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IBM hits Amazon with patent suits
Alleges that key parts of online retailer's Web site including famed recommendation system are based on Big Blue's intellectual property.
By Rob Kelley, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- IBM has filed two patent infringement lawsuits against Amazon.com for unspecified damages, the company announced Monday.

The lawsuits are over five patents that IBM alleges that Amazon has knowingly infringed upon, which it says the online retailer uses in its customer recommendation and purchase system, advertising, Web site navigation and the way its stores data on its network, according to IBM.

Big Blue says it has notified Amazon.com more than a dozen times of the alleged infringement since September 2002 seeking reimbursement, but the companies have not been able to resolve the issue.

IBM added that other companies license these same patents and that it is open to licensing and sharing its intellectual property.

The suits were filed in two federal District Courts for the Eastern District of Texas: one in the Tyler Division and the other in the Lufkin Division. Texas has attracted many intellectual property disputes recently because lawyers believe some districts are sympathetic to the charge.

"We filed this case for a very simple reason. IBM's property is being knowingly and unfairly exploited," said Dr. John E. Kelly III, senior vice president of IBM Technology and Intellectual Property, in a statement.

"Everything we do is premised on the fundamental principle that IBM's intellectual property is one of our core assets, and represents the work product of tens of thousands of scientists and engineers and billions of dollars of investment," he added.

Amazon declined comment Monday, saying it does not speak publicly on pending litigation.

An analyst said that the suit could just as easily end in an out-of-court agreement as a damages award.

"My sense is that Amazon will ultimately reach an agreement with IBM," said Robert Toomey, an analyst with E.K. Riley Advisors who covers the online retailer. "They'd certainly like to avoid a court outcome, and patent lawsuits are also known to drag on for a long time."

IBM is the nation's largest computer services company, with $91.1 billion in revenue in 2005.

It spends about $6 billion on research and development each year and has had more U.S. patents than any other company in the world for each of the past 13 years.

Shares of IBM (up $1.08 to $91.56, Charts) rose 1.6 percent in early Monday trade. Shares of Amazon (up $0.31 to $32.88, Charts) were relatively unchanged on Nasdaq.


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