Japan set to reject Amazon patent

Amazon.com is facing a deadline within the next two weeks to respond to the Japan Patent Office's preliminary rejection of its patent application on a "one-click" online purchasing process. The patent office last November notified Amazon that it had reason to reject Amazon's 1998 patent application, according to Kenichiro Natsumi, deputy director of the patent office's Technology Research Division. Also in November, the agency sent a similar notification to Signature Financial Group Inc. concerning a 1992 application for a patent on its "hub and spoke" data processing system.

Each company has only a few days left to file either an opinion to contest the rejection, or an amendment to the patent application to make it qualify, Natsumi said. Amazon must file by Thursday and Signature by Monday, May 21. In either case, if the company does not respond in time, the patent application will be rejected. However, Amazon or Signature could appeal the decision.

In both cases, the patent office found "prior art" -- evidence that others had the idea first. In the case of the "one-click" concept, the prior art consisted of an earlier Japanese patent application and a 1996 book, "User Interface Design," by Alan Cooper.

"We decided that the technology could be easily invented from this prior art," Natsumi said in a phone interview on Monday.

Ideas similar to Signature's technology likewise were found in an earlier patent application and a book, Natsumi said.

Signature Financial's technology, patented in the U.S. in 1993 under the name "Data Processing System for Hub and Spoke Financial Services Configuration," covers a computerized accounting system for managing a mutual fund investments operation. It has also come under legal attack in the U.S.

Amazon's "one-click" system, patented in the U.S., enables repeat customers to place orders without re-entering personal information such as a credit card number or address. Part of the patent covers the way Amazon stores its billing and shipping data. Amazon has faced criticism and legal challenges over the patent, which critics said could stifle innovation by other online merchants. [See "BountyQuest announces results of 1-Click patent search," March 14.]A representative of the European Commission earlier this year also said that under a proposed revamp of Europe's patent law, Amazon's patent would not stand. Although Amazon was not available for comment Monday morning, an open letter on the company's Web site from Amazon Chief Executive Officer (CEO) Jeff Bezos addresses public calls for the company to drop its patents across the board.

In the undated letter, Bezos states that he does not believe that the company should surrender any of its patents, but should use the controversy surrounding them to ignite change in how business method and software patents are processed.

Bezos proposes that as a start the U.S. Patent and Trademark Office recognizes that "business method and software patents are fundamentally different than other kinds of patents" and proposes a retroactive "fast patent" system for these types of patents, limiting them to a 3- to 5-year lifespan, as opposed to the standard 17-year cycle.

Interestingly, Bezos' "fast patents' would include a short public comment period beforehand whereby the Internet community could "provide prior art references to the patent examiners at a time when it could really help," Bezos said.

Although it is still unclear what decision Amazon will make with its pending Japanese patent, Bezos letter indicates that the Internet business poster child is far from fighting its last battle over patents.

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