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Old 02-26-2000, 12:08 AM   #1
Steve_S
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Exclamation Your Future ?? The Amazon Patent!

Hello,

I suggest you read this news. Amazon holds Patent No. 6,029,141, for "an Internet-based referral system that enables individuals and other business entities ('associates') to market products, in return for a commission, that are sold from a merchant's website," according to the patent office website.

This is NOT good. Does CD-NOW have to pay Amazon for the rights to use their patented technology so they can pay their affiliates? Hmmmmmm........

Headline from CNET:

Amazon patents affiliate programs technology
The online retail giant files for ownership--and receives--the technology that lets other Web sites send it customers in exchange for a commission.

Link:
http://cnet.com/news/0-1007-200-1558...07-200-1558650

More News:

Amazon Associates Plan Wins Patent Protection

Link:
http://www.techweb.com/wire/story/TWB20000225S0013



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Old 02-26-2000, 12:31 AM   #2
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Actually I see this turning out to be another Compuserve (I believe, I may be wrong) and Gif example.

Technically, one company owns the rights to the gif image, therefore everyone is infringing and breaking just about every rule whenever they create new images and put them on the web, but in reality nothing happens.

Same case here, there are far too many people using this system now. Does Amazon intend to sue everyone? I doubt it, particularly from the PR point of view.

I would also question if such a wide ranging patent would stand up in court? It seems far to general and nowhere near specific enough.

I looked for similar stories on Yahoo, but nothing is said http://www.very-cool-stuff.com/ubb/frown.gif so I am not sure how important other sites are regarding this latest twist.

Trust me Steve. In 2 years from now, if I was to ask you about this topic, you and I and everyone else will have already forgotten about it http://www.very-cool-stuff.com/ubb/smile.gif

Ain't nothing gonna happen from it.
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Old 02-26-2000, 12:32 AM   #3
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Nasty stuff. I think the best thing to do here is boycott Amazon. If people raise enough of a noise about it, the company may be forced to make some statement saying, "we won't use it to ruin other companies' business models."

I look to what happened with Double Click and I gain heart. The privacy community got the word out, and many people hooted and hollered, and now they're under investigation! http://www.very-cool-stuff.com/ubb/smile.gif Yay!

Otherwise, what will happen to companies like Commission Junction, ClickXchange, etc? If they are all forced to change their business model or go out of business, it would not bode well for many of us.

I understand Amazon's move. It is following it's dharma as a public company - make as much money as possible. It's just unfortunate that so many of these new patents that are getting past the out-of-touch nitwits in the patent office are incredibly powerful if they stand up in court.

- Aaron
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Old 02-26-2000, 12:38 AM   #4
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In the time it took me to post, you beat me to it Marshmallow man! http://www.very-cool-stuff.com/ubb/smile.gif

I certainly hope you're right. I would have had a similar reaction, before I read the articles. However, one article mentioned that they have already used their "one-click shopping" patent *successfully* against Barnes & Noble.

I doubt Amazon would come after everyone else on the planet that is using affiliate programs... maybe they'll just use it against their closest competitors. But really it's also the principle here. I don't like the idea of corporate bullying. It's just so... Microsoft. LOL

They didn't invent affiliate programs, so they don't deserve the patent.

- Aaron

[This message has been edited by Aaron Dragushan (edited 02-26-2000).]
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Old 02-26-2000, 12:49 AM   #5
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Steve, thanks for the info. This is interesting information and certainly a cause for concern. However, not too much cause for concern overall. It appears from the CNet article that Amazon will only go after Barnes and Noble like it did after it won a patent on its "one-click" technology. Certainly with that patent it could have gone after every site imaginable but it clearly chose to go after its direct competition. My guess is that they will simply selectively enforce their patent against those companies they deem to be their direct competition.

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Old 02-26-2000, 12:54 AM   #6
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This is the actual abstract of said patent:

Abstract
Disclosed is an Internet-based referral system that enables individuals and other business entities ("associates") to market products, in return for a commission, that are sold from a merchant's Web site. The system includes automated registration software that runs on the merchant's Web site to allow entities to register as associates. Following registration, the associate sets up a Web site (or other information dissemination system) to distribute hypertextual catalog documents that includes marketing information (product reviews, recommendations, etc.) about selected products of the merchant. In association with each such product, the catalog document includes a hypertextual "referral link" that allows a user ("customer") to link to the merchant's site and purchase the product. When a customer selects a referral link, the customer's computer transmits unique IDs of the selected product and of the associate to the merchant's site, allowing the merchant to identify the product and the referring associate. If the customer subsequently purchases the product from the merchant's site, a commission is automatically credited to an account of the referring associate. The merchant site also implements an electronic shopping cart that allows the customer to select products from multiple different Web sites, and then perform a single "check out" from the merchant's site.


--------------------------------------------------------------------------------
Inventors: Bezos; Jeffrey P. (Seattle, WA); Kaphan; Sheldon J. (Seattle, WA); Ratajak; Ellen L. (Seattle, WA); Schonhoff; Thomas K. (Seattle, WA)
Assignee: Amazon.com, Inc. (Seattle, WA)
Appl. No.: 883770
Filed: June 27, 1997

Source:
http://164.195.100.11/netahtml/srchnum.htm

US Patent and Trademark Office

YUK! Where these folks rowing with both oars!
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Old 02-26-2000, 01:23 AM   #7
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It's certainly not good news that Amazon has been granted this patent, but to temper some of the more knee-jerk reactions in this thread, and to play the role of Devil's Advocate to the prosecution for a moment, it is worth considering the following:-

A) Amazon did *for all practical intents and purposes* invent, refine and provide proof-of-concept for affiliate programs. (CDNow also claims to have been the first, based on their corporate bio, but as far as I can tell from the respective dates, Amazon's program started earlier).

B) The patent was filed for in mid-1997, way, way before MOST of the current affiliate program-operating sites had even heard of affiliate programs so it is NOT necessarily an attempt to shut the stable door after the horse has bolted.

C) The patent is actually MUCH more descriptive, clear and accurate than the majority of internet-related patents that have been granted recently (some of the waffling language on the reverse-auction type patents is mind-blowing!) so there was a real attempt by Amazon to define a very specific process that it believed it had dreamed up and implemented.

That said, it will be a disaster if they decide to pull out the real legal big guns and go after the thousands of affiliate program operators and tens of millions of folk participating in such programs.

What they might consider doing (i.e. it's a good idea, not "I know they are considering...") is to have a flat "tax" of $1 per signed-up and active affiliate participating in any program. They could assign a 3rd party such as PriceWaterhouseCoopers to audit the books of other companies and AGGREGATE the "tax" so that Amazon.com cannot see how many affiliates each individual site has. That way, it generates *some* revenue from what is after all an amazingly clever and potentially market-changing way to promote products or services, sites can continue to gain all the benefits of affiliate programs and everyone remains relatively happy.

Edwin

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Old 02-26-2000, 02:27 AM   #8
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Looking at patent, it looks like they will provide copying of (their) exact ideas. What if you leave the shopping cart out , for instance. Or if the the selling company is setting up the homepages themselves for the affilates (like Virtualis is doing). Then the papent would not work.
I do not think it is a good thing, but it is not the end of the world.

In addition, I think Amazon want to make money were possible, otherwise they do not excist anymore in two years. Lets face, Internet is a big opportinity, but most companies only make losses and that is ok, when the economy of the US stays like this.
I see some bankrupties coming the next 5 years.

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Old 02-26-2000, 03:26 AM   #9
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Just a couple of rambling points reading the context of the patent:
A) States websites will go up AFTER being accepted as an associate. Does this mean if your site was up BEFORE becoming an affiliate to a merchant you are exempt from patent infringement?
B) The term "Commission" is not defined. Does changing the term to fee for lead get around infringement also?
C) States Merchant will have an electronic shopping cart that allows the customer to shop at not only their site but to other websites and purchase products. Does this mean Amazon.com also owns the patent on shopping carts since the wording is so vague?
D) States associate will be paid a commission after following refering link Merchant for subsequent purchases made by customer. Does this mean the associate is entitled to commission on EVERY purchase made by that customer after the date they first visited? Seems to me if this is the case, Amazon.com is setting itself up for a landslide of requests for payments due, and the nightmare of a myriad of problems trying to track each purchase made and accounting for a commission on each and every purchase to the satisifaction of all associates.
This, I'm afraid folks, is headed for a long and bitter war, where the losers in the end could be us.
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Old 02-26-2000, 01:01 PM   #10
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The patent could be used to sue companies that use business models that are not exact copies of Amazon's. Otherwise, patents would be pretty meaningless. It's up to a judge to decide exactly how far you have to deviate to be OK. I consider it probable (but far from certain) that all of the affiliate programs listed at ClickQuick are in violation. As someone else mentioned, this is much like the Unisys LZW (as in GIF and nearly all modems) patent--and Unisys is still charging fees on that patent.

That *does not* mean affiliate programs will stop operating tomorrow. What it means is that they and Amazon will have to decide on terms of use, or argue it out in court. In the former case, Amazon may or may not charge them money, and that may or may not affect the rates they pay. In the latter case, nearly anything could happen, but they likely will have to shut down the programs for the duration of the trial.

The patent doesn't entitle affiliates to anything. Affiliates are entitled to whatever their contracts say they are.
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Old 02-26-2000, 01:45 PM   #11
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Red face

Does anyone else see the irony here? Here we are grilling Microsoft and probably breaking them up for being a Monopoly, yet here is a government agency building Monopolies. With all affiliate programs in the trash bin, Amazon would be the only choice for webmasters, and with the way they are expanding product selection, they could be a monopoly before long.

That aside, I really don't see this affecting us much at all. Why? Well, should Amazon choose to enforce this, it would cost them billions in legal fees to take on all affiliate programs. Spending a few million dollars to knock out affiliate programs that don't compete with your site really doesn't make much sense at all. It would be a huge PR mistake, as thousands would work hard to cause a boycott of Amazon(I know I would!)

By the way, just so you know, I'm applying for the patent of a "Bulletin Board System" - a great idea where people can exchange ideas via the posting of messages in a electronic form. Unfortunately, that will mean that all other BBS's will need to be shut down - be expecting a call from my lawyer Steve http://www.very-cool-stuff.com/ubb/wink.gif

j/k

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Old 02-26-2000, 03:26 PM   #12
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I'm not sure I follow the "monopoly" logic - the whole basis of the PATENT system, which has been in place for hundreds of years, is that people/companies that come up with good NEW ideas and concepts are protected from having their work ripped off by competitors.

So of course every single patent ever granted (and there are tens of millions of patents out there!) creates a monopoly under the terms you were describing...

... it's a monopoly on the right to own the product of one's own sweat, toil and tears.

Nothing wrong with that at all.

Edwin

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Old 02-26-2000, 03:28 PM   #13
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Some great thoughts in this thread and Edwin, thanks for calming me down http://www.very-cool-stuff.com/ubb/smile.gif However, after reading the entire patent and the great Monopoly point by Spencer I found this:
http://www.internetnews.com/ec-news/...297821,00.html

IMHO, Amazon will soon (a year or two) be a Monopoly and armed with subject Patent well positioned to disuade competition and "force" many other present and future competitiors to go away. At the least, it empowers them with a very strong "chip" in the negotiating process with another company.



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Old 02-26-2000, 03:34 PM   #14
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The US Patent Office lives in another day and time. This is just one more absurd example of their being out of touch with Net reality.

A good number of affiliate programs, including CDNOW, came online before Amazon filed for the patent. In addition, there are a number of affiliate programs that predate Amazon's Associate program.

I've done my homework.

If the folks at the patent office had read "The Complete Guide to Associate and Affiliate Programs on the Net", they would have never granted Amazon the patent. The book shows that PC Flowers & Gifts started their program in October 1994.

Yet another case of our tax dollars at work.

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Old 02-26-2000, 03:49 PM   #15
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Well, I wasn't saying that any company that gets a patent, even one that gives them a competetive edge makes them a monopoly. However, Amazon is clearly on course for a "monopoly", and this patent only brings them closer. If they do decide to enforce this (and find a way to do it quickly and easily), most webmasters will be forced to use them. This will quickly erode new customer acquisitions/sales for other sites that rely on affiliate programs, and give Amazon a much larger customer base very quickly. I can't see something like this being enforced effectively.

My question is this - What other patents has Amazon (and maybe other companies) applied for? As Edwin said, the patent system is designed to protect new ideas from others using them. I am not anti-patent, but it is easy to see that Amazon did not create the first affiliate program, so why should they be able to patent an idea they didn't come up with in the first place?



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