IBM is facing a US$6 million patent-related lawsuit from Harry & David, an Internet retailer that was sued because it used an IBM e-commerce system that allegedly contained technology patented by two other companies.
The US-based Harry & David, an IBM customer since 1991, purchased WebSphere and Net Commerce software to create an Internet-based catalog used to sell its products. IBM knew these products contained technology patented by Charles E. Hill & Associates as well as NCR, but failed to notify Harry & David or defend the company when it was ultimately sued by Hill, Harry & David alleged in a complaint filed on February 26 in US District Court.
The retailer says IBM continued to sell upgrades of the e-commerce system to Harry & David as recently as 2005, despite knowing that Hill and NCR might demand payment from Harry & David for using unlicensed technology. Ultimately, NCR notified Harry & David that its use of the e-commerce software infringed on NCR patents in June 2005, and Harry & David was forced to purchase a license to use the technology, the company states in court documents. Then, in June 2007, Hill sued Harry & David in a Texas court and the company was forced to pay a settlement.
"Despite IBM's knowledge that its infringement could subject Harry and David to claims for patent infringement, and despite its knowledge that Hill in fact intended to sue IBM's customers for their use of E-commerce Programs, IBM took no action to protect Harry and David from Hill's lawsuit or to inform Harry and David of the potential of a Hill suit," the retailer claims.
IBM spokesman Fred McNeese said "we have no comment" and said he didn't know when IBM might file an official response in court. Harry & David asked for at least $US6 million on seven claims for relief, and has demanded a jury trial.
The Harry & David suit isn't the only legal trouble faced by IBM this month.