Open Market wins critical patents
The technologies covered by the patents include online shopping carts, session tracking, and real-time credit card transactions -- all three used widely by sites conducting online commerce, the company believes.
| 'The worst-case scenario would be a blanket interpretation that puts an extra drag, an extra tax, on the marketplace.' -- Analyst Scott Smith |
CEO Gary Eichhorn and other Open Market (OMKT) executives said the company would try to get violators to either buy its software, or sign licensing agreements to use the technology.
Analysts said the patents, if interpreted broadly, could have an enormous impact on the industry because the vast majority of existing e-commerce applications employ technology that could be the intellectual property of Open Market.
"The best-case scenario would be that the patents are narrowly interpreted and they don't create a lot of extra drag on the market," said Scott Smith, an analyst at Current Analysis in Sterling, Va. "The worst-case scenario would be a blanket interpretation that puts an extra drag, an extra tax, on the marketplace."
Commerce firms alarmed
Officials at other e-commerce firms expressed alarm when told of the patents and questioned whether Open Market planned to enforce them.
"That's incredibly broad," said Keith Miller, executive vice president of the Internet Billing Co. in Fort Lauderdale, Fla.
The first patent deals with credit card transactions over the Internet. Filed in December 1993, the Payment Patent lays out the key issues for using credit cards online and authenticating the users.
For software to be in violation of the patent, it would have to do three things: Conduct real-time authentication of the user and merchant; take place over the Internet, and bar someone from doing a "replay" of the transaction in order to scam the merchant.
Is SET covered?
Much of the specifications for the Secure Electronic Transactions protocol shepherded by MasterCard International Inc. and Visa International Inc. perform the same tasks for online credit card use. SET was finished nearly four years after Open Market filed for the patent.
The second patent, Network Sales Patent applied for in October 1994, covers the electronic "shopping carts" metaphor that consumers use when picking out products from a Web site.
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"The shopping cart claims are very general and very broadly focused," said Win Treese, director of security at Open Market.
While the first two patents deal with technology already in widespread use, the third covers the future. The Session Identifier Patent, filed in June 1995, makes it possible for a company to track Web site visits and usage, and allow "one-to-one" marketing -- an increasingly popular feature in e-commerce applications.
Treese said Open Market intends to enforce the patents. It is focusing its attention on software companies profiting from the patented technology and other firms that built it on their own but are now using it on their Web sites. Open Market does not intend to go after Web sites that have bought infringing applications from a software company.
Won't stifle competition
Open Market officials maintained they are not seeking to stifle competition, or to drive their competitors out of business. But that doesn't mean the company, founded at the dawn of the Web in 1993, doesn't intend to make money off of its intellectual property.
"The fact is, we came up with the idea first," said Bob Weinberger, vice president of marketing at Open Market. However, he said, Open Market doesn't want legal battles and licensing issues to stifle the emerging electronic commerce field.
"We are definitely concerned and conscious about that and we are committed to making sure that does not occur," he said. "That would not be in our best interest or any one else's."
But the possibility of licensing revenues could have a tremendous impact on the company, which has yet to turn a profit.
Weinberger wouldn't say whether the company expects licensing revenues to become a major revenue source, but the news was well received on Wall Street, where Open Market's stock jumped almost 12 percent to $17.50 by midday.
The three patents are "further confirmation that our technology is unique and innovative," said Eichhorn. It's also a sign that it was one of the first on the market, said analysts.
| 'The worst-case scenario would be a blanket interpretation that puts an extra drag, an extra tax, on the marketplace.' -- Analyst Scott Smith |
CEO Gary Eichhorn and other Open Market (OMKT) executives said the company would try to get violators to either buy its software, or sign licensing agreements to use the technology.
Analysts said the patents, if interpreted broadly, could have an enormous impact on the industry because the vast majority of existing e-commerce applications employ technology that could be the intellectual property of Open Market.
"The best-case scenario would be that the patents are narrowly interpreted and they don't create a lot of extra drag on the market," said Scott Smith, an analyst at Current Analysis in Sterling, Va. "The worst-case scenario would be a blanket interpretation that puts an extra drag, an extra tax, on the marketplace."
Commerce firms alarmed
Officials at other e-commerce firms expressed alarm when told of the patents and questioned whether Open Market planned to enforce them.
"That's incredibly broad," said Keith Miller, executive vice president of the Internet Billing Co. in Fort Lauderdale, Fla.
The first patent deals with credit card transactions over the Internet. Filed in December 1993, the Payment Patent lays out the key issues for using credit cards online and authenticating the users.
For software to be in violation of the patent, it would have to do three things: Conduct real-time authentication of the user and merchant; take place over the Internet, and bar someone from doing a "replay" of the transaction in order to scam the merchant.
Is SET covered?
Much of the specifications for the Secure Electronic Transactions protocol shepherded by MasterCard International Inc. and Visa International Inc. perform the same tasks for online credit card use. SET was finished nearly four years after Open Market filed for the patent.
The second patent, Network Sales Patent applied for in October 1994, covers the electronic "shopping carts" metaphor that consumers use when picking out products from a Web site.
|
| Have an opinion on this story? Add your comments to the bottom of this page. |
|
"The shopping cart claims are very general and very broadly focused," said Win Treese, director of security at Open Market.
While the first two patents deal with technology already in widespread use, the third covers the future. The Session Identifier Patent, filed in June 1995, makes it possible for a company to track Web site visits and usage, and allow "one-to-one" marketing -- an increasingly popular feature in e-commerce applications.
Treese said Open Market intends to enforce the patents. It is focusing its attention on software companies profiting from the patented technology and other firms that built it on their own but are now using it on their Web sites. Open Market does not intend to go after Web sites that have bought infringing applications from a software company.
Won't stifle competition
Open Market officials maintained they are not seeking to stifle competition, or to drive their competitors out of business. But that doesn't mean the company, founded at the dawn of the Web in 1993, doesn't intend to make money off of its intellectual property.
"The fact is, we came up with the idea first," said Bob Weinberger, vice president of marketing at Open Market. However, he said, Open Market doesn't want legal battles and licensing issues to stifle the emerging electronic commerce field.
"We are definitely concerned and conscious about that and we are committed to making sure that does not occur," he said. "That would not be in our best interest or any one else's."
But the possibility of licensing revenues could have a tremendous impact on the company, which has yet to turn a profit.
Weinberger wouldn't say whether the company expects licensing revenues to become a major revenue source, but the news was well received on Wall Street, where Open Market's stock jumped almost 12 percent to $17.50 by midday.
The three patents are "further confirmation that our technology is unique and innovative," said Eichhorn. It's also a sign that it was one of the first on the market, said analysts.