Apple, PayPal, and Victoria's Secret have been slapped with a patent-infringement suit which alleges that their one-click online transaction-processing systems violate a 2004 patent held by a pair of companies that are no strangers to legal dust-ups.
The suit was filed in the US District Court for the District of Delaware – a state with favorable corporate laws – by Efficient Online Purchasing LLC and Cordance Corporation.
Efficient Online Purchasing appears to be a mere shell company: it shares the same Newport Beach, California, address as Acacia Research Corporation, a patent-management firm that describes itself as a "Leader in Patent Licensing" and which says on its website that its "subsidiaries partner with inventors and patent owners, license the patents to corporate users, and share the revenue."
According to paidContent.org, that sharing is "typically on a 50-50 basis."
Cordance, as the complaint notes, was formerly known as OneName Corporation, which, according to Bloomberg Businessweek, filed for Chapter 11 bankruptcy protection in 2003. Cordance – whose News & Events web page hasn't been updated since mid-2006 – refers to itself as "the pioneering developer and provider of digital addressing technology".
This week's lawsuit isn't the first in Cordance's online transaction-processing patent-infringment follies.
A bit of background: Back at the end of the previous millennium, Amazon sued bookseller Barnes & Noble for patent infringement over its US Patent Number 6,269,369, which it claimed covered "1-Click" online transations. Although a US District Court quickly granted the online mega-retailer an injunction preventing others from using similar checkout tech, that injunction was overturned on appeal in early 2001. Just over a year later, Amazon and Barnes & Noble announced a settlement, though terms were not disclosed.
Amazon continued to defend its 1-Click patent, however, despite a 2006 patent infringement complaint against it from – wait for it – none other than Cordance Corporation. Four Cordance patents were in question at that time, including US Patent Number 6,757,710, the one in question in the just-filed suit against Apple, PayPal, and Victoria's Secret.
Cordance's 129-page patent – replete with 47 pages of patent diagrams, flowcharts, and screenshots – that is at the center of this week's complaint, and which was included in the company's 2006 complaint against Amazon, is entitled "Object-based on-line transaction infrastructure", and was granted to OneName Corporation in June 2004.
The core allegation of the lawsuit is the same 1-Click concept that was at the center of Cordance's tussle with Amazon. Specifically, the complaint alleges that "Apple has infringed, and continues to infring, literally or under the doctrine of equivalents, the '710 patent, at least by implementing its iTunes purchasing platform," and that the alledged infringment is "knowing and willful."
The complaint also alleges the same infringement by PayPal for its "'Check-out with PayPal' purchasing platform", and Victoria's Secret for its "'1-step express checkout' functionality." Interestingly, the complaints against these two latter defendants don't include the "knowing and willful" clause – one that can triple damages if proven.
From the point of view of Efficient Online Purchasing and Cordance Corporation, Apple, PayPal, and Victoria's Secret's manner of storing customer information in such a way as to enable one-click – or 1-Click – checkout is protected by their patent, and they want a piece of the action.
If the court or a jury (the complaint "demands" a jury trial) goes the Amazon route, the entire exercise will be another futile one for Cordance. If, however, things go their way, or if an out-of-court settlement is reached, there may be a nice chunk of change for the two plaintiffs to split 50-50. ®