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Wed Mar 15 2006 21:15:52

Why Does Patent Apply to eBay and Not Amazon?

By: Ina Steiner

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I've read forum discussions about the eBay patent case (set to be heard before the Supreme Court on March 29), and a question commonly arises. Why does the MercExchange patent apply to eBay and online auction sites, but not to retail sites like Amazon?

Here's part of the explanation of the '265 patent from the MercExchange brief filed in the Supreme Court case that should help answer the question. (I've left out the references.)

"The '265 patent describes an "electronic market" for the sale of goods. In such a market, sellers can display their wares by posting pictures, descriptions, and prices of goods on a computer network, such as the Internet. A prospective buyer can electronically browse the goods on sale by connecting to the network. After selecting an item, the buyer can complete the purchase electronically, with the "electronic market" mediating the transaction, including payment, on the buyer's behalf. The seller is then notified that the buyer has paid for the item and that the transaction is final. A central authority within the market can police the obligations and performance of sellers and buyers over time, thereby promoting trust among participants." You can find the full brief on Dennis Crouch's Patently-O blog (link).

It goes on to talk about the "trusted network," or "trusted system" on eBay that includes "escrow services, conflict resolution services, insurance, payment intermediaries, authentication system, feedback forums and the policing of the system."

Retail sites like Amazon own their own inventory.

During the trial in 2003, eBay and MercExchange put forth their arguments before a jury. I'd love to review the court transcripts and see exactly what each side said,....

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Readers Comments

Why Does Patent Apply to eBay and Not Amazon?   Why Does Patent Apply to eBay and Not Amazon?

by: Bidofthis

Sun Mar 19 23:29:23 2006

...many e-commerce-based web sites have been primarily directed to listing and selling those items which are easily classified and catalogued, such as, automobiles, books, music CD's, clothing, shoes, and others. One example of such a website is Amazon. com, at the URL http://www. amazon. com. Amazon. com is well known for its extensive online catalogue of books. This is driven, in part, by the need to provide a standard set of product descriptors which might be easily programmed into a database from which information is subsequently extracted for presentation via a web page interface. As a result, many items, which cannot be easily described, do not as readily lend themselves to inclusion in a        structured database from which their information could be easily extracted and categorized for presentation to a potential buyer. In particular, where a buyer is interested in the provision of both a product and associated services, current e-commerce web sites are incapable of accurately communicating accurate and targeted inquiries and offers between buyers and sellers.

Several e-commerce-based web sites are directed to an auction format, allowing buyers to post online bids for a particular product for a specific period of time. An example of such an auction format web site is EBAY, at the URL, http://www. ebay. com. Additionally, PRICELINE, at the URL, http://priceline. com, is a slightly different type of auction-format web site, except that potential buyers may only bid one price for a product before purchase.

This format is commonly known as a Dutch auction and has existed for centuries. Both sites are seller-driven, providing a means by which sellers can expose more products to a greater number of buyers. .....

....Another recent patent issued to Woolston, Thomas G.. Consignment Nodes, U. S. Patent No.

5,845,265 (December 1.1998) describes a method and apparatus for creating a computerized market for used and collectible goods. As with Walker (U. S. Patent No. 5,794,207), Micali (U. S. Patent No. 5. 615,269) and Mori (U. S. Patent No. 5,880,446), described above, Woolston's system requires a third party to act as a bailee of the goods beings sold to evoke the trust and confidence of the parties participating in a transaction. Additionally, Woolston's system creates an online catalogue of goods through which a prospective buyer may browse to attempt to find a product of interest. Consequently, Woolston's system is unnecessarily cumbersome, where a prospective buyer knows specifically what item he or she is currently interested in purchasing.

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