The Great Amazon Patent Debate
You might think that Jeff Bezos would be on top of the world. The company he founded, Amazon.com, is sitting pretty on top of the e-commerce food chain. In an age consumed with millionaires, his stash can be measured in billions. His braying laugh has rung out on the Leno show; his beaming visage was on a certain NEWSWEEKly cover as 1999's alpha human. And he and his wife are momentarily expecting the arrival of a brand-new baby Bezos. But last week he sounded hurt at finding himself in an unfamiliar role: Internet villain.
His perfidy? Patenting controversial innovations like the ability to buy an item with a single mouseclick ("1-Click"), suing an alleged infringer (chief competitor barnesandnoble.com) and creating a chill that discourages others from adopting the efficient technique. Such behavior may be taken for granted in much of the business world, but is scorned on the Net, which thrives on open systems and giving stuff away. Thousands of Webheads believe that "owning" single-click buying (and laying claim to the concept of collecting commissions on the Net, the essence of another Amazon patent granted just last week) is like owning the air itself. And these critics are doling out punishment for what they consider a violation of the Internet spirit. Several grass-roots campaigns to boycott Amazon have sprung up. A site called noamazon.com links boycotters to alternative merchants. And last week, publisher and Internet guru Tim O'Reilly posted an open letter to Amazon that urged Bezos to share his innovations. More than 10,000 people quickly indicated virtual solidarity. Many of them were heavy Amazon customers who vowed to do their online buying elsewhere, even if it required multiple clicks.
O'Reilly expresses an opinion held by many in the industry: our clueless government gives unwarranted protection to unoriginal ideas. (Officials in the U.S. Patent and Trademark Office think that the system is working just fine. "We stand behind our patents," says spokesperson Brigid Quinn.) He believes that instead of pursuing patents on questionable breakthroughs, companies should share conceptual innovations. In that spirit, he began a dialogue with Bezos, first speaking to him on Wednesday, and continuing for an hour on Thursday, when I had the chance to sit in.
To Bezos, it's all a matter of survival. "I'm extremely sensitive to the arguments Tim makes," he said. "But there's still disagreement." Following O'Reilly's suggestions to forgo litigation--to unilaterally disarm--would set Amazon on "the path to certain ruin," Bezos insisted. "We face companies like Wal-Mart, companies that are 70 times bigger than we are. Do you want Amazon to be the next Netscape?"
O'Reilly said that Amazon might do better by giving 1-Click away and reaping good will. Anyway, he said, "the Web is a gift," without which Amazon wouldn't have existed. "You got this stuff for nothing," he said. Now trying to enforce a patent claim on something as obvious as 1-Click is downright selfish.
"Two years ago, when we applied for the patent, 1-Click wasn't obvious," Bezos countered. Even within Amazon, people wondered whether customers would go for it. A focus group indicated that they'd balk. "When we introduced it, people were surprised," said Bezos. "They called it innovative." Bezos said--and O'Reilly agreed--that Amazon was far from the worst offender, anyway. Getting patents is only a minor part of his company's strategy. Not so with a company like Priceline, whose founder Jay Walker--the Dark Prince of Internet Patents--unabashedly admits that building an enforceable patent portfolio is central to his Web strategy. (Priceline claims to own the "name your own price" concept, and has sued Microsoft's Expedia for employing a similar scheme.)
It was clear that Bezos is troubled by the controversy, and not just because he's losing a few sales. He vowed to do a better job of explaining his point of view, and promised to look hard at the issues to see if there was wiggle room. Also, when O'Reilly asked him if he'd be willing to help fund a Web site where people could post "prior art" that prevented Johnny-come-latelies from getting patents on unoriginal concepts, Bezos immediately agreed to contribute from his personal holdings. On the crucial issue of easing up on patent rights, though, he didn't really budge. But he did make an interesting admission. I asked Bezos if Amazon would have developed 1-Click even if there were no patent system to protect it and anyone could legally rip it off. "Yes," he responded without hesitation. "Very definitely." This was quite telling, because the purpose of patents is to encourage innovation that otherwise would not occur. (This is clearly written into the Constitution: you can look it up.) But Bezos is saying that for Amazon, such incentive is unnecessary--its drive to innovate isn't based on developing valuable intellectual property but on serving its customers. Given that, it's difficult to figure out how the public benefits by giving Amazon the sole ownership of a technique like 1-Click. If competitors swipe it, then Amazon has to beat them by better service, better focus and more innovation. Sounds good to me.
Yes, the law, as well as the prevailing corporate ethic, may be on the side of Jeff Bezos and his current course. But Amazon.com has become a globally known brand valued at $21 billion not because of exclusive technology but by its vision, its aggressive focus on customer service... and its embrace of the Internet, which offers an alternative ethic of sharing technology. Who better to break the mold of predatory patent litigation than its celebrated founder?
