As a writer, I get lots of press kits. Most of them are pretty boring; some of them are pretty creative. Before they caught the suspected Unabomber, some of them were even pretty scary. When a press-kit-like package from E-Data arrived this month, I figured it was one of the more boring ones. When I opened it up, I found an offer of “amnesty” for alleged patent infringement by ARTS & FARCES. All I had to do was sign a license agreement and pony up cash. Potentially lots of cash. As you can see below, E-Data’s amnesty offer also carried a threat.
E-Data, a Utah Corporation located in Secaucus, NJ. that runs a gift shop on the Web, claims it owns a patent on electronic transactions. Well, technically, the patent E-Data holds, U.S. Patent No. 4,528,643, relates to a “system for reproducing information in material objects at a point of sale location.” E-Data’s position seems to be that this 1985 patent, which it acquired about two years ago, grants it ownership over the means of electronically distributing digital data to a purchaser either online or on encrypted electronic media like CD-ROMs.
If E-Data's patent holds up -- a court date of August 22, 1996 has been set in New York's federal court -- anyone who sells anything electronically will probably have to pay the hefty E-Data licensing fees:
| Net Sales | Yearly License Fee | |||||
| Over | Under | 1996 | 1997 | 1998 | 1999 | 2000 |
| $5,000,000 | Subject to individual negotiation | |||||
| $3,000,000 | $5,000,000 | $40,000 | $44,000 | $48,000 | $52,000 | $56,000 |
| $1,500,000 | $3,000,000 | $25,000 | $27,500 | $30,000 | $32,500 | $35,000 |
| $750,000 | $1,500,000 | $15,000 | $16,500 | $18,000 | $19,500 | $21,000 |
| $400,000 | $750,000 | $10,000 | $11,000 | $12,000 | $13,000 | $14,000 |
| $200,000 | $400,000 | $7,500 | $8,250 | $9,000 | $9,750 | $10,500 |
| $100,000 | $200,000 | $4,000 | $4,400 | $4,800 | $5,200 | $5,600 |
| $50,000 | $100,000 | $2,500 | $2,750 | $3,000 | $3,250 | $3,500 |
| $25,000 | $50,000 | $1,000 | $1,100 | $1,200 | $1,300 | $1,400 |
| $0 | $25,000 | $500 | $550 | $600 | $650 | $700 |
Surprise! If you charged someone for something you sold electronically on the Net and earned a net profit of US$0.01 you may owe E-Data US$500 on that penny profit.
The August trial pits E-Data against more than 20 high-profile defendants including Broderbund, CompuServe, Dun & Bradstreet, Intuit, and Ziff-Davis. In addition, 75,000 of the "Amnesty Packets" (like the one I received) were sent out to companies E-Data feels are infringing its patent.
Reportedly, several companies -- including Adobe and IBM -- have paid E-Data an undisclosed licensing fee. E-Data has negotiated a license arrangement with First Virtual to use that company's Internet payment system for all online purchases of E-Data licenses.
It seems obvious that what's happened is that a company has purchased an old patent with the sole apparent intent of interpreting that patent as broadly as possible, hoping to cash in on the Internet craze. There seems to be no shortage of bottom-feeders anxious to try to own that which can't even be seen, let alone held. And Adobe and IBM? Shame on you for caving in to this nonsense. We use your tools to ply our trade. If we go, so do you and you should know that by now. The solution is simple enough for even the lowest of the bottom-feeders.
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