August 27, 1996 4:00 PM PDT

E-Data claims patent infringement

Online entrepreneur E-Data filed papers in U.S. District Court yesterday that detailed the company's claims of patent infringement against 13 defendants, including CompuServe, Intuit, and Broderbund.

In June, Judge Barbara Jones of the Southern District of New York ordered E-Data, which owns a 1985 patent that covers methods of electronic distribution and purchase of digital data, to explain each of the patent's 56 claims and to clarify each claim of infringement. Defendants had complained that the original charges were too vague.

U.S. patent No. 4,528,643, which was granted in 1985 to computer scientist Charles Freeny and bought by E-Data two years ago, could conceivably give the small New Jersey company a slice of most electronic commercial transactions, including purchases made over the Internet.

"Dr. Freeny brilliantly conceived systems anticipating the recent rush of electronic distribution through the Internet and other now economical channels," said E-Data counsel David Fink in a prepared statement.

Opponents hope to produce evidence, or "prior art" of examples that predate the Freeny patent and thus invalidate its claims of originality. One such example could be the Telephone Software Connection, a one-man company in Southern California that sold software over dial-up modem connections in the late 1970s and early 1980s.

Judge Jones, who has scheduled a conference call for September 6 with E-Data and the defendants, has the right to invalidate the patent if she so chooses.

Meanwhile, defense attorneys will convene next week to discuss E-Data's claims.

"I think the attorneys are pleased with the way things are going so far," said CompuServe spokeswoman Gail Whitcomb. "The case is moving along quickly, but it will depend on how this document plays out."

E-Data announced yesterday that two defendants in a similar trial in Connecticut agreed to sign licenses for undisclosed amounts in exchange for having charges against them dismissed. IBM, VocalTec, and Adobe have also signed licenses as part of E-Data's recent "Carrot or Stick" amnesty program. Observers say such practice among larger companies is not uncommon in such cases when the legal expenses promise to outstrip the cost of a license.

Related stories:
E-Data royalty claims challenged
E-Data ordered to prove its point
Small patent may have big impact

 

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