Law Firm going after individual sellers on Amazon for Patent Violation

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I don’t know enough about this right now to go and make the statement of if this is a valid legal issue, or if this is simply “patent trolling”, but apparently a law firm representing Kelora Systems is now going after individual Amazon sellers over patent 821.  Patent 821 covers part of interactive search used on many web sites from Amazon to Ebay to Google to Bing.

This is interesting because individual sellers on Amazon who are using Web Store are basically buying the service from Amazon. By going after individual sellers who are leasing Web Store by Amazon, it is a way to get people scared enough to pay upfront for software they are leasing for their e-commerce solution. Apparently Magneto had the same problem in 2008 before they were purchased by Ebay for the same issue.

I am not a lawyer, not even close to understanding the patent system we currently have, but it seems very interesting for a law firm to go after individual sellers who are purchasing a service from Amazon for violations of Patent 821.

There is a lot of information about Patent 821 and its current court case against Microsoft, Adobe and others if you are interested in reading them; it is an eye popping set of documents to read. What I am more interested in though is the tactic of going against individuals who are leasing software from Amazon, much like we lease software from Ebay for our own web store. We have no control over what goes in it, how it is developed, or how it is managed by Ebay. Going after individuals who are leasing the software should in my opinion, contact a lawyer and roll the complaint up to Ebay legal or Amazon legal depending on where you are hosting your shopping cart out of.

The idea though of going after individual sellers or individuals makes for an interesting case of trying to get money before the final legal case is finished on the 17^th of November 2011. This tactic has been used very successfully by the MPAA and RIAA in getting money for people who are doing illegal downloads. Most individuals looking at a 40,000 to 70,000 dollar payout to a legal firm for a patent violation would drive all but the largest Amazon and Ebay sellers out of business overnight. The average amazon seller only sells some 5,000 to 10,000 dollars worth of product a year on those sites. If you are looking at a fine of 4X to 7X annual gross revenue you are going to panic.

Get a lawyer; see if there is a way to charge back the legal fees to the party suing you. Engage with Amazon and any other party that is counter suing the legal firm and see if you can become part of their countersuit. Again I am not a lawyer but that is what I would be doing today if I got such a letter.

If anything is going to kill off e-commerce and the small to medium seller on Amazon who is leasing their shopping cart from them are things like this. This would seriously stop many sellers from even thinking of using Amazon Web Store, or other products like Amazon Web Store from other companies if there was even a chance of litigation that could wipe out a smaller seller’s business.

This one is worth following, and if you are interested in seeing what happens to people who lease commercial level web stores from Amazon, Ebay, Yahoo and others, you need to be following this case. In my non-lawyer thinking, I am leasing software much like I lease Microsoft Office or Adobe Reader because most EULA’s do not let me directly own the software to do with what I want. Commercial web stores are very similar in the EULA’s that we sign to use the product.

If it ends up that individuals can be sued for leasing software from any company if there is a patent violation, the end of software as we understand it is right around the corner. Because these kinds of lawsuits are going to kill the software industry as we understand it, and I’ll be asking to make sure that any software I purchase is “lawsuit potential free” before using it. When individuals have to police larger companies to make sure they are in compliance with patents, we all lose this game.

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