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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: epke who wrote (61383)	10/25/2000 12:05:37 PM
From: StockDung	Respond to of 122087

AMZN news->PluggedIn: New Web site challenges patents, and itself By Scott Hillis SEATTLE, Oct 24 (Reuters) - If you thought you've seen it all when it comes to Internet companies, how about a Web site that -- in an example of its business model -- offers to pay you if you can prove it didn't invent the model? That's one of the market incentives BountyQuest (http://www.bountyquest.com) is using to enlist help in an effort by its founder, a former patent attorney, to reform what he considers an out-of-date U.S. patent system. BountyQuest lets companies or individuals post rewards for information that can be used to overturn -- or bolster -- a patent claim. At the heart of BountyQuest's mission lies a recent debate over so-called "business method" patents that are increasingly being sought by Internet companies such as online retailing giant Amazon.com Inc. <AMZN.O> (http://www.amazon.com), name-your-price shopping service Priceline.com Inc. <PCLN.O> (http://www.priceline.com) and auction site eBay Inc. <EBAY.O> (http://www.ebay.com). Those companies say such patents protect investments they have made in making it easier for Web surfers to buy, sell and trade online. Critics charge the patents -- and the bitter court cases that inevitably follow -- threaten to undermine the free-wheeling spirit that lifted the Internet off the ground in the first place. Interestingly, Boston-based BountyQuest is backed by Amazon founder and Chief Executive Jeff Bezos, and Tim O'Reilly, a computer book publisher who this year sparred with Bezos over an Amazon business method patent for "one-click" online purchasing technology. Amazon is locked in a court battle with rival Internet bookseller Barnesandnoble.com (http://www.barnesandnoble.com) <BNBN.O> over the use of the technology, which streamlines the ordering process for return customers so they don't have to fill out data each time. CHANGING THE RULES In another twist, O'Reilly immediately became one of BountyQuest's first clients, posting a reward of $10,000 to anyone who could help prove that Amazon didn't invent one-click. "I felt I needed to take a stand because I felt Amazon was effectively changing the rules of Web development," O'Reilly said in a recent interview. "The innovation of the Web happened under a fundamentally different set of rules, where people did copy each other. When Amazon sued Barnesandnoble, that changed the rules. It was undermining something that I really treasured in the Web, and thought it was a foolish act on Amazon's part," O'Reilly said. O'Reilly said he and Bezos agreed to back BountyQuest out of belief that patent reform was long overdue. "We thought it was sort of a great touch for us to be involved," O'Reilly said in the interview. "I'm posting a bounty on Jeff's patent, and he's supporting that." Amazon spokeswoman Patty Smith noted that BountyQuest was backed by Bezos out of his own pocket and that the new company was not otherwise linked to Amazon. "We echo Jeff's comments that it is in the best interest of all parties to make patents stronger," Smith said. "NEEDLE IN A HAYSTACK" BountyQuest's founder, former patent attorney Charles Cella, said he wanted to solve one of the system's thorniest problems -- finding so-called "prior art," or evidence that a technology covered in a patent has already been invented by someone else. "It's like looking for a needle in a haystack and we thought there's got to be a better way," Cella said in an interview. Moreover, the skyrocketing number of applications for patents on things like software and Web site technologies has complicated matters because much of that prior art may be locked away in a programmer's mind or tied up in an obscure piece of code somewhere. BountyQuest estimates that companies spend about $4 billion a year on patent issues, whether it's dredging up prior art or taking the more costly step of challenging a patent in court. Cella says he believes BountyQuest will be used to argue patent violation claims, in which millions of dollars in royalty and damages payments are often at stake. "It is also good for the world at large because it serves as a market-based patent reform. By testing patents through the Internet, we help knock out bad patents and also help validate good ones," Cella said. A BOUNTY ON BIG OIL BountyQuest is putting its money where its mouth is, too. It has posted a bounty on its own business model, offering $14,159 to anyone who can successfully challenge its patent application for a "Internet-based, broadcast reward service for finding prior art relevant to the validity of a patent." "That's what we love: we posted our own business model up on the site on day one. It's a win both ways. Either someone will knock it out, which proves that the model works, and if no one does, then it's a unique site," Cella said. The company has also taken up one of the biggest patent issues of the year -- Unocal Corp.'s <UCL.N> claim that oil companies owe it millions of dollars in royalties for using its patents on a cleaner burning gasoline. The U.S. Supreme Court is reviewing a decision by a lower court involving California that ruled Unocal could collect about $90 million in fees for violations over a five-month period, amounting to 5.75 cents for each infringing gallon. "We think it is much more likely to see BountyQuest used in settlement negotiations. We think there will be a lot less litigation after BountyQuest," Cella said. Cella said he thinks the bounty offerings will spread word of mouth, especially among academia and scientists. "All it takes are a few people who understand the power of being rewarded for their knowledge to create tremendous, rapid spreading of the word," Cella said. "Can you imagine a grad student who wins a $10,000 prize for a senior thesis he read?" 19:40 10-24-00