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Amazon.com, Inc. v. Barnesandnoble.com, Inc.

73 F.Supp.2d 500, No. C99-1695P, 1999 WL 1095502 (W.D. Wash., Dec. 1, 1999) vacated and remanded 239 F.3d 1343 (Fed. Cir., February 14, 2001)

The United States District Court for the Western District of Washington issued a preliminary injunction enjoining defendants Barnesandnoble.com, Inc. and Barnesandnoble.com, LLC, (collectively "Barnesandnoble.com") from continuing to operate on their website as currently configured their "Express Lane" product ordering feature on the ground that operation of this feature infringed plaintiff Amazon.com Inc.'s '411 patent. The '411 patent describes a Method and System for Placing a Purchase Order Via a Communications Network. More particularly, the '411 patent "describes a method ... in which a consumer can complete a purchase order for an item via the Internet using only a single action (such as a single click of a computer mouse button) once information identifying the item is displayed to the consumer."

Sometime prior to May 1997, Jeffrey Bezos conceived of the idea of enabling Amazon.com's users to purchase products with a single click of a computer mouse. This idea was commercially implemented by Amazon.com in September 1997. To be able to use this ordering system, the user must first have provided Amazon.com with information about himself (such as the user's address and credit card number) and accept an identifier from Amazon.com that enables Amazon.com to identify the user and his PC when he comes to Amazon.com's site. This ordering system was designed to address a long-standing problem in e-commerce -- abandoned shopping carts. As reported in the court's decision, users, on average, abandon approximately 65% of the online shopping carts they create without making a purchase. In order to decrease the amount of abandoned carts, and thereby increase sales, Bezos determined to simplify the purchasing experience with his 'one-click' purchasing technique. This technique, testified Bezos, was contrary to conventional wisdom, which taught that to overcome the user's hesitancy about making an on-line purchaser, the user must be led slowly to the point of purchase.

In May 1998, Barnesandnoble.com began use on its web site of its "Express Lane" ordering feature. According to the court, "Express Lane allows customers who have registered for the feature to purchase items by simply clicking on the Express Lane button shown on the detail or product page that describes and identifies the [product] to be purchased. The text beneath the Express Lane button invites the user to 'Buy it now with just one click!'"

On September 28, 1999, the '411 patent was issued. Shortly thereafter, Amazon.com commenced this suit, alleging that defendants' operation of Express Lane infringed the '411 patent. Amazon.com also moved for a preliminary injunction.

Defendants argued that Amazon.com was not likely to succeed on the merits of its claim because the '411 patent was invalid on obviousness and anticipation grounds. Defendants also argued that they were not infringing plaintiff's patent. The court rejected these arguments, and issued the requested preliminary injunction. The court further held that "Barnesandnoble.com can modify its 'Express Lane' feature with relative ease to avoid infringement of the '411 patent. For instance, infringement can be avoided by simply requiring users to take an additional action to confirm orders placed by Express Lane."

As explained by the court, a patent has a "statutory presumption of validity. ... A defendant may overcome this presumption, however, if he raises a 'substantial question' concerning the validity of a patent and if the party seeking the injunction fails to show that this defense lacks "substantial merit.'"

Defendants attacked the validity of the '411 patent on the ground of anticipation. "Anticipation is a question of fact and is a defense only if 'all of the same elements are found in exactly the same situation and united in the same way ... in a single prior art reference.'"

While defendants cited a number of prior art references, the court held that none of them anticipated the '411 patent, and its one-click ordering system. In the main, this was because each prior art reference cited by defendants involved a process which required more than one click to effectuate an order. See e.g. Web Basket, Netscape Merchant System, and Oliver's Market.

Defendants also attacked the '411 patent on the ground of 'obviousness.' "The issue of obviousness is a mixed question of fact and law. The ultimate question is one of law, but it is based on several factual inquiries including: (1) the scope and content of the prior art; (2) the differences between the prior art and the claims: (3) the level of ordinary skill in the pertinent art; and (4) applicable secondary considerations. 'Such secondary considerations as commercial success, long felt but unsolved needs, [and] failures of others' are relevant as evidence of obviousness." (citations omitted).

The court found that the '411 patent was not obvious. In reaching this conclusion, the court relied on the testimony of Jeffrey Bezos, discussed above, that offering one-click purchasing ran counter to the conventional wisdom of leading consumers slowly to the point of purchase. The court also relied upon the testimony of non-party witnesses that the '411 patent was a "major innovation," the fact that Barnesandnoble.com and others copied the invention reflected in the '411 patent, and the fact that the '411 patent addressed an unsolved need, the problem of abandoned shopping carts.

The court also rejected defendants' claim that they were not infringing, because defendants had issued numerous press releases and public statements to the effect that the 'Express Lane' feature made 'one-click' ordering possible.

Lastly, the court found that defendant's actions, if not enjoined, would cause plaintiff irreparable injury. In addition to the presumption of irreparable injury that normally accompanies the infringement of a patent, the court also relied on the fact that the '411 patent and its one-click ordering system would give Amazon.com an opportunity to distinguish itself from its competitors and build customer loyalty and goodwill by enhancing the shopper's online experience. Depriving Amazon.com of this opportunity was not easily measurable in damages, and hence justified the issuance of the requested injunctive belief.

The court further held that "[a]ll of the following factors ... weigh in favor of a finding of irreparable harm: the parties are direct competitors trying to influence the same group of customers; Amazon.com spent significant time and effort on market development; Defendants' continuing infringement is likely to undermine Amazon.com's market position; and Defendants' unchecked infringement will encourage others to infringe."

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