To all,
I don't know if you all have seen this but I'll post it anyway!
COLUMBUS, OHIO, U.S.A., 1996 JUL 8 -- REPEAT/E-Data is a name worth
remembering -- the company has filed suit against more than 43 computer-related companies, sent
notices to another 140, and has offered some 75,000 companies an amnesty program to avoid
litigation over what is known as the Freeny electronic commerce patent. A recent federal court
decision, applauded by Compuserve (NASDAQ:CSRV), slows E-Data's aggressive litigation
strategy.
A path to the US Southern District New York court of Judge Barbara Jones is a bit complicated.
Her recent decision, however, slows E-Data by ordering the company to justify its actions and
clarify its claims in a case against Compuserve and others.
In 1985, computer scientist Charles Freeny patented a digital-based point-of-sale transaction
software system similar to technology used on the Internet, online services, 3.5-inch disks, and
CD-ROMs. Some industry experts say the software design is not patentable, but a patent
nonetheless exists. After four years of tying to make his patent profitable and just before the Internet
became popular, Freeny sold his patent rights to Interactive Gift Express, which is now called
E-Data (NASDAQ:GIFT). Freeny divested his right over the patented software for $200,000.
E-Data's president, Arnold L. Freilich, a former accountant and business consultant built a business
around Freeny's patent and hired David Fink as his patent infringement specialist. What ensued was
a list of law suits against companies such as IBM, Adobe, Dun & Bradstreet, KMart's
Waldenbooks, Vocal Tec, Apogee Software, Ziff- Davis, McGraw-Hill and many others.
Last November, Robert Metz, editor of an electronic weekly financial report called "Shaking The
Money Tree," wrote "E-Data reminds me a little of the Hugh Grant movie, 'Four Weddings and a
Funeral.' E-Data has Three Employees and a Patent. Still, if that patent holds up, E-Data can hold
up virtually every company that decides to buy and sell through our digital playpen -- cyberspace.
You could say E-Data is carrying an air gun on an elephant hunt. But that air gun will shoot poison
darts if E-Data`s patent holds. And no one has yet attacked it directly."
He also noted, "Veteran analyst Calvert D. Crary writes litigation notes for Auerbach, Pollak &
Richardson Inc., a correspondent of Bear Stearns. Crary finds it `fairly evident' E-Data`s patent is
applicable to hundreds of companies, large ones among them."
According to other reports, E-Data says it is not suit-happy, but would rather settle with the
companies involved and collect an ongoing royalty. IBM has already settled out of court with
E-Data for an undisclosed amount and royalty.
Compuserve spokesperson Gail Whitcomb told Newsbytes, "This suit against us and others covers
just about any product which is electronically distributed online, on a floppy, or CD-ROM. It is just
too important of a case to let it slip by unnoticed. If left unattended this type of case could lead to
others which would see how easily a company can be forced to pay royalties for basic technologies
which are only similar to one another."
Continuing, she said, "With the decision of Judge Barbara Jones, E-Data will have to explain to the
court in detail how each company's products specifically violate the Freeny patent."
Whitcomb also noted E-Data's stock increased each time the company announced a settlement.
E-Data's future litigation promises to be an interesting case for the entire Internet community and
computer industry.
More information is available at patents.com .
(Patrick McKenna/19960703/Press Contact: Gail Whitcomb, Compuserve, 614-538-4457) |
