Interview: Patent company CEO has his say

Computerworld reporter Matthew Cooney interviews DE Technologies' CEO, Ed Pool.

Below is the email interview between Computerworld and DE Technologies’ CEO, Ed Pool. (DET refers to the system it has patented as BOES.)

I've heard estimates of the number of businesses that have receiving infringement notices ranging from a dozen to "about four dozen". Can you say how many letters have been sent out?

I am not sure of the exact count but would place the number at around 15.

What criteria did you use in selecting infringing businesses?

The criteria is called an infringement analysis. Since New Zealand has a legal procedure or defence argument called "innocent infringer" we had to notify each infringing firm in order to start the clock for accruing damages. We patiently waited for over one year to see if New Zealanders would have the integrity to respect their own laws which we did respect by lodging patents there in lieu of using US law to protect our property rights in New Zealand. Certainly now with all the bias and press coverage it would now be virtually impossible for this argument to be used by anyone else irregardless of whether formal notices are served. For this we are grateful to the NZ press. It has saved us thousand of hours of work and hundreds of thousands in legal fees.

Are you sure they all infringe your patent?

The claim analysis was solid on each firm and supported by counsel of record. Not only are they violating the property laws in NZ but most are violating US 6,460,020. This will now allow us to move through our legal system to have infringing companies products seized by US. Customs and elevate this from a civil to criminal matter.

How did you decide what was a fair licensing fee for BOES?

This was based on the present fees charged to merchants by credit card companies for card not present internet transactions (2.5 to 5% plus ticket fees - .30 to .50 cents per, monthly maintenance fees and escrow fees, plus 18% to buyers), the ridiculous charges of carriers which many times exceed the cost of the goods, governmental taxation and VAT rates, import fees and duties etc. Additionally, most serious international e-commerce back ends charge 25 - 100,000 US dollars per client to setup and manage such systems. Remember that if firms utilise a licensed service provider/software seller their (etailer) fees are only 40 (four tenths of 1%) basis points. This is more than reasonable. Only if they choose to go it alone and infringe our property rights must they pay the higher fees, which are mostly costs assessed by accounting firms to us. You need to study firms like SWIFT (Society for Worldwide Interbank Financial Telecommunications – they are in Brussels) who handle 5.5 trillion US dolars per day (read again per day).

Why did you take action in New Zealand first?

We complied with the laws of NZ and waited one full year to give NZ infringers time to adjust and come to us to negotiate rates and fees - not a single firm complied with NZ law. Secondly as was reported in 2001 we had been trying since 1998 to relocate our operations to NZ which we had thought was a highly sophisticated and law abiding citizenry. At the time when we met with consular officials (1998) NZ had the most sophisticated IT community on the planet, due to the continued "brain drain" and selling off of the IT infrastructure that position has been reassessed.

How many countries have accepted your patent?

Three. It is now taking an average of five years for small firms to receive patents, this is interesting considering big firms get theirs in 1.5 to two years.

Do you have any existing BOES licensees?

Since we operate as a road bed or deep backend firm I cannot comment on this issue due to contractual restraints.

To date, have any NZ companies agreed to license BOES?

Due to the personal situation I am in I have not checked with counsel in over two weeks. I am personally having discussions with several firms but they are inconclusive at this writing. I will be checking with counsel next week on this issue.

Why haven't you deployed your own BOES system?

BOES was being deployed for US SME firms in 1999 via the Foreign Commercial Service here in Washington. Due to major interference by a very large company the contract was cancelled along with five other small firms contracts. This was then repackaged and bid restricted to very large firms a year later (surprise) "GSA prequalified bidders only". The technology to assist American SME firms then was never brought out to the market. Recent conversations with a US official close to the programme reveals they will be terminating the large firms system as it does not work. A terrible disservice to our SME's and a massive waste of taxpayers funds, similar to something that happened in your neck of the woods several years ago. Large IT firms are systematically killing the small software innovators world wide – with great success I might add. This does not bode well for the creators in NZ.

The local industry has been vigorously opposed to your patent claim. Were you surprised by this?

No! Firstly I have not seen a single comment that understands the 505284 patent which covers INCO Term points of sale such as EXW, FAS, FOB Vessel, C&F, CIP, CIF, DDU, DDP to name a few, landed cost engines, and complex payment vehicles etc. this is not manna that fell from the heavens. My co-inventor and myself spent years trying to figure all this out. You must remember that we have been around since before Netscape was even a company. Question - where was the worlds first electronic village? This is not a patent on e-commerce.

Any comment on the reaction?

The reaction from the NZ technology pirates (innocent infringers excluded) is like going into a prison and asking those convicted of robbery if they did it. I think you would find the great majority would say "I am innocent" even though theirs peers convicted them.

With the benefit of hindsight, would you have pursued your claim differently?

Yes, instead of extending the courtesy of complying with a countries local laws and respecting their citizenry I now understand with crystal clarity why mega corporations opt to simply use their own laws to protect their rights. In retrospect I would have simply gone to the ITC in October of 2002 and obtained a ruling which would allow seizure of infringing companies products being imported into our markets. If you are going to steal Intellectual Property and be highly anti-American then you should not be allowed to rob Americans of our jobs and our dignity. I submit, any American firm is going to think long and hard about investing resources into a country that not only disrespects US IP law but their own as well. No one is going to invest years of their lives and their personal funds to be innovative if piracy and theft of same is tolerated.

Some examples of prior art have supposedly been found. Is DET prepared to pursue its claims in the courtroom if necessary?

We will at a time and place of our choosing vigorously enforce our property rights. No matter how these violators band together at the end of the day a licence will be required by the firms. They can split the cost of litigation but we are under no obligation to license after winning in a court of law. Do you really think that I would now approve licensing of the 6,460,020 patent which they (the violators or worse pirates) will need to import their products into the United States via computer to computer systems? Only innocent infringers will be given this opportunity and only if they comply with NZ law.

When Computerworld talked to you in March 2001, you were looking for a buyer for the patent. What came of that effort?

September the 11th happened. Our technology has a tremendous side benefit which was known by several elected officials and governmental agencies (a point intentionally ignored by the NZ press). We realised that only by keeping our brain trust together could we have a chance via material tracking (which is a default system value of BOES) could we protect our families and ourselves.

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