South to the Future

Pressing Patent Suit May Backfire on Amazon.com

October 27, 1999

NEW YORK -- In what might be the most bizarre marketing stunt of the dot com era, the mammoth bookstore chain Barnes and Noble apparently tricked rival Amazon.com into a well-publicized patent dispute.

Amazon Inc. filed suit against Barnes and Noble on Friday of last week claiming the retail chain's online store meticulously copied Amazon's "1-Click" express checkout system. Both "1-Click" and Barnes and Noble's "Express Lane" systems allow online customers to make multiple purchases without having to re-enter credit card information.

Just one month ago, Amazon founder Jeff Bezos was awarded patent No. 5,960,411 for a "method and system for single-action ordering of items in a client-server environment." Because most e-commerce sites use similar processes to store the credit card information of return customers, the patent-infringement law- suit immediately raised a ruckus among leading e-tailers. The consensus among industry insiders is that the lawsuit has little or no merit.

Barnes and Noble Vice President of Marketing Jack Servon greeted the news of the lawsuit with characteristic aplomb. In an interview with Wired News, Servon was pleased to note that Amazon had substantially boosted traffic to barnesandnoble.com just by "spelling our name correctly" in a press release announcing the lawsuit.

"By suing us, Amazon is admitting that our service is just as good if not better than their own -- we couldn't buy better publicity," crowed Servon, who added, "They might as well try to patent leather shoes."

What he neglected to mention to the press, however, was that the patent lawsuit had in fact originated inside his office at Barnes and Noble headquarters.

In a brilliantly conceived marketing ploy which could make or break his career, Servon "leaked" rumors that Amazon intended to take legal action against his own company. Some analysts believe these rumors prompted the Seattle-based behemoth to file the actual patent infringement suit. Amazon refused to comment on the origins of the suit.

Barnes and Noble, a division of Bertelsmann A.G., has been sharply criticized in recent months for its lackluster foray into the online shopping market. In an industry where a name is literally an address, the company has waffled between identifying itself as bn.com and barnesandnoble.com. Lagging far behind Amazon in hits and sales, barnesandnoble.com posted an $8 million loss in the last quarter alone.

When Servon learned from Barnes and Noble's in-house counsel that Amazon had been awarded a patent for a commonly used Web technology, he sensed opportunity in the air. Rather than retreat from a possible confrontation, he cooked up a scheme to lure his competitor into prosecuting what most consider a ridiculous legal action. And if media reaction to the lawsuit is any measure, Servon's gambit has been an unqualified success.

"If Servon did goad Amazon into suing B and N, he deserves extra stock options," observed Dennis O'Keeffe, an analyst with Forrester Research. "The suit makes Amazon look like it's opposed to progress. It's as if Ford put a patent on a machine that can take people from one place to another."

Investors appear to agree. Amazon's stock closed yesterday at 82 3/4, down 10 points.

South to the Future's stories contain fictional and factual elements. Except when public figures are being satirized, any use of real names is accidental and coincidental. Comments? Holler@sttf.org.

 
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