Amazon Faces Off Against Patent Trolls Over Banner Ad Technology

Sep 25, 2012

By Kerrie Spencer, staff writer – September 25, 2012

The patent trolls are at it again, and this time they have Facebook, LinkedIn and Amazon in their sights. In what may amount to a questionable set of lawsuits – yes, plural, as they are all filed separately in an attempt to maximize returns – a patent troll from Memphis has sued the Internet giants, claiming that they own the rights to technology used in banner advertising. (1) Although many people find these lawsuits to be dubious, they can result in hefty awards for the plaintiffs should they be successful.

A patent troll is essentially a company that does not do or make anything, but buys up patents and then aggressively pursues alleged patent infringement cases without any intention of ever taking a product to the market. It is a very lucrative business and many trolls do nothing else but sue, largely because they do not have to do anything else.

In this case, B.E. Technologies LLC says Amazon’s Kindle devices violate their technology by serving personalized advertisements. The lawsuit against LinkedIn and Facebook claims the same thing. (1)(2) On the surface, these lawsuits make attorneys do two things simultaneously: roll their eyes but also agree that a case should be taken to court to litigate intellectual property rights. Privately, many wonder what the point is and question the fairness of suing another company for something the plaintiff has no intention of making, producing or manufacturing.

In the suit against Amazon, the patents in question are from 2000 and 2001, and deal with choosing Internet advertising predicated on what applications the viewer was using on their computer when they access certain sites. The lawsuit against Facebook is similar in nature and deals with patent 6,628,314. (1)(2)

Specifically, B.E. Techonologies, LLC, is alleging that the named defendants are using their patented technology, “an automatically upgradeable software application that includes targeted advertising based upon demographics and user interaction with the computer,” (2) to profit from targeted advertisements.

The application is a graphical user interface with a display region for “banner advertising that is downloaded from … a network such as the Internet. [..] when the user runs the program, an ad displays that is relevant to that program.” (1)(2) In other words, if you are looking for spreadsheet programs, you would see ads for other related programs.

The habit of patent trolls to sue opportunistically for profit, while irritating to some and costly to others, does raise a very valid question: Is the patent owner the actual inventor whose intellectual property rights have been infringed upon? If not, then it’s a troll; the kind that hides under the bridge and takes far more than the typical toll for crossing.

To determine if a case constitutes a troll lawsuit, take a close look to see if the firm suing is a shell company. These companies do not make anything – period. They just buy up patents and wait in the weeds for the chance to sue another unsuspecting company. Once the first patent troll suit is successful, the companies then have cash on hand to go chase other patents and companies. And the vicious cycle continues.

The interesting thing about B.E. Techonologies, LLC is that it looks very much like the only thing they do is litigate. Additionally, the batch of patents they are sitting on, and slowly suing their way through, are from an era when the U.S. Patent Office approved some questionable items. For instance, U.S. patent US6368227, which relates to the method of swinging on a swing. (3) Holding the laughter for a second, it is not hard to see why patent trolls often end up making money from some of the patents they buy. When a patent gets issued that describes how to swing on a swing, it offers ripe fruit for the trolls’ picking. Perhaps the issue of patent trolling is more complex than companies just suing because they can. It appears the Patent Office might have something to do with the issue as well.

Amazon, Facebook and LinkedIn may be none too surprised to be sued again, but are not happy with the prospect of shelling out millions of dollars to defend their technology. They are wise to the trolls, and over time the trolls have have begun suing smaller start-up companies because they will settle more quickly out of court, simply because they do not have the same kind of money on hand that the big boys do.

Aside from requesting damages, what else does B.E. Technologies LLC., want? They want Amazon, LinkedIn and Facebook to be barred from using the technology. Things may get interesting in this case, and the Facebook complaint is well worth a read: