A Patent On Clicking Website Images? Nope, Appeals Court Affirms

Written by Frank Hayes
July 25th, 2013

For once, JCPenney (NYSE:JCP) has something to be happy—not just hopeful—about. On July 22, a federal appeals court delivered what should be the final blow to a patent-infringement lawsuit that dates from CEO Mike Ullman’s first stint in that job—and one for which JCPenney served as a stand-in for the entire retail industry.

It was in October 2009 that a company called Eolas, claiming it had patent rights to any interaction with images using a web browser, sued more than 20 big companies, ranging from Apple and Perot Systems to Frito-Lay and Playboy. By the time the case came to trial in 2012, most had settled, but half of those who remained were retailers: Amazon, CDW, JCPenney and Staples. As the jury deliberated, only JCPenney, Amazon, Google and Yahoo hadn’t bought their way out.

Then the jury came back—and invalidated all of Eolas’s patents. Last week the appeals court affirmed that decision without comment.

That means JCPenney and the remaining defendants still have to foot their legal bills, but they don’t have to pay millions more to Eolas. How much more? It’s not public how much Staples, CDW, Apple and the other defendants paid to settle. But Eolas’s first lawsuit—against Microsoft in 1999—resulted in a $540 million jury verdict against Microsoft. Microsoft appealed, but eventually paid Eolas more than $100 million in 2007.

The appeals court decision also confirms that there’s nothing left of the patent lawsuits Eolas filed even after it lost that jury verdict—which means Disney, Facebook and Walmart are also off the hook.

Eolas isn’t the only company still waving around technology-related patents that retailers have to deal with. It’s not even the one that sued the most retailers (that could (would?) be giftcard patent troll Card Activation Technologies, whose patents were thrown out in 2011).

But Eolas’s patents were the most far-reaching—any interaction with an image on the web, remember, including clicking on it—and the defendants went so far as to bring in World Wide Web inventor Tim Berners-Lee to testify that, no, actually, clicking on things on a web page really is obvious. (Wired has a nice account of Berners-Lee’s testimony, written before the outcome of the case was known.)

And if Penney’s and the few other remaining defendants had cut a deal before the jury returned, Eolas would now be busily coming after every retailer in e-commerce.

Of course, Eolas still has the option to try an appeal to the U.S. Supreme Court, which in the last few years has turned decidedly less friendly toward questionable patents. But for now, JCPenney has something to be happy about: It beat the biggest patent threat web retail has seen.

Now it just has to survive back-to-school.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.