September 9, 1996 5:30 PM PDT

E-Data must explain itself, again

In the latest development of a potentially influential patent case, a federal judge on Friday ordered online entrepreneur E-Data to give a more detailed report of its claims of patent infringement, after defendants in the case complained that E-Data hadn't complied with the judge's original request for clarification.

In March, E-Data added to a previous lawsuit by filing charges of patent infringement against 22 companies, including CompuServe, Intuit, and Broderbund, that sell encrypted electronic data over the Internet or CD-ROM. So far, 9 of the original 22 defendants have chosen to settle for undisclosed amounts.

In June, U.S. District Court Judge Barbara Jones ordered the small Secaucus, New Jersey company to specify how the defendants have been infringing upon patent 4,528,643, "System for Reproducing Information In Material Objects at a Point of Sale Location," which the company bought two years ago. The patent, which could give E-Data a slice of many electronic commerce transactions on the Internet, was granted in 1985 to computer scientist Charles Freeny.

After examining the details submitted last month, Judge Jones agreed with the defendants that the details did not meet her requirements, and she ordered E-Data to go back to the drawing board.

"I guess it isn't enough to tell a company that distributes software that they're distributing software," said E-Data president Arnold Freilich.

The parties met Friday via private conference call. "All the defendants whined about how E-Data attorney David Fink didn't comply with the order," said Mark Voorhees, editor of the online newsletter Information Law Alert. "It was a very civilized schoolyard beating of E-Data."

Voorhees agreed, however, that although the E-Data report submitted by the original deadline of August 25 outlined the company's complaints reasonably well, it did not supply enough specifics.

"The report just duplicates itself over and over," said Voorhees. "It does delimit the claims somewhat but not as much as you would think a 264-page report would do."

E-Data must sumbit a more detailed report by November 8, and the defendants are due to respond on November 18. A formal hearing is scheduled for December 3.


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