Amazon settles with IBM over technology

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Amazon.com has paid an unspecified amount to IBM to settle a patent dispute that challenged some of the core technology underpinning its e-commerce site.

The agreement resolves an unusual legal battle that broke out late last year, as IBM moved to enforce part of its extensive holdings of intellectual property.

The technology giant rarely takes legal action in high-profile cases like this, preferring to license out its technology to others in a business that brings in about $1bn in revenue a year. The dispute with Amazon spilled over into the courts after what IBM claimed were four years of fruitless discussions over a licensing deal.

The IBM suit accused Amazon of infringing on five long-standing patents that dealt with various fundamental aspects of networking and e-commerce.

They included the use of recommendations to suggest other products to people who buy things on Amazon, a familiar feature of the site. In a counter-suit against IBM, Amazon later claimed that two of its own patents had been breached by IBM.

The case drew considerable attention in legal circles, particularly given Amazon’s own earlier legal defence of its “one-click” shopping patent against online rival BarnesandNoble.com.

That case came to symbolise what many critics claim is wrong with the US patent system, since it suggested that a company could lay claim to fundamental business processes.

As part of Tuesday’s settlement, the ecommerce company will also license IBM’s wider portfolio of intellectual property. Scott Hayden, head of IP at Amazon, called IBM’s patent portfolio “the largest and strongest in the IT industry”. Having access to it would give Amazon “greater freedom to innovate for our customers”, he said.

Dan Cerutti, head of software IP at IBM, said: “We’re pleased this matter has been resolved through negotiation and licensing. We look forward to more productive relationship with Amazon in the future.”

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