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Did Lawrence Lockwood invent e-commerce? Hardly. Nonetheless, he is the rightful owner of exclusive rights to two e-commerce concepts: U.S. Patent 5,576,951, issued in 1996, covers an “automated sales and services system,” and U.S. Patent 6,289,319 was granted in 2001 for an “automatic business and financial transaction-processing system.” A close look at these patents suggests any number of strategies a competent patent lawyer could use to challenge Lockwood’s payment demands. The latter patent, for example, despite its very broad language, explicitly claims rights to a system meant for filing loan applications online-a far cry from the purported infringements of the PanIP defendants.

But here’s the rub: according to the American Intellectual Property Law Association, the average patent case that goes to trial costs defendants more than $1.5 million. Meanwhile, getting the U.S. Patent Office to reexamine even one of its more obvious mistakes is time-consuming and costly. Unfortunately-and this is really disgraceful-because they have little recourse, small companies such as DeBrand Fine Chocolates have considerable incentive to pony up the royalties. Two-thirds of the companies PanIP has sued to date have agreed to its royalty terms, says attorney Walker. Despite this grim reality, there is heartening news. Some 15 of the companies PanIP has targeted-including DeBrand Fine Chocolates-have decided to fight. They have banded together and started a legal-defense fund. “It has taken a lot of late nights,” Tim Beere says.

PanIP’s request of $5,000 from DeBrand Fine Chocolates is less than the $30,000 PanIP sought from earlier defendants. Nonetheless, PanIP continues to file lawsuits, and Walker says her client is ready to fight “all the way through the courts to uphold our patents if we have to.” It seems all but certain that many similar lawsuits are in the offing. And don’t look to Congress for a remedy; there is no thoughtful legislation on the docket to redress the kind of problem the Beeres and other small-business owners face. It helps that in areas such as gene patenting, the U.S. Patent and Trademark Office has made the requirements slightly more stringent, but even that will do nothing to defuse the thousands of overly broad e-commerce patents already strewn about like ticking time bombs.

It’s up to the courts to put the brakes on baseless lawsuits and prevent misuse of overly broad patents. And that is why I urge every reader to visit the PanIP defendants’ Web site and learn more about their legal counterattack. The defendants’ Web address might make you chuckle, but it should give you pause:

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