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Amazon.com Hit With 'Recommendation' Suit

Online retailer Amazon.com was hit by a patent infringement suit that strikes at the core of its business.

Cendant Publishing, a division of the multinational giant Cendant Corp. (another e-commerce pioneer) claimed Amazon.com's method of offering online book buyers recommendations of books violates its patent.

The civil action, filed against the Seattle-based Amazon.com in U.S. District Court of Delaware on Thursday, is the latest in a string of suits by companies claiming to own the rights to the most basic of Web technologies and practices. The claims include the use of plug-ins, downloading content and streaming media.

Cendant's U.S. Patent No. 6,782,370 is for "a computer-implemented method and system utilizing a distributed network for the recommendation of goods and/or services to potential costumers based on a potential customer's selection of goods and/or services and a database of previous customer purchasing history."

The patent application was filed on September 4, 1997, a time when e-commerce was fairly new.

Amazon.com became a public company in March of 1997. It didn't begin touting its "recommendation center" technology until September 23, 1997 -- just 20 days too late for its tech to be considered prior art.

Under U.S. patent law, a patent is denied if there is evidence that the method or practice was in use by another company prior to the application date.

Cendant itself was a very early e-commerce player, launching NetMarket, a sort of online Sam's Club, Books.com, NetGrocer and AutoVantage. According to Internet infrastructure provider VeriSign , NetMarket facilitated the first e-commerce transaction in August, 1994. Cendant later sold off its e-commerce holdings.

In his application, Stack pointed out that the use of demographic information and user profiles to target information is hampered by the large base of users needed and their reluctance to invest the effort in filling out profile forms. Stack thought a better method was to passively store a user's purchasing history, as Amazon.com and most companies that have e-commerce operations now do.

Versions of the patent application were rejected twice in 1999 and once in 2000. After appeals and several revisions, the patent was granted in August 2004. The U.S. Patent & Trademark Office could not provide electronic versions of documents showing the examination and appeal process.

Nicholas D. Rosen, the patent examiner who granted the '370 patent, also has okayed patents on integrating live chat into a credit card application; for implementing a counter-offer for an online credit card application; and a Web site offering specialty chemicals along with product information and support.

An analysis of the USPTO's list of patents granted by Rosen indicates that he began his stint as a chief examiner around 1990 as a specialist in biotech and organic chemistry. His first electronic business patent grants appeared in 2003. (The USPTO says the patent process takes two to three years, but five years has become the norm.)

Amazon.com is well versed in patent disputes. It's in litigation with Pinpoint over its personalization feature. In 1999, it sued rival BarnesandNoble.com for infringing its patent on one-click shopping. That patent was the subject of a patent-busting effort led by open source advocate and technology publisher Tim O'Reilly. The two companies settled in 2002.

Amazon.com also holds a patent for a Web-based, bulletin-board type discussion of products; for electronic gift certificates (awarded by Rosen); and for the use of browser cookies to store structured data. In all, it has 41 patents in its portfolio.