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Sitemap Aug-Archive-05 Amazon To Pay $40 Million To Settle E-Commerce Patent Case

Amazon To Pay $40 Million To Settle E-Commerce Patent Case  

Amazon.com has agreed to pay US$ 40 million to settle year-old patent infringement lawsuit just days before the case was set to go to trial.

Under the terms of settlement, Amazon will make a one-time payment of $40 million in the third quarter of this year, and Soverain will grant Amazon a non-exclusive license to its patent portfolio and dismiss all claims, the SEC filing says. Soverain, based in Chicago, filed the lawsuit on Jan. 12, 2004, in the U.S. District Court for the Eastern District of Texas.

We are pleased to have reached an agreement with Amazon, and to have them as one of our patent licensees, said Katharine Wolanyk, Soverain president, in a statement. Soverain's intellectual property is essential to the ongoing development of our software product Transact and the future of our company.

Soverain sued Amazon and clothing company Gap early in 2004, saying both violated a handful of the patents it holds for controlling how e-commerce takes place in back-end systems. Gap and Soverain had previously reached an undisclosed settlement as well.

The e-commerce company amended its complaint on October 2004 adding infringement of two additional patents in the areas of digital active advertising and open network payment system.

Soverain traces its history to the 1990s and later bought technology from Open Market that is now the basis of its Transact platform of e-commerce infrastructure.

The patents at issue deal with common e-commerce processing matters. For example, one allows e-commerce merchants to recognize a customer when he or she makes multiple inquiries on a Web site during a shopping session or when that person makes a return visit.

Amazon will make the one-time payment to Soverain Software of Chicago. In exchange, Soverain agreed to drop all claims that Amazon violated five of its core e-commerce technology patents covering things such as controlling server access and monitoring sales systems.

As is typical with such settlements, Amazon did not acknowledge any wrongdoing, but instead said it moved to settle in order to avoid a potentially lengthy and costly litigation. The settlement also makes Amazon a non-exclusive licensee of some of Soverain's technology.

Soverain's Web site says the company's Transact platform has about 3,000 users worldwide. In addition to its Chicago headquarters, the company maintains development and support operations in Burlington, Mass., and Hyderabad, India.

Analysts said Amazon is wise to minimize distractions such as costly suits at a time when it is struggling to be consistently profitable. Though Amazon continues to be one of the most dominant e-commerce players in the consumer space alongside eBay, its penchant for discounts, such as its free shipping promotions, has hurt its ability to stay in the black.

Meanwhile, one of the biggest questions surrounding Amazon today -- the e-tailer recently marked its 10th anniversary -- is when it will formally launch its own digital music product. Many observers believe such a move could happen in a matter of weeks. Amazon has been surveying its customers about their music preferences and recently posted a job listing for a music program director.

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