11 May 2011

Telstra Scores Pyrrhic Victory in Amazon ‘1-Click’ Opposition

Telstra Corporation Limited v Amazon.com, Inc. 2011 APO 28 (9 May 2011)

For over a decade, the infamous Amazon ‘1-click’ ordering patent has courted controversy, and it continues to do so.  Its US incarnation, patent no. 5,960,411, was subjected to re-examination following a request filed by New Zealander Peter Calveley, but survived with only a slight narrowing to the scope of its claims.  Its Canadian counterpart, application no. 2,246,933, was rejected by the Patent Appeal Board on the ground that it did not claim legitimate statutory subject matter, however Amazon successfully appealed this decision in the Federal Court of Canada (see Business Methods Patentable (Again) in Canada).

Despite widespread disbelief and disgruntlement, felt particularly by section of the software development community, the novelty and nonobviousness (i.e. inventive step) of the ‘1-click’ ordering invention has yet to be successfully challenged.  Even a US$10,000 ‘bounty’, to be awarded to anybody bringing forward prior art that would invalidate the Amazon claims, failed to produce a significant challenge to the patent.

While the main battleground has been North America, for the last eight years a dispute has been quietly simmering away here in Australia over the local counterpart to the ‘1-click’ ordering patent.  Australian application no 94779/98 resulted from the national phase of Amazon’s international patent application no. PCT/US1998/018926, filed on 10 September 1998, and claiming priority from earlier US applications filed on 12 September 1997 and 23 March 1998.  The application passed examination, and was advertised accepted on 19 June 2003 under the prospective Australian patent no. 762175.

On 19 September 2003, Telstra Corporation Limited (Telstra) filed a Notice of Opposition to the grant of patent no. 762175.  Thus began an opposition proceeding that would eventually last for nearly eight years.  A decision in the opposition finally issued on 9 May 2011.

While Telstra has achieved some small level of success – Hearing Officer Ed Knock finding claim 1, 2 and 4 to 61 (out of 141 claims in total) to be invalid – the claims that have survived the Australian opposition are, to our knowledge, the broadest of any of the ‘1-click’ patent family members.  For all practical purposes, after years of proceedings and (no doubt) tens of thousands of dollars in costs (at least), Telstra has gained no meaningful freedom-to-operate out of the opposition.

‘1-CLICK’ ORDERING – BACKGROUND

As the Hearing Officer has pointed out (in paragraph [5] of the decision), it is necessary to bear in mind that the Amazon ‘1-click’ ordering system dates back to the filing of the first patent application in 1997.  The inventiveness of the system must be assessed at this date, and it is of no relevance that it might have been considered manifestly obvious just a few years, or even months, later.

At the time, e-commerce was a recognised, though still relatively new, application of the Internet.  However, as explained in the ‘1-click’ patent specification, the up-take of online purchasing was limited by a few practical considerations.  Firstly, many consumers were reluctant to trust this new technology with their financial details, such as credit card numbers, which might be intercepted in transit (even with encryption, assuming that the consumer was aware of this).  Secondly, the number of steps involved in completing a purchase, from filling the virtual shopping cart to entering billing and delivery information, was off-putting for many consumers.

The ‘1-click’ ordering system was presented in the patent specification as a solution to these problems.  By storing all of the required consumer information on an e-commerce server, and having the server provide the consumer’s computer (the ‘client’) with an identifier (specifically, on the Internet, a browser cookie) that could be used subsequently to identify the consumer, order placement could be reduced to a single click.  By taking a single action (e.g. clicking on a button on a web page) the consumer can initiate a sequence of steps in which the consumer details are retrieved, an order placed, and a transaction (payment) completed, without the need for any further action on the part of the consumer.

By 1997, cookies had been around for a couple of years, following their introduction by Netscape.  However, the evidence in the Australian patent opposition establishes that the uses to which they were put at that time were fairly straightforward, such as ‘state maintenance, profile management, and automatic log-ins’ (paragraph [94]).

It is in this context that the Amazon claims must be viewed.

WHAT IS A ‘SINGLE ACTION’?

A critical issue in the opposition was determining the meaning of the term ‘single action’ appearing in the Amazon claims.  Telstra argued that this term was unclear, that it included within its scope more than one action, and that it might require qualification by the word ‘only’.

The Hearing Officer consulted dictionaries and the specification, and concluded that there is nothing ambiguous about the term ‘single action’.  The specification speaks of a number of ways in which the ‘action’ might be implemented, but ultimately summarises the key characteristic: ‘single action generally refers to a single event received by a client system that indicates to place the order’ (see paragraph [50] of the decision).  Such an event might involve more than one physical ‘action’, such as a double-click, but the meaning would nonetheless be clear to a person skilled in the art.

As for the possible requirement for the qualifier ‘only’, the Hearing Officer was satisfied that, as a matter of logic, a ‘single action’ means only a single action, and that the inclusion of a redundant qualifier would not change the meaning (paragraph [52]).

NOVELTY

Ultimately Telstra relied on five prior disclosures in its efforts to show that the Amazon claims were anticipated.  these were:
  1. the Digicash ecash system (also raised by Peter Calveley in his US patent re-examination request);
  2. a system known as ‘OM-Transact’;
  3. an article in Dr Dobbs Journal entitled ‘Implementing a Web-Shopping Cart’;
  4. Telstra’s own prior Australian patent application no. 19173/97, which related to an automated telephone connection system; and
  5. a Japanese patent publication in the name of Hitachi.
The Hearing Officer found that none of these prior disclosures deprived the Amazon claims of novelty, except for the Telstra application, which anticipated claims 1, 4 to 7, 32 and 35 to 38 (see paragraphs [68]-[72]).

Interestingly, the Telstra application was ‘whole of contents’ prior art, i.e. having an earlier priority date, but later publication date, than the Amazon patent application.  The Hearing Officer proceeded on the simple basis that it was therefore available for purposes of assessing novelty (though not inventive step).  However, as we reported recently, this simple approach to the whole of contents novelty analysis is insufficient, according to the Federal Court of Australia (see Valid ‘Notional Claim’ Required for ‘Whole of Contents’ Novelty Test).

INVENTIVE STEP

The Amazon patent application was filed well prior to 1 April 2002, when the Patents Act 1990 was amended to expand the basis for finding a lack of inventive step.  In the case of the ‘1-click’ claims:

…lack of an inventive step can only be established on the basis of the common general knowledge in the art, or the common general knowledge considered together with prior art information made publicly available in a single document or through doing a single act, or made publicly available in two or more related documents or through doing two or more related acts. That is, it was not available to the opponent to combine two or more unrelated documents or acts to establish lack of an inventive step. Hence common general knowledge figured prominently in the case put forward by the opponent in regard to lack of inventive step. (Paragraph [17].)

The Hearing Officer ultimately accepted (at [86]) that the common general knowledge included:
    1. the display of order or item information, or instructions or user inputs, for Internet ordering systems in the form of Web pages using HTML code, and the use of a web browser by the customer to access and interact with such displays; and
    2. the use of the following means by a client system or device to select information or send instructions or requests to the server system, clicking a mouse button over a pre-defined area of displayed information, a sound generated by the user, use of a television remote control, depressing a key on a key pad, using a pointing device, and selection of a displayed indication.
He therefore concluded that the only feature of claims 1, 2 and 4-61 (when dependent upon claim 1) that was not part of the common general knowledge was the feature of placing an order via a ‘single action’.  However, when expressed in such broad terms, the Hearing Officer considered that this was an obvious solution to the problem of reducing the number of steps involved in placing an online order.

He considered it to be a different matter, however, when the invention was defined in the more specific terms of implementation using browser cookies (or ‘server-provided client identifiers’, as they are described in the claims).  There was no clear teaching or suggestion of such an approach in any of the prior art, nor any satisfactory evidence that the skilled person would have considered this to be an obvious approach at the time.  Thus claims 3 and 62 to 141, which all include this feature, were found to be valid (see paragraphs [93]-[96]).

SURVIVING CLAIMS

Telstra was partially successful in its opposition, and costs were therefore awarded against Amazon.  (It should be noted, however, that costs before the Patent Office are generally strictly circumscribed, and Telstra is unlikely to be awarded any more than A$10,000-A$15,000, despite the protracted nature of the opposition.)

However, this ‘success’ is likely to be of little comfort.  Since the application was found to contain patentable subject matter, Amazon has been allowed 60 days within which to propose amendments to overcome the successful grounds of opposition.  Amazon can simply delete the invalid claims, and amend the remaining claims as appropriate.

The broadest surviving claim is claim 3 which, if rewritten in independent form, can be expressed as follows:

A method for ordering an item using a client system, the method comprising:
  1. displaying information identifying the item and displaying an indication of a single action that is to be performed to order the identified item; and
  2. in response to the indicated single action being performed, sending to a server system a request to order the identified item,
  3. wherein the server system uses an identifier sent along with the request to identify additional information needed to generate an order for the item, and
  4. wherein the identifier identifies the client system and the server system provides the identifier to the client system.

This claim defines the broad ‘1-click’ ordering system, as implemented using browser cookies, i.e. the only practical implementation on the World Wide Web!

As far as we are aware, this is the broadest surviving claim of any of the ‘1-click’ patent family members.  It is certainly broader than the main independent claims in the US and Canadian patents (which are similar in scope to claim 62 of the Australian patent application).

We therefore imagine that Amazon will be celebrating its ‘loss’ in the opposition, while Telstra can take little comfort from its ‘win’.

CONCLUSION

Having been filed in 1998, the ‘1-click’ patent is now more than half way through its 20-year lifespan!  There appear to be good prospects that it may finally proceed to grant in Australia within the coming months.  In Canada, Amazon had little opportunity to celebrate its success in the Federal Court before the Attorney General and Commissioner of Patents filed an appeal (see Amazon '1-Click' Heads for the Canadian Federal Court of Appeal).

While Amazon was able to enforce the US ‘1-click’ patent against Barnes & Noble between 1999 and 2002 (when the suit was settled on confidential terms), we believe that the world has moved on, and further enforcement of the patent seems somewhat unlikely.  Yet Amazon still touts ‘1-click’ ordering on its site, and the mechanism is particularly important to users of its Kindle e-book reader.

From a PR perspective, each time Amazon successfully defends ‘1-click’ against an attack, it sends out the message that – no matter what the detractors may say –  it is the innovator, and any similar ordering systems merely imitators.

2 comments:

Timtamtoboot said...

Not limited to cookies though - any communication including sessions is covered - otherwise no one would care and just bypass the cookie requirement

Patentology (Mark Summerfield) said...

Thanks for your comment, which raises an interesting point about the scope of the claim.

As it stands, the claim requires that a single click result in an order request being sent to the server.  An 'identifier' is sent along with the request which effectively identifies the customer account associated with the 'client system', i.e. the customer computer.  Furthermore, the claim requires that the 'identifier' has been provided by the server server system.

This describes the now-conventional implementation, in which the 'identifier' is a cookie.  But, as you say, maybe it would cover some other session-based implementations.  The identifier could be, for example, carried throughout the session within the URL, and still be within the scope of the claims.

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