Eolas Technologies, a company that ground through a years-long patent infringement lawsuit against Microsoft, now has sued a large swath of corporate powers for infringement of that same patent and another related patent concerning interactive programs on Web sites.
The list of defendants includes many high-profile companies inside and outside the tech world: Adobe Systems, Amazon, Apple, Blockbuster, Citigroup, eBay, Frito-Lay, Go Daddy, Google, J.C. Penney, JPMorgan Chase, Office Depot, Perot Systems, Playboy Enterprises, Staples, Sun Microsystems, Texas Instruments, Yahoo, and YouTube.
Eolas' suit is not to be taken lightly. Although the earlier Microsoft case took many years to resolve, and Eolas by no means won a complete victory, the patent involved did overall withstand heavy legal challenges despite many on the Web rallying to Microsoft's aid. Microsoft and Eolas won't describe terms of their 2007 settlement of the patent case, but Eolas did say it expected to pay its shareholders a 2007 dividend afterward.
"What distinguishes this case from most patent suits is that so many established companies named as defendants are infringing a patent that has been ruled valid by the Patent Office on three occasions," said Mike McKool, head of the national law firm McKool Smith and Eolas' lead attorney.
This diagram shows one example of the newly granted Eolas patent 7,599,985 in use.
(Credit: Eolas)The U.S. District Court suit, filed in the eastern district of Texas, seeks preliminary and permanent injunctions prohibiting the plaintiffs from using the patented technology; payment for damages from infringement, including treble damages because the alleged infringement was willful; attorney's fees; and a jury trial.
Eolas conducts research and development but also has a separate licensing department. "Eolas seeks to return value to its shareholders by commercializing these technologies through strategic alliances, licensing and spin-offs," the company says of itself.
The earlier Microsoft case involved U.S. patent 5,838,906, "Distributed hypermedia method for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document," which involved browsers launching a helper application such as Adobe Flash.
In the new case, that patent is joined by a newer one granted Tuesday, No., 7,599,985, with a very similar title: "Distributed hypermedia method and system for automatically invoking external application providing interaction and display of embedded objects within a hypermedia document."
"The '985 Patent is a continuation of the '906 patent, and allows Web sites to add fully-interactive embedded applications to their online offerings through the use of plug-in and Ajax (asynchronous JavaScript and XML) Web development techniques," Eolas said in a statement about the lawsuit.
Ajax caught on midway through the decade as a way to endow Web pages with interactive features based in part on the JavaScript programming language. Ajax is used in many Web sites including Google Maps and Yahoo Mail.
The '985 patent, originally filed Aug. 9, 2002, involves a program embedded in a Web page--or "hypermedia document," as the patent language calls it more generally. Here's an excerpt from the patent abstract's description of the technology:
A system allowing user of a browser program on a computer connected to an open distributed hypermedia to access and execute an embedded programming object. The program object is embedded into a hypermedia document much like data objects.
The user may select the program object from the screen. Once selected the program executes on the user's (client's) computer or may execute on a remote server or additional remote computers in a distributed processing arrangement.
After launching the program object, the user is able to interact with the object as the invention provides for ongoing interprocess communication between the application object (program) and the browser program.
And later, in a bit more detail:
The present invention allows a user at a client computer connected to a network to locate, retrieve, and manipulate objects in an interactive way. The invention not only allows the user to use a hypermedia format to locate and retrieve program objects, but also allows the user to interact with an application program located at a remote computer.
Interprocess communication between the hypermedia browser and the embedded application program is ongoing after the program object has been launched. The use is able to use a vast amount of computing power beyond that which is contained in the user's client computer.
Apple, Google, Yahoo, Texas Instruments, and Office Depot each declined to comment on the suit. Staples, Playboy, Sun, Blockbuster, Citigroup, eBay, Frito-Lay, J.C. Penney, JPMorgan Chase, Adobe, and Perot Systems didn't immediately respond to requests for comment.
Elizabeth Driscoll, vice president of public relations for Go Daddy, said in a statement, "We have not seen the lawsuit and, therefore, cannot comment on it. However, we are unaware of the basis for any such claims and we will defend the case vigorously."
Updated 1:26 p.m., 2:09 p.m., 2:35 p.m., and 4:08 p.m. PDT with comment from companies.
This was originally posted at Between the Lines. It was updated at 3:25 p.m. PDT with Amazon adding Hawaii to the list of states where it's pulled its Associates program.
Amazon.com is in a high-profile tax showdown with states over its Associates referral program and is likely to come out a winner either way.
Amazon has pulled its Associates program, which allows Web site operators to drive sales to the e-tailer in exchange for commissions of up to 15 percent, in North Carolina and Rhode Island. And on Tuesday, Amazon also added Hawaii to its hitlist, according to The Wall Street Journal.
States are hurting for revenue and are trying to force Amazon to collect sales taxes on its associates. Simply put, states are trying to treat associate Web sites as if they are physical assets of Amazon.
Amazon's response: Cut out associates in the states where tax bills are proceeding.
Providence Business News reported that Amazon cut its ties with business affiliates in Rhode Island over a bill that would force it to collect sales tax on referrals via authors or businesses in the state. Amazon had the same reaction to a similar tax-happy move by North Carolina. These battles will be fought state by state, depending on the return on Amazon's marketing dollars.
Bernstein Research analyst Jeffrey Lindsay summarizes the situation:
The issue is collection of sales taxes--several states are trying tactics developed by then-Gov. Eliot Spitzer in New York to try to force Amazon to collect sales taxes on online sales made in their states. In 2008, Spitzer argued (and the courts upheld his view) that if Amazon has affiliates in the state where sales were made, that counted as "in-state" presence, and sales taxes must be collected.
Amazon's response to the latest move by cash-strapped states hoping to follow New York's lead has been to terminate relationships with in-state affiliates in a rapidly escalating game of chicken. It is not clear where this game may end, but clearly, Amazon is prepared to tolerate some pain to maintain its sales tax collection exemption for the majority of states.
While loss of affiliates in some smaller states may not be an insurmountable problem, it now looks as if California may be next to impose the "affiliate rule," and this may be more difficult to circumvent. Even if the states prevail, however, we do not believe the impact upon Amazon will be large.
Given Amazon's response and states' desperation for tax revenue, it doesn't take a brain surgeon to figure this showdown will escalate. What would happen if Amazon just shut down its Associates program in all states?
Amazon could win. Think about it: If Amazon was really dependent on the Associates program for a huge portion of sales would it really just pull it that quickly? Amazon in its SEC filings doesn't break out revenue garnered from its referral program or its total expense.
However, Amazon does drop a few hints. In a blog post, Amazon says, "We pay out hundreds of millions of dollars per year to Web sites that advertise our products."
In other words, these commissions can add up:
Amazon.com commissions, or referral fees, can indeed add up.
(Credit: Amazon.com)In Amazon's SEC filings, it explains that the Associates program falls under its marketing spending line. According to Amazon's annual report:
We direct customers to our Web sites primarily through a number of targeted online-marketing channels, such as our Associates program, sponsored search, portal advertising, e-mail campaigns, and other initiatives. Our marketing expenses are largely variable, based on growth in sales and changes in rates.
To the extent there is increased or decreased competition for these traffic sources, or to the extent our mix of these channels shifts, we would expect to see a corresponding change in our marketing expense or its effect.
Marketing costs increased in absolute dollars in 2008, compared to 2007 and 2006, due to increased spending in variable online-marketing channels, such as our Associates program and sponsored-search programs.
While costs associated with free shipping are not included in marketing expense, we view free-shipping offers and Amazon Prime as effective worldwide marketing tools, and intend to continue offering them indefinitely.
The big question is whether Amazon's referral program accounts for the bulk of the company's marketing expense. For the year ended December 31, 2008, Amazon reported marketing expenses of $482 million, up from $344 million in 2007 and $263 million in 2006.
It's hard to quantify the connection between referrals and Amazon's sales, but chances are good that the company has word of mouth, habits, and low prices at its back these days. Simply put, if Amazon cuts its Associates program in every state, its marketing expenses would fall dramatically and ultimately boost earnings. And Amazon would likely land the sale, anyway. Meanwhile, these small businesses that like Amazon's commissions will be screaming at their state legislators.
JPMorgan analyst Imran Khan writes in a research note:
Although the affiliate network changes could result in some lost sales, Amazon will have the ability to shift marketing spend into other arenas. We think the company can continue to focus its marketing on the areas that deliver the best (return on investment), mitigating the impact of losing some affiliates.
The state tax flap is an interesting showdown, but Amazon has done the math internally. The e-tailer appears confident that it can win a game of chicken.
Republican John McCain and Democrat Barack Obama will go at it once again Tuesday night during the second official presidential debate, this one in the form of a town hall meeting.
The 90-minute debate, moderated by NBC News' Tom Brokaw, kicks off at 9 p.m. EDT at Belmont University in Nashville, Tenn., and you can follow it live online at the CBS News Debate Webcast site.
Immediately following the debate, stay with the site for a Web-only analysis and commentary with Katie Couric, the CBS News political team, and guests. You can also submit your own questions, now or during the event, at the Debate Webcast site.
We'll offer the same exclusive Web coverage for the final presidential debate on October 15.
You can check out the post-debate Webcast from the first presidential debate here: Examining McCain-Obama debate No. 1. Watch the Webcast from the first and only vice presidential debate here: Examining the Biden-Palin debate.
Here's an old photo of Hans Reiser from his Stanford days. A San Francisco Chronicle reporter said at his sentencing Friday, however, Reiser's hair was grown out and he looked more like Art Garfunkel.
(Credit: via Stanford University)
In what appears the final chapter of the Hans Reiser crime saga, the Linux programmer convicted of killing his wife was sentenced Friday afternoon to 15 years to life in prison under a deal he worked out with prosecutors in exchange for leading police to his victim's body.
Reiser--known to the technology world as the founder of the ReiserFS file system software--was found guilty in April of first-degree murder in the 2006 killing of his wife, with whom he was undergoing a bitter divorce. The jury convicted him largely on circumstantial evidence and despite the fact that Nina Reiser's body hadn't been found before trial.
First-degree murder carries a sentence of 25 years to life, compared with 15 years to life for second-degree murder. But in anticipation of his sentencing, Reiser, 44, brokered a deal with prosecutors that went generally like so: If he brought police to his wife's body and he gave up his appellate rights, he could plead guilty to second-degree murder and get 15 years.
And that's what happened in an Oakland, Calif., courthouse Friday, after Reiser pleaded guilty to second-degree murder, according to media reports. He'll be eligible for parole in about 13 years, having already served two years since his October 2006 arrest.
Throughout the drama-filled six-month trial, Reiser maintained his innocence. Arguing the so-called geek defense, his attorney said that while Reiser may be strange, arrogant, even abnormal, his odd behavior following Nina's disappearance wasn't evidence of murder. On trial, Reiser smeared the mother of his two children, alleging, among other things, that she was likely hiding out in her native Russia with money she stole from his now defunct company, Namesys.
Nina Reiser's remains were found in Oakland's Redwood Regional Park, about a half a mile from where she was last seen. Click image for full map.
(Credit: Google)Reiser, handcuffed to his attorney, did in fact bring authorities to a grave site Monday containing his wife's remains in a heavily brushed, secluded area about 40 yards off a road in Oakland's Redwood Regional Park. The grave site was located about a half mile from where Nina was last seen in 2006 at Reiser's mother's house, where he was living.
It's unclear whether the cause of death was ever determined through an autopsy. But Wired reported that after the sentencing, prosecutor Paul Hora revealed some of the details from Reiser's confession. Reiser first punched Nina in the mouth, then strangled her to death, Hora said. Hora added that Reiser "stored the body in the bathroom, then moved it to his car, where it stayed for two days while he searched for a place to bury her," according to Wired.
Wired's David Kravets added that before he was formally sentenced, Reiser vowed to make up to society for what he had done and said he was putting Namesys and ReiserFS into a trust fund for his children. Reiser added that he hoped to earn money for his kids while in prison, assuming he's "able to get access to a computer and the Internet," according to Kravets.
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