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Dell sued over patent infringement
DE Technologies seeks a cut of Dell's international business.
November 2, 2004: 6:31 PM EST

NEW YORK (CNN/Money) - Computer hardware giant Dell Inc. is being sued by DE Technologies, a small Virginia company over patent infringement, according to a newspaper report published Tuesday.

DE Technologies, a tiny company that holds a U.S. patent covering international transactions handled over the computer, has challenged Dell's international computer sales business.

About 36% of Dell's $41.4 billion in sales comes from international clients and are handled online. According to a story appearing in the Wall Street Journal, DE Technologies is seeking a percentage of those sales.

Dell, the first company to be sued by DE Technologies, would not comment to CNN/Money on the lawsuit. But DE Technologies CEO Ed Pool told the Wall Street Journal that his company's goal is to license its technology to multinational firms for a small percentage of the value of those companies' international shipments, a sum total potentially worth billions of dollars.

Business methods patents such as the one held by DE Technologies cover the processes companies use to conduct business, not gadgets or machines.

These types of patents are controversial because critics say they protect obvious processes. But Bruce Lagerman, president of DE Technologies and a former patent attorney, believes that his firm's case is "rock solid," according to the Wall Street Journal.

Whenever an industry expands, such as biotech in the 1980s, or the Internet technology of the late 1990s, the U.S. patent office experiences growing pains, says Michael Kirk, the executive director of the American Intellectual Property Law Association.

During such periods, the Patent Office must review large numbers of patent applications without a cohesive list of historical precedents to use as guides. As a result, new patent decisions are often contested in litigation, acording to Kirk.

Business method patents came to a head in 1998 with the State Street Bank case, in which the company successfully patented a method of calculating securities by the end of the day.

Up to that point patents were only granted for hard processes, things like oil refinement or chemical engineering, but as the tech boom emerged so did patents for computer assisted models in business, blurring the rules between hard processes and virtual processes. After the State Street case, all patents applications would be judged by new criteria of novelty, utility and non-obviousness, says Kirk.

Although the patent office has resolved many of the controversies around how it grants business method patents, some questions still abound. When companies file patent infringement lawsuits for business method patents they risk the possibility that their patent will be reversed, according to Kirk.  Top of page

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