Amazon Patents E-Commerce Technology
By Michael J. Martinez
AP Business Writer
Friday, Feb. 25, 2000; 6:43 p.m. EST SEATTLE In a move that could shake up electronic commerce, Internet retailer Amazon.com has patented a technology that lets other Web sites send it customers in exchange for a commission.
These "affiliate programs" are commonly used by many sites, including Amazon competitors, to enhance sales. Amazon's possession of a patent on the technology could allow the company to prohibit others from using it, or Amazon could charge them a fee if they want to use it.
"If they choose to enforce this, it may radically impact aspects of emerging technology for Web shopping," Rob Labatt, an analyst at the research firm Gartner Group, said Friday. "The $64,000 question is whether they'll enforce it."
Amazon.com wouldn't say Friday what plans it has for the new patent.
"We never speculate about what we may or may not do in the future," company spokesman Bill Curry said. The company applied for the patent on June 27, 1997 and received it Tuesday.
In an affiliate program, a Web site can display part of a retailer's catalog then link to the retailer to complete the purchase. The affiliate then gets a percentage of the transaction as a referral fee.
Amazon's far-reaching patent covers nearly all aspects of its affiliate program, from the process used to apply to become an affiliate, the technology used to link Amazon's databases to the affiliate site and the billing system used to make sure the affiliate gets its share of the profits.
"This is pretty broad," said Walter Linder, a patent attorney with Faegre & Benson LLP in Minneapolis. "I think there might be a lot of Web sites that will have to change their affiliate programs to get around this."
Linder said the patent could even be broad enough to cover single links that would simply go from an affiliate to Amazon's home page, instead of to specific items.
Amazon could choose to license its patented affiliate system to Web sites that already use it, or could sue rival sites to get them to stop using it, Linder said.
On Sept. 28, Amazon received a patent for its One-Click technology, used by previously registered Amazon customers to buy an item with just "one click" of a mouse.
It then sued one of its biggest competitors, bookseller barnesandnoble.com, to get it to stop using a similar single-step purchase system. The suit is pending.
Like simplified online ordering, affiliate programs are very common with e-commerce sites, which benefit from the increased traffic and sales. Smaller sites often affiliate themselves with many different Internet retailers in order to generate more money.
"Are they going to patent air next?" said John Segrich, an analyst with CIBC World Markets Corp., who follows Amazon.com. "I would certainly think that this will be quickly challenged."
While its suit is pending, Amazon.com won a temporary injunction barring Barnesandnoble.com from using its own single-click service. That service has 280,000 affiliate members.
Barnesandnoble.com, music retailer CDNow, online pet stores Pets.com and Petopia.com and many other e-commerce sites have affiliate deals, but they had no immediate reaction on the patent award Friday. Barnesandnoble.com and CDNow said they wanted to read and analyze the patent first.
© Copyright 2000 The Associated Press