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Avoiding Patent Peril - InternetNews.
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Avoiding Patent Peril

To followers of technology news, these headlines may look familiar: Akamai Sues Cable & Wireless Over Patents; Cable & Wireless Sues Akamai Over Patents; Akamai Claims Victory in Patent Suit; Cable & Wireless Claims Victory in Wireless Suit.

That's because for more than two years, the companies have been locked in a complicated and contentious intellectual property battle over who owns the rights to technology that speeds Internet content to end users.

At times, the dispute seemingly degenerates into a school yard game of "did not, did too." The diametrically opposed claims of Cambridge, Mass.-based Akamai and U.K.-based Cable & Wireless might be comical, if the stakes weren't so high.

To be sure, wrangling over patents isn't limited to the content delivery sector; storage (EMC v. Hitachi), semiconductor (Siliconix v. Fairchild) and e-commerce (First USA v. PayPal) have all have their share recently. But the protracted nature of Akamai and C&W underlines the importance of guarding the fruits of engineers' research and development labor against poaching.

"As more and more of our economy is based on technology, there is a growing awareness on how important patents can be in the marketplace," said Edward Naughton, a patent attorney and partner with the Boston law firm Holland & Knight.

Federal statistics bear that out. In 2001, the U.S. Patent and Trademark Office (USPTO) granted a record 166,045 patents for inventions, up 5.4 percent from the 157,495 in 2000. Compare that to 1991, just before the digital economy spawned thousands of IT startups, when 95,513 patents were stamped.

Patents as Competitive Strategy

Not only are companies pocketing more patents, they are more territorial about enforcing them.

Perhaps the most-publicized case is Amazon's "OneClick" dispute. At the height of the 1999 holiday shopping season, the online bookseller sued rival Barnes & Noble.com over technology allowing a shopper to buy additional items without re-entering credit card and other information.

Consumer groups and Internet free-trade types, not to mention Barnes & Noble, were appalled that Amazon patented and tried to enforce such an "obvious" e-commerce checkout feature. The action was eventually settled out of court.

"But it was too late," Naughton said. "The damage was done."

By damage, Naughton means millions of dollars in legal bills and lost sales. Barnes & Noble.com, the Internet arm of the national book retailer, could bear those costs. A smaller company would have almost have been driven under.

More recently, a judge dismissed BT Group's claim that an Internet Service Provider infringed its patent for hyperlinks, a tool that lets Web users easily move between pages. If the decision went the other way, it could have spawned dozens of additional suits by BT Group against ISPs using the common technology.

Please see page 2 to learn how to protect your intellectual property assets