No escape for patent 'pirates'

DE Technologies is unfazed by the storm of protest surrounding attempts to enforce its Australian and New Zealand patent covering e-commerce systems, and has vowed to make infringers pay up.

Ed Pool, chief executive of DE Technologies, told IDG last week that some local firms were “technology pirates” and raised the possibility of taking action against them using US laws.

DE Technologies, based in Quebec and Virginia, holds a New Zealand patent titled “Universal shopping centre for international operation”, and has sent letters to some local e-tailers demanding licence fees of $10,000, a 1.5 per cent royalty on all transactions and an 11c “per document” charge.

“We will at a time and place of our choosing vigorously enforce our property rights,” Pool said in an email interview. “No matter how these violators band together at the end of the day a licence will be required by the firms.”

Firms that contest the patent may not be granted a licence to use the system, Pool said.

“They can split the cost of litigation, but we are under no obligation to license after winning in a court of law. Do you really think that I would now approve licensing of the [US] patent which they - the violators or worse pirates - will need to import their products into the United States via computer to computer systems? Only innocent infringers will be given this opportunity and only if they comply with NZ law.”

Pool said he’s unsurprised by the furore the patent demands have aroused, but claimed commentators don’t understand what the patent covers. He denies attempting to patent all e-commerce activity.

“The reaction from the New Zealand technology pirates - innocent infringers excluded - is like going into a prison and asking those convicted of robbery if they did it. I think you would find the great majority would say ‘I am innocent’ even though their peers convicted them,” Pool said.

Asked whether the claim could have been handled differently in hindsight, Pool is blunt. Rather than approach e-tailers in New Zealand he’d have gone straight to the US International Trade Commission.

“In retrospect I would have simply gone to the ITC in October of 2002 and obtained a ruling which would allow seizure of infringing companies’ products being imported into our markets,” he said.

“If you are going to steal intellectual property and be highly anti-American then you should not be allowed to rob Americans of our jobs and our dignity … any American firm is going to think long and hard about investing resources into a country that not only disrespects US IP law but their own as well.

“No one is going to invest years of their lives and their personal funds to be innovative if piracy and theft of same is tolerated.”

DE Technologies has been granted its patent in three countries, Pool said, which IDG understands to be New Zealand, the US and Singapore. Pool states a readiness to use US law against infringers in other countries.

Asked how certain DET is that all the businesses that received infringement notices were actually infringing the patent, Pool said an “infringement analysis” had been performed. “Not only are they violating the property laws in NZ but most are violating US 6,460,020,” he said.

“This will now allow us to move through our legal system to have infringing companies’ products seized by US Customs and elevate this from a civil to criminal matter.”

Asked why DET was not deploying a system of its own, Pool said an implementation was attempted in 1999 but was cancelled due to interference by “a very large company”. He refused to say whether the firm has any existing licensees.

IDG interviewed Pool in 2000 and 2001. In March 2001 Pool was looking for a buyer for the patent. He said the terrorist attacks of September 11, 2001 ended that effort.

About 15 New Zealand companies have been contacted by DET, Pool claimed.

Meanwhile, one local developer says DE Technologies should accept it has a fight on its hands and leave New Zealand e-tailers alone.

“The best thing that could happen now is that DET roll over and go back to try something useful and something that really is unique,” said Richard Shearer, CEO of software developer WebFarm. Shearer is one of the organisers of a website set up to combat DET’s patent claims,

If the courts do become involved, Shearer said he’s confident the search for prior art — examples of similar systems that predate a patent and might be used to challenge it — has turned up some useful information.

“I think there’s prior art out there,” he says. “The focus now is on sorting out the wheat from the chaff.”

“We have got a couple of gems among the many submissions of prior art.”

The deadline for local businesses to respond to DET’s New Zealand lawyers, James & Wells, passed early last week.