Controversial patent hangs in the balance

A controversial patent on international e-commerce transactions has been opposed within days of being sealed by Australia’s patent administrator, IP Australia.

The patent was filed in Australia three months ago by a Canadian company called DE Technologies. DE, led by a president who is a qualified patent attorney, has been attempting to have a patent approved for international e-commerce transactions since the late 1990s. The company finally succeeded in the US in October 2002, and has since filed the same patent in New Zealand, Singapore and Australia.

The patent worries many industry figures as unlike other patents placed on e-commerce technology, such as those filed by, DE Technologies has signaled its intent to aggressively coerce e-commerce companies into paying it licensing fees for breaches of the patent.

DE Technologies hired Hamilton-based law firm, Parks & Wells, to send letters to e-tailers in New Zealand claiming intellectual property rights for some of the features of their e-commerce sites.

The letter claims that by merely accepting international orders on their sites the e-tailers are infringing on the patent. In order to avoid legal action, they are asked to license the technology for a fee of $NZ10,000 to $NZ25,000 as well as paying a 1.5 per cent royalty on all transactions. The letter demands a response within a fortnight.

New Zealand’s e-tailers and Web hosting firms initially reacted with bemusement to the letter but have since realised the massive ram­ifications of the issue after realising that the Intellectual Property Office of New Zealand had indeed approved the patent.

“It appears this company is using New Zealand as a test-bed to see if it gets up,” said Matthew Tutaki, a vocal member of the IT community in Australia.

Tutaki fears for the local IT industry if DE Technologies’ strategy in New Zealand travels across the Tasman.

While no companies in Australia have received threatening legal letters yet, DE Technologies did manage to file the patent with IP Australia earlier in 1999 and it was accepted by the administrator several months ago. However, IP Australia allows for a three-month review process whereby parties can oppose the granting of a patent before it is officially sealed. And one party has managed to do so at the last minute.

“We were set to seal it this week,” deputy commissioner of patents, Janet Werner, said. “We only found out about the opposition to it a couple of days ago. When we first accept a patent, we advertise it in our official journal and seal it within three months of that publication. This opposition came through slightly after that three months, but included a submission for extending the time for considering the patent. Now we are in the preliminary stage of examining this opposition claim.”

Tutaki is upset that such a patent could be approved by the administrator in the first place, especially considering the dramatic events occurring in New Zealand.

“What the hell is IP Australia doing approving this?” he asked. “At no stage should IP Australia have allowed a foreign company the rights of ownership of e-commerce in this country.

“This is like being the pope, and putting a patent on the air we all breathe, because you fundamentally believe that your CEO, God, invented the Universe. It is ludicrous.”

He would undertake a “personal crusade” over the matter, and was seeking support from the wider Australian IT industry.

In New Zealand, e-tailers have banded together to lobby against the patent ( and are considering legal action to force their Government to intervene.

Werner explained that the process for settling a patent dispute in Australia was a long one. Those that oppose the patent have three months in which to provide evidence as to why the contents of the patent are not new, those that filed the patent have a further three months to refute this evidence, and then those that oppose the patent have yet another three months to state their case in the context of this rebuttal. Finally, the matter is decided by a delegate of the commissioner.