Patent infringment - you may be next

Patents. They protect us when we come up with a great piece of technology, and allow us to reap the rewards from our hard work and intellectual property. As a creator of intellectual property myself, I thoroughly understand and support the need for patent and copyright laws. Without them, innovation and creativity would be severely stifled.

But they can be abused.

A company called PanIP holds patents that it claims apply to any web site that contains text and graphics, and can obtain credit card and financial information from a user. That means just about anyone doing business on the web is infringing on its patent. PanIP's vision of E-business is that it is like a utility, and they are the only game in town. What's next? That's like claiming you have a patent on air, and charging people to breathe it.

What's most disturbing about this (even more disturbing than the fact that the US Patent Office granted these patents in the first place) is that PanIP has filed suit against dozens of small to mid-size companies and is actually collecting money from them. They haven't gone after any larger companies which is logical, I guess. If you're going to be the classroom bully of the Internet, it makes sense to only pick on those that are smaller than you lest you get your corporate nose bloodied.

There's no rhyme or reason in PanIP's selection of victims. They range from an online candy company, to plumbing supply firms and a variety of mom 'n pop operations. The only thing these companies have in common is that they probably don't have enough money to defend against such a ridiculous lawsuit. Defending against a patent lawsuit is incredibly expensive, no matter how far-fetched the claim. It could easily cost millions of dollars and bankrupt the defendant. Several of the defendants have decided to settle, seeing no other alternative than to give in. In the meantime, PanIP is collecting settlements and building up a war chest, perhaps in anticipation of going after bigger fish.

A few others have decided to fight. A group led by Indiana-based DeBrand Fine Chocolates has set up a site,, to keep people up to date on the latest developments.

Should PanIP get its way, the fate of the web and the future of E-business would be entirely in their hands. Another company, Divine, Inc., holds a patent on electronic shopping carts. Although unlike PanIP, Divine's entire business model doesn't revolve around extorting money from small companies - they do produce valuable goods and IT-related services that are highly regarded in the marketplace - the potential is there for the same sort of abuse. Almost everyone doing E-commerce uses an electronic shopping cart, and they've become almost generic. They're widely available cheap or even free, and come as part of almost any E-commerce package on the market. Another company tried to claim a patent on hyperlinks.

Given the unorganized nature of the Internet, it was inevitable someone would try to claim ownership of its vital processes and try to cash in. If they're successful, the results could be devastating to E-business everywhere.

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