezos would need to start the congressional reform gears in motion; Wall Streeters actually have been patenting e-commerce business methods since well before the term e-commerce was invented. Since the 1980s financial services firms have won patents covering everything from Merrill Lynch's "two-way wireless system for financial industry transactions" (patent number 5,915,245), to Charles Schwab's electronic bill system, which lets a financial institution pay its customers household bills electronically rather than with checks (5,978,780).

"If the guys in the button-down shirts say the system doesn't work for us, it would be hard for Congress not to listen," Samuelson says. "They have the clout; they don't look like a bunch of ragtag Internet hippies trying to get out from under the strictures of the patent system, which is exactly how the anti-patent crowd has been portrayed."

It's far too early to say whose support Bezos can garner, but even if he doesn't organize a million-man march on Washington, there's hope for the "ragtag Internet hippy." Patent experts say Bezos' best chance of effecting change may come from his suggestion to create a database of prior art. Such a database, which he has offered to fund with his own money, would not have to involve the Patent Office or Congress -- it could be up and running as fast as an Internet entrepreneur could get it going. Essentially, it would help solve what many consider to be the patent office's biggest problem: examiners' inability to find prior art that might keep them from issuing a patent that should have been rejected.

Of course, Bezos wasn't the first to dream up this plan. Lots of patent attorneys and historians have suggested that such a database would solve a lot of problems. Aharonian, who makes a living disproving the validity of patents for corporate customers, has already started his own arsenal -- storing examples of existing innovations that can be used to contest bad patents. "On average, issued software patents are missing three or four prior art examples that should have been cited," says Aharonian, who says he would need $5 million to $6 million to complete the database he has already started. By making such data available to the Patent Office, perhaps fewer bad patents would be issued.

Already the Patent Office is behind it; Quinn says it's "a need we have often noted."

But that doesn't mean the Patent Office is eager for any other sweeping software patent reforms. As Quinn puts it: "We believe the existing patent law works as well for new technology as it has for old."

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