AMAZON.COM, INC., Plaintiff, v.
BARNESANDNOBLE.COM, INC., and
BARNESANDNOBLE.COM, LLC, Defendants.
UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF
WASHINGTON, SEATTLE DIVISION
73 F. Supp. 2d 1228; 1999 U.S. Dist. LEXIS 18660; 53
U.S.P.Q.2D (BNA) 1115
December 1, 1999, Decided
December 1, 1999, Filed
DISPOSITION: [**1] ORDERED that
Defendants Barnesandnoble.com LLC and
Barnesandnoble.com Inc., their officers, agents, servants,
employees and attorneys and those in active concert or participation with them
or Defendants RESTRAINED AND ENJOINED from continuing to infringe United States
Patent No. 5,960,411.
AMAZON.COM, INC, plaintiff: David J. Burman, Jerry A Riedinger,
Brian G Bodine, PERKINS COIE, SEATTLE, WA. Lynn H Pasahow, J David Hadden,
MCCUTCHEN DOYLE BROWN & ENERSEN, PALO ALTO, CA. Christopher B Hockett,
MCCUTCHEN DOYLE BROWN & ENERSEN, SAN FRANCISCO, CA.
BARNESANDNOBLE.COM, INC., BARNESANDNOBLE.COM,
LLC, defendants: Warren Joseph Rheaume, Koren Koubourlis, FOSTER PEPPER &
SHEFELMAN, SEATTLE, WA. Steven I Wallach, Jonathan A Marshall, Ronald M
Daignault, Steven D Chin, Thomas A Canova, Bruce J Barker, Garland T Stephens,
Kelly D Talcott, John J Lauter, Jr, William G Pecau, Andrew Sanders, PENNIE
& EDMONDS, NEW YORK, NY.
JUDGES: Marsha J. Pechman,
U.S. District Judge.
OPINIONBY: Marsha J. Pechman
OPINION: [*1231] ORDER ON PLAINTIFF'S
MOTION FOR PRELIMINARY INJUNCTION
On October 21, 1999, Plaintiff Amazon.com filed a
complaint in this Court alleging patent infringement by Defendants
[**2] Barnesandnoble.com Inc. and
Barnesandnoble.com LLC (hereinafter referred to collectively as
"Barnesandnoble.com"). The patent in question is United States
Patent No. 5,960,411 (the '411 patent), which was issued on September 28, 1999.
The '411 patent describes a Method and System for Placing a Purchase Order Via a
Communications Network and includes 26 claims.
The '411 patent, in
essence, describes a method and system in which a consumer can complete a
purchase order for an item via the Internet using only a single action (such as
a single click of a computer mouse button) once information identifying the item
is displayed to the consumer. This method and system is only applicable in
situations where a retailer already has in its files various information about
the purchaser (such as the purchaser's address and credit card number) and where
the purchaser's client system (e.g., a personal computer) has been provided with
an identifier that enables the retailer's server system to identify the
Amazon.com alleges that Defendants' "Express
Lane" ordering feature infringes various claims of the '411 patent. Concurrently
with its complaint, Amazon.com filed a motion for a preliminary
[**3] injunction to enjoin Barnesandnoble.com from
infringing the '411 patent. Amazon.com properly noted a hearing
on the motion for a preliminary injunction in accordance with the local rules of
this Court for November 12, 1999. After the Court denied Defendants' motion to
reschedule the hearing to January of 2000, the parties fully briefed their
arguments and conducted expedited discovery, including a number of depositions.
An evidentiary hearing on Plaintiff's motion began on November 16, 1999, and was
conducted over five days.
Amazon.com presented live
testimony at the hearing from the following witnesses: Mr. Henry Manbeck, an
attorney and former Commissioner of Patents and Trademarks; Mr. Jeffrey Bezos,
the chairman and chief executive officer of Amazon.com; and Mr.
Geoffrey Mulligan, who was presented as an expert on electronic commerce
("e-commerce"). Barnesandnoble.com presented live testimony at
the hearing from the following witnesses: Dr. John Lockwood, an assistant
professor of computer science at Washington University in St. Louis and the
developer of a program called Web Basket; Mr. Alexander Trevor, a technology
consultant and a former employee of CompuServe, Inc.; Mr. Gary [**4]
King, the chief information officer for Barnesandnoble.com; and
Mr. Jonathan Bulkeley, the chief executive officer of
Barnesandnoble.com. In addition, the parties jointly submitted
deposition designations from the following individuals: Mr. Shel Kaphan, who is
listed as an inventor of the '411 patent; Dr. Eric Johnson, a professor at the
Columbia School of Business who was presented as an expert on e-commerce issues;
Mr. Martin Adelman, a professor at the George Washington University School of
Law; and Mr. Donald Carli, the founder and principal of Nima Hunter, Inc., which
provides services related to e-commerce.
Defendants raised a number of
defenses in their pleadings and during the hearing. In support of their position
that Amazon.com is not likely to succeed at a trial on the
merits, Defendants placed particular emphasis on arguments that the '411 patent
is invalid on obviousness and anticipation grounds and that the Express Lane
feature does not infringe any claims in the '411 patent. To a lesser extent,
Defendants also suggested that the '411 patent is unenforceable. In addition,
Defendants argued that Amazon.com could not demonstrate
irreparable harm, that the balance [*1232] of hardships
[**5] did not tip in Amazon.com's favor, and that
the public interest would not be served by issuance of a preliminary injunction.
On November 22, 1999, following the testimony of all witnesses and the
submission of evidence, the parties presented proposed findings of fact and
conclusions of law to the Court. The Court heard closing arguments on November
23, 1999. Based on the papers, pleadings, testimony, evidence, and arguments
presented by the parties, the Court finds that Plaintiff has demonstrated: (1) a
reasonable likelihood of success on the merits at trial; (2) it will suffer
irreparable harm if the preliminary injunction is not granted; (3) the balance
of hardships tips in its favor; and (4) the preliminary injunction sought is in
the public interest. Although Defendants have raised a number of defenses
concerning the validity of the patent and infringement of the patent, Plaintiff
has shown that the defenses asserted by Defendant lack substantial merit.
Therefore, the Court hereby GRANTS Plaintiff's motion for a preliminary
The Preliminary Injunction is effective at 12:01 a.m. P.S.T.
on Saturday, December 4, 1999, and upon Amazon.com's filing an
undertaking in the [**6] sum of $ 10,000,000, and shall remain in
effect during the pendency of this action. Defendants may, however, continue to
offer an Express Lane feature if the feature is modified in a manner that is
consistent with this Order to avoid infringement of the '411 patent.
Pursuant to Fed. R Civ. P. 52(a), the Court's findings of facts and
conclusions of law are set forth below.
II. FINDINGS OF
Amazon.com, Inc. ("Amazon.com") is a Delaware
corporation with its principal place of business at Seattle, Washington. Through
its website, www.amazon.com, the company enables customers to
find and purchase books, music, videos, consumer electronics, games, toys,
gifts, electronic greeting cards, and other items over the World Wide Web. (Ex.
11, Bezos Decl. P 3). Amazon.com is the leading online retailer
of books. (Ex. A-18 at 19, P 2).
Barnesandnoble.com LLC is a Delaware limited liability company
with its principal place of business at New York, New York.
Barnesandnoble.com LLC operates a website through which it
distributes books, software, music, and other items. (Ex. 36 at 6).
Defendant Barnesandnoble.com Inc. is a Delaware corporation
[**7] with its principal place of business at New York, New York.
Barnesandnoble.com Inc. is a holding company whose sole asset
is a 20% share in Barnesandnoble.com LLC, and whose business is
acting as sole manager of Barnesandnoble.com LLC.
Barnesandnoble.com Inc. controls all major business decisions
of Barnesandnoble.com LLC. Collectively, these two defendants
are referred to herein as "Barnesandnoble.com." (Ex. 36).
4. Sometime before May 1997, Amazon.com CEO Jeffrey
Bezos conceived of an idea to enable Amazon.com customers to
purchase items with a single-click of a computer mouse button. (Tr. at 123:4-22,
124:1-12 (Bezos)). This idea was commercially implemented by
Amazon.com in September of 1997. (Tr. at 125:9-13 (Bezos)).
5. On September 28, 1999, United States Patent No. 5,960,411 (the " '411
patent"), entitled "Method and System for Placing a Purchase Order Via a
Communications Network," was issued. (Complaint, Ex. A). The filing date for the
'411 patent is September 21, 1997. (Id.). The patent was assigned to
and is owned by Amazon.com.
6. The evidence indicates
that before granting the patent, the examiner assigned to the patent searched
the data base of patents available [**8] at the Patent and Trademark
Office (PTO), and obtained a search of private databases through the PTO's
Science and Technology Information Center ("STIC"). Additionally, the examiner
[*1233] commissioned a third-party search firm to perform a search
for potential non-patent prior art. (Tr. at 62:20-25 (Manbeck); Ex. 13, Manbeck
Decl. at PP 8, 9). The examiner also conferred with more senior examiners and
counsel to insure that the patent involved patentable subject matter. (Tr. at
60:16-63:14; 65:2-10; 72:20-73:9 (Manbeck); Ex. 13, Manbeck Decl. at P 10). The
evidence from the patent's file history and the testimony of former Commissioner
Manbeck indicates that the patent was thoroughly examined by the PTO before
issuance. (Tr. at 73:10-13 (Manbeck); Ex. 13, Manbeck Decl. at P 11).
7. Plaintiff's expert Geoffrey
Mulligan testified that except for single-action ordering and the implementation
of single-action ordering without a shopping cart model, everything in the
independent claims of the '411 patent (claims 1, 6, 9, and 11) is in prior art.
(Tr. at 180:14-181:3).
8. In support of their arguments that the
single-action ordering element of the '411 patent is invalid [**9]
on obviousness and anticipation grounds, Defendants offered evidence concerning
several prior art references. This evidence of prior art falls into two general
categories: systems for ordering tangible items online (such as groceries or
computer equipment) and electronic document delivery systems. In the former
category were Dr. John Lockwood's Web Basket system, the Netscape Merchant
System described in the "Creating a Virtual Store" reference, and the "Oliver's
Market" web pages. In the latter category were the CompuServe financial
information service represented by Mr. Alexander Trevor's testimony regarding
the "Trend" feature, and U.S. Patent No. 5,708,780 (the '780 patent). It is
undisputed that these prior art references were not before the PTO when the '411
patent was examined.
presented evidence regarding an on-line ordering system called "Web Basket" that
was developed in and around August 1996 by Defendants' expert Dr. John Lockwood.
(Tr. at 214:23-216:2; 218:13-229:18 (Lockwood); Ex. A-56, Lockwood Decl. P 9).
Defendants argue that Web Basket anticipates at least claims 6-8 of the '411
patent and that this reference, either alone or in [**10]
combination with other prior art references, renders the claims of the '411
10. Web Basket requires users to accumulate items into a
virtual shopping basket and to check these items out when they are finished
shopping. (Tr. at 175:6-17; 176:7-179:13 (Mulligan); Ex. 12, Mulligan Supp.
Decl. at P 29). Web Basket also requires several confirmation steps for even
preregistered users to complete their purchases. (Ex. 12, Mulligan Supp. Decl.
at PP 18-22; Ex. A-56, Lockwood Decl. PP 41-44).
11. The Court finds
that Web Basket requires a multiple-step ordering process from the time that an
item to be purchased is displayed. (See Tr. at 275:7-276:5). These
multiple steps are inconsistent with the single-action requirements of the '411
12. On cross-examination, Dr. Lockwood admitted that it "could
have" been simpler for a person purchasing from Web Basket to purchase items
using only one click of a computer mouse, but he admitted that he never
considered making single-action ordering an available option to users. (Tr. at
Netscape Merchant System
13. Defendants also presented as a prior art reference an excerpt from a
book entitled [**11] "Creating the Virtual Store" that was
copyrighted in 1996. (Ex. A-63; Ex. 27). Defendants focused on the following
language from this reference: "Merchants also can provide shoppers with an
instant buy button for some or all items, enabling them to skip check out
review. This provides added appeal for customers who already know the single
item they want to purchase during their shopping excursion." (Ex. 27 at 7; Tr.
at 309:23-310:18; 312:3-20 [*1234] (Lockwood)). Defendants argue
that the Netscape Merchant System reference anticipates each of the independent
claims of the '411 patent and that this reference, either alone or in
combination with other prior art references, renders the claims of the '411
14. The balance of the Netscape article describes a
multi-step shopping cart ordering model that requires both checkout and checkout
review steps. (Ex. 27). A first step is required to put an item in the user's
cart. Information identifying the item is then stored on the user's computer. A
second "check-out" step is required to send that information to the merchant's
computer. A third step of checkout review must occur after the transfer of the
list of purchased items to the [**12] merchant's computer during the
check-out step. The standard Netscape shopping cart therefore would appear to
require a minimum of three steps by the user. (Tr. at 324:12-327:18.(Lockwood)).
15. Read in context, the few lines relied on by Defendants appear to
describe only the elimination of the checkout review step, leaving at least two
other required steps to complete a purchase. (Tr. at 327:10-18 (Lockwood);
see also Ex. 27 at 7). Thus, apart from the words "instant buy," there
is no indication that the Netscape system implements a single-action ordering
component as required by claims 6 and 9 of the '411 patent or a single action as
required by claims 1 and 11 of the '411 patent. Moreover, Defendants' expert
acknowledged that he did not know how the Netscape instant buy feature worked.
(Tr. at 312:3-20; 350:7-12 (Lockwood)).
16. Defendants presented pages from a website entitled "Oliver's Market
The Ordering System." (Ex. A-106). This web site may be accessed at
www.sonic.net/ [approximately] raptor/current/how2ordr.html. Defendants contend
that the Oliver's Market system anticipates all of the independent claims of the
'411 patent and that this [**13] reference, either alone or in
combination with other prior art references, renders the claims of the '411
17. Though the Oliver's Market reference begins with the
sentence: "A single click on its picture is all it takes to order an item," the
ordering system described by the reference is a multi-step shopping cart model.
18. The "single click" referred to in the first sentence is
the click required to add an item to the user's shopping cart and does not
complete the ordering process. After a single action is taken to select an item,
the method described by this reference explicitly requires the user to take
further actions to complete a purchase order, including: (1) specifying whether
items will be picked up or delivered; (2) specifying the time that pickup or
delivery is desired; and (3) indicating that the user is done shopping, which
would appear to be the checkout procedure required by a standard shopping cart
model. These additional actions are inconsistent with the single-action
requirements of independent claims 1, 6, 9, and 11.
19. Defendants also presented testimony by Dr. Lockwood
in support of their argument that U. [**14] S. Patent No: 5,708,780
(the '780 patent) anticipates or renders obvious claims of the '411 patent. The
'780 Patent lists a filing date of June 7, 1995 and an issue date of January 13,
1998. (Ex. A-67). The title of the '780 patent is "Internet Server Access
Control and Monitoring System." The description of the '780 patent is directed
towards a service for controlling access to web documents within a particular
domain. Defendants argue that the '780 patent anticipates claims 1 and 11 of the
20. In the '780 patent's preferred embodiment, a user
browses the web conventionally. (Ex. A-67 at Col. 3, II 21-22). A content server
provides web documents to the user and determines when the user seeks access to
"controlled" content, i.e., web pages for which the user needs authorization
[*1235] to browse. (Id. at Col. 3, II 22-25; Fig. 2A).
21. The '780 patent does not explicitly show generating an order for an
item. The record regarding whether and how the system of the '780 patent
generates an order for an item consists entirely of Dr. Lockwood's testimony.
Dr. Lockwood's testimony on this point is confusing and the witness appeared not
to understand how the system described would [**15] function. Dr.
Lockwood testified that generating an order takes place when the server system
opens a file on its disk drive to read a controlled page. (Tr. at 305:1-19). Dr.
Lockwood also testified that the user places an order by selecting a link to a
controlled page. (Tr. at 302:5-303:5).
22. The testimony of Dr. Lockwood
regarding this patent; as well as the '780 patent itself, describe a system in
which controlled pages are simply returned to the user's browser when an
authorized request is received by the content server. (See Ex. A-67,
fig. 3; Tr. at 309:2-16).
23. It appears that if billing is to take
place at all in the '780 Patent system it would take place based on the logged
transactions. (Tr. 306:9-15). In this regard, the '780 Patent system shows no
more than a method for tracking what documents the users of an on-line
information service like LEXIS or WESTLAW would request and then billing them
based on these requests.
CompuServe Trend System
24. Defendants presented evidence that CompuServe offered a service
called "Trend" beginning in the mid-1990s whereby CompuServe subscribers could
obtain stock charts for an additional surcharge. Defendants presented
[**16] screen shots from the current system and the testimony of a
former CompuServe employee that the current screen shots were substantially the
same as those provided to CompuServe subscribers in the mid 1990s. (Tr. at
369:12-20 (Trevor)). Defendants argue that the Trend System anticipates claim 11
of the '411 patent and renders obvious various claims of the patent.
The CompuServe system was not a world wide web application. (Tr. at 380:21-381:7
(Trevor)). Instead, after a user logged in, a persistent connection was
established between the user's computer and CompuServe which lasted until the
user logged off. (Tr. at 368:24-369:8; 380:25-381:16 (Trevor)). CompuServe,
therefore, did not solve the problem of identifying users.
26. To order
a chart from CompuServe, the user must first log in to the CompuServe service
with his or her user ID and password, then select the Trend application dialogue
box. Once that box appears, the user at a minimum must first (1) type in a stock
ticker tape symbol and then (2) click on the chart button which becomes active
once the user has typed the first letter of the ticker tape symbol. (Tr. at
377:25-378:18; 388:4-14 (Trevor)). The Court finds that [**17] this
method involves two actions, not one. In addition, CompuServe does not begin
processing any surcharge to the user's account until the user's computer
performs an additional step of sending back a confirmation to CompuServe that
the requested chart image was in fact accessed. (Tr. at 384:5-14 (Trevor)).
Summary of Prior Art
27. There are key
differences between each of the prior art references cited by Defendants and the
method and system described in the claims of the '411 patent. The Court finds
that none of the prior art references offered by Defendants anticipate the
claims of the '411 patent. On the question of obviousness, the Court finds that
the differences between the prior art references submitted by Defendants and the
'411 patent claims are significant. Moreover, there is insufficient evidence in
the record regarding a teaching, suggestion, or motivation in the prior art that
would lead one of ordinary skill in the art of e-commerce to combine the
references. The Court finds particularly telling Dr. Lockwood's admission that
it never occurred to him to modify his Web Basket program to enable
single-action ordering, [*1236] despite his testimony that such a
modification [**18] would be easy to implement. This admission
serves to negate Dr. Lockwood's conclusory statements that prior art references
teach to one of ordinary skill in the art the invention of the '411 patent. (Tr.
at 319:5-320:22 (Lockwood)).
Barnesandnoble.com's Shopping Cart
and Express Lane
28. Barnesandnoble.com offers
customers two purchasing options. One is called Shopping Cart and the other is
called Express Lane. (Ex. 9, Mulligan Decl. at PP 7, 8.i, Ex. H). The two
methods are separate and cannot be combined. (Tr. at 429:6-10 (King); Ex. 9,
Mulligan Decl. at Ex. I (noting "Express Lane and the Shopping Cart are two
different ways to place your order. You can't combine them.")). The
Barnesandnoble.com Shopping Cart option includes the steps of a
standard shopping cart model, including adding items to a virtual shopping cart
and "checking out" to complete the purchase. (Ex. 9, Mulligan Decl. at P 14j).
29. Barnesandnoble.com's Express Lane allows customers
who have registered for the feature to purchase items by simply clicking on the
Express Lane button shown on the detail or product page that describes and
identifies the book or other item to be purchased. (Ex. 9, Mulligan
[**19] Decl. at Ex. R). The text beneath the Express Lane button
invites the user to "Buy it now with just 1 click!" (Id.).
Throughout its web site, Barnesandnoble.com consistently
describes Express Lane as a one-click ordering method. (Tr. at 463:15-464:10
(Bulkeley)). In its May 1999 prospectus, Barnesandnoble.com
consistently described Express Lane as making one-click ordering possible.
(See, e.g., Ex. 36 at 6, 44, 47). In its November 1999 10-Q Report to
shareholders, Barnesandnoble.com describes Express Lane as a
one-click ordering system. (Ex. 39 at 13). It does not appear that
Barnesandnoble.com has ever described the Express Lane ordering
process as requiring more than one action, other than in the course of this
litigation. (Tr. 471:1-4 (Bulkeley)).
Barnesandnoble.com began using the Express Lane feature in May
of 1998, describing the feature in a press release as "Express Lane (SM) One
Click Ordering" and noting that "now, visitors can click one button to order
books, software and magazines." (Ex. 37).
32. Clicking on the shopping
cart icon on the top of every Barnesandnoble.com page will not
show the items that the user has purchased using the Express Lane. (Tr.
[**20] at 430:14-17 (King)).
33. The strong similarities
between the Amazon.com 1-click feature and the Express Lane
feature subsequently adopted by Barnesandnoble.com suggest that
Barnesandnoble.com copied Amazon.com's
feature. (Ex. 10, Johnson Decl., P 13).
Direct Evidence of
34. Amazon.com has provided
direct evidence of nonobviousness. Jeff Bezos, Amazon.com's
founder and an inventor on the '411 patent, testified that because "many
customers were tentative and somewhat fearful of on-line purchasing,
conventional wisdom was that they had to be slowly and incrementally led to the
point of purchase. In addition, consumers were not acclimated to rely without
confirmation on stored personal information for correct shipping and billing."
(Ex. 11, Bezos Decl. P 9).
35. Professor Eric Johnson of Columbia
Business School testified in his declaration that "Amazon.com's
1-Click (R) purchasing was a major innovation in on-line retailing that allows
for purchasing without disrupting the consumer's shopping experience; and by
eliminating additional confirmation requirements, recasts the default in a way
that both maximizes the likelihood that consumers will complete their
[**21] purchases and minimizes consumer anxiety over real or
perceived issues of internet security." (Ex. 10, Johnson Decl. P 12).
36. Moreover, despite their experience with prior art shopping cart
models of on-line purchasing, both sides' technical experts [*1237]
acknowledged that they had never conceived of the invention. Mr. Mulligan
testified that ordering with one click was "a huge leap from what was done in
the past." (Tr. at 190:25). Mr. Mulligan testified further that: "I've been
working in electronic commerce for years now. And I've never thought of the idea
of being able to turn a shopping cart or take the idea of clicking on an item
and suddenly having the item ship- having the complete process done." (Tr. at
199:3-7). Mr. Mulligan also testified that he believed it was "a huge leap of
faith for the website and the consumer to implement something like this." (Tr.
at 199:12-14). Additionally, as noted above, Dr. Lockwood testified that he
never thought of modifying Web Basket to provide single-action ordering. (Tr. at
single-action ordering method addressed an unsolved need that had been long-felt
(at least in the relatively [**22] short period of time that
e-commerce has existed), namely streamlining the on-line ordering process to
reduce the high percentage of orders that are begun but never completed,
i.e., abandoned shopping carts. The problem of on-line consumers
starting but abandoning shopping carts was acknowledged by both parties and
their experts. (Ex. 10, Johnson Decl P 8; Ex. 11, Bezos Decl. P 8; Tr. at
473:14-474:5; (Bulkeley); Tr. at 418:1-420:12 (King)).
38. In the
on-line industry in general and at Barnesandnoble.com in
particular, over half of the shopping carts started by customers are abandoned
before checkout. (Tr. at 418: 9-11 (King)). In an attempt to alleviate the
problem of abandoned shopping carts, Barnesandnoble.com
attempts to make the checkout process as simple and easy as possible. (Tr. at
473:24-474:5 (Bulkeley); Tr. at 419:24-420:8 (King)). The single-action ordering
invention of the '411 patent solves the problem by eliminating the checkout
39. Barnesandnoble.com presented
evidence that a number of other e-commerce retailers have offered single-action
ordering to customers. (Tr. at 453:11-456:15 (Bulkeley)).
Amazon.com's single-action ordering is used [**23]
by millions of customers, indicating the commercial success of the feature. (Ex.
11, Bezos Decl. P 14). Barnesandnoble.com's Express Lane also
accounts for a significant portion of its sales. (Ex. 28). Further evidence of
commercial success of single-action ordering is suggested by the fact that
Barnesandnoble.com promoted its Express Lane feature in a press
release after it was announced (Ex. 37) and in its prospectus (Ex. 36 at 6, 44,
and 47). Indeed, Barnesandnoble.com described Express Lane as
one of its "major enhancements" to its on-line business. (Id at 6).
41. Industry analysts and the popular press also found
Amazon.com's single-action ordering process to be innovative.
Patricia Seybold, an e-commerce observer and consultant, described
Amazon.com's 1-Click (R) purchasing as "legendary." (Ex. 11,
Bezos Decl. P 14; Ex. A). Joseph Gallivan in The New York Post
described Amazon.com's 1-Click (R) purchasing as a "seductive
innovation." (Ex. 11, Bezos Decl. P 14; Ex. B). InfoWorld indicated:
"Net retailers are starting to realize that potential customers often don't make
it as far as the virtual checkout line - they fill their on-line shopping carts
with products, then [**24] simply abandon them. . . . Faced with
these problems, it's no surprise that retailers have been eyeing
Amazon.com's 1-click purchases with envy for some time now."
(Ex. 11, Bezos Del. P 14).
The harm that would be suffered by Amazon.com due to
Barnesandnoble.com's infringement during the pendency of this
case would be irreparable. The invention described in the '411 patent is of
significant commercial value, as evidenced, among other things, by the large
number of customers who make use of single-action ordering available on the
websites of both Amazon.com and
Barnesandnoble.com, [*1238] and by the large number
of other e-commerce retailers whom Barnesandnoble.com claims
have adopted single-action ordering. (Ex. 11, Bezos Decl. P 14; Ex. 28; Tr. at
43. The harm Amazon.com
would suffer if denied the benefit of using its invention to distinguish itself
from its competitor Barnesandnoble.com could not easily be
measured in dollars. (Tr. at 474:19-475:19 (Bulkeley)).
Amazon.com has pursued a strategy of innovating to distinguish
its shopping experience from the competition, and it has made substantial
investments to build customer [**25] relationships and broaden its
customer base during the current growth phase of electronic commerce (Tr. at
107:22-109:1 (Bezos); Ex. 10, Johnson Decl. P 7).
45. Customers become
loyal to sites with which they become familiar. Considerations such as ease of
use and the availability of time-saving features are significant factors in
determining the relative success of on-line enterprises. (Ex. 10, Johnson Decl.
P 4; Tr. at 122:4-11; 419:25 & 420:1-12). Creating easy-to-use and
easy-to-learn consumer interfaces is a key aspect of e-commerce competition.
Amazon.com's commercial success depends in part on its efforts
to reduce its customers' time and effort in using its site. (Ex. 10, Johnson
Del. P 7; see also Ex. 37, at 41).
46. One of
Amazon.com's investments to improve its customers' experience
and attract new customers was to develop single-action ordering. (Tr. at
123:4-124:6 (Bezos)). The feature has been popular with
Amazon.com customers and the one-step ordering innovation has
been praised in the industry. (Tr. at 125:9-126:6 (Bezos); Ex. 11, Bezos Decl.
at P 14, Exs. A, B).
47. A number of other e-commerce retailers,
including Defendants, subsequently adopted systems that [**26] are
essentially identical to the features of Amazon.com's
single-action ordering process. With respect to
Barnesandnoble.com, the Court finds that its later adoption of
a single-action ordering system, Express Lane, eliminated a key point of
differentiation between its website and Amazon.com's.
48. The harm to Amazon.com would be compounded if
Barnesandnoble.com's infringement were permitted to continue
during the 1999 holiday shopping season. (Ex. 10, Johnson Decl. P 16; Ex. 11,
Bezos Decl. P 20). There is no dispute that holiday seasons have historically
been key periods for e-commerce customer acquisition and that they can have a
significant effect on the long-term prospects of e-commerce businesses.
(See Tr. at 474:9-18 (Bulkeley)). In 1998, for example,
Amazon.com increased its customer base nearly 20% in just the
last six weeks of the year, adding over a million new customer accounts in this
time period. (Ex. 11, Bezos Del. at P 20). This year appears likely to be an
even more significant season for customer acquisition. (Ex. 10 Johnson Decl. at
PP 16-17; Ex. 11, Bezos Decl. at P 20; Tr: at 108:3-16). Industry estimates for
the amount that will be spent by consumers online [**27] in November
and December of this year range from $ 6 to 12 billion -- 2 to 3 times the
amount spent during the same period in 1998. (Ex. 10; Johnson Decl at P 16, Exs.
49. As many as 10 million new users are expected to make their
first on-line purchases during the 1999 holiday season. (Ex. 10; Johnson Decl. P
16). Millions of these new customers are likely to be shopping at
Amazon.com and Barnesandnoble.com for the
first time. Long-term success in e-commerce depends on establishing positive
relationships with these new on-line buyers now, to preserve the ability to
compete effectively for future sales, which by some estimates will reach $ 78
billion by the year 2003. (Ex. 10, Johnson Decl., Ex. C; Tr: at 474:9-18).
50. If Barnesandnoble.com were able to continue to
offer Express Lane as currently configured during the 1999 holiday season and
for the pendency of this action, Amazon.com would not be able
to distinguish itself from a key competitor by offering [*1239]
single-action ordering and would likely lose market share and customers to
Barnesandnoble.com. The Court finds that this loss would not be
easily compensable in damages. Exclusive rights to the patented invention are
important [**28] to Amazon.com's ability to
differentiate the customer experience available at its site from that of
competitor sites such as Barnesandnoble.com.
III. CONCLUSIONS OF LAW
1. This Court has
subject matter jurisdiction over Amazon.com's claim for patent
infringement pursuant to 28 U.S.C. ¤¤ 1331 and 1338(a). Defendants are subject
to personal jurisdiction in this District because they have purposefully availed
themselves of the privileges of conducting business in the State of Washington.
2. Venue is proper in this District pursuant to 28 U.S.C. ¤¤ 1391(b) and
1400(b) because Defendants reside here (28 U.S.C. ¤ 1391(c)).
September 28, 1999, United States Patent No. 5,960,411 (the " '411 patent"),
entitled "Method and System for Placing a Purchase Order Via a Communications
Network," was duly and legally issued. The patent was assigned to and is owned
4. "To obtain a preliminary injunction, pursuant to 35
U.S.C. ¤ 283, a party must establish a right thereto in light of four factors:
(1) reasonable likelihood of success [**29] on the merits; (2)
irreparable harm; (3) the balance of hardships tipping in its favor; and (4) the
impact of the injunction on the public interest." Hybritech, Inc. v. Abbott
Labs., 849 F.2d 1446, 1451 (Fed Cir. 1988).
of Success on the Merits
The statutory presumption of validity, 35 U.S.C. ¤ 282, applies to all patents
and is meant "to contribute stability to the grant of patent rights."
Magnivision, Inc. v. Bonneau Co., 115 F.3d 956, 958 (Fed. Cir. 1997).
This presumption operates at every stage of the litigation, including in a
motion for preliminary injunction against an alleged infringer. See
Canon Computer Systems, Inc. v. Nu-Kote Int'l, Inc., 134 F.3d
1085, 1088 (Fed. Cir. 1998). A defendant may overcome this presumption, however,
if he raises a "substantial question" concerning the validity of a patent and if
the party seeking the injunction fails to show that this defense lacks
"substantial merit." See New England Braiding Co. v. A.W.
Chesterton Co., 970 F.2d 878, 883 (Fed. Cir. 1992) (noting that "while it
is not the patentee's [**30] burden to prove validity, the patentee
must show that the alleged infringer's defense lacks substantial merit").
Defendants raise a number of questions regarding the '411 patent's validity,
which the Court discusses below.
6. Anticipation is a question of fact, see Atlas Powder Co.
v. Ireco Inc., 190 F.3d 1342, 1346 (Fed. Cir. 1999), and is a defense only
if "all of the same elements are found in exactly the same situation and united
in the same way . . . in a single prior art reference." Perkin-Elmer Corp.
v. Computervision Corp., 732 F.2d 888, 894 (Fed. Cir. 1984). Although
anticipation is a factual inquiry, the Court reiterates its findings and the
applicable law here for ease of reference.
7. The Court finds that Web
Basket does not anticipate any claim of the '411 patent. Each claim of the '411
patent requires either "a single-action ordering component" [claims 1-10] or "a
single action that is to be performed to order the identified item" [claims
11-26]. The Web Basket ordering process requires that the user perform at least
five actions to complete the order. Web Basket, therefore, does not include "a
single-action [**31] ordering component" or "a single action that is
to be performed to order the identified item."
8. In addition, claims
1-5 and 11-26 require that "the item is ordered without using a shopping cart
ordering model" [claims 1-5] or "the item is ordered independently
[*1240] of a shopping cart model" [claims 11-26]. Because Web Basket
is itself a shopping cart model, it lacks these required elements as well.
9. The description of the Netscape Instant Buy option presented by
Defendants consisted of a total of four lines. Defendants' expert Dr. Lockwood
was unable to supply any additional information regarding the feature described
by this reference and ultimately admitted that he did not know how the feature
worked. (Tr. at 312:3-20; 350:7-12). The Netscape reference therefore does not
teach the invention to one of ordinary skill in the art (e.g., Dr. Lockwood) as
is required of an anticipatory reference.
10. Moreover, when read in
context, the reference appears to describe a shopping cart model with an option
to skip one of the required checkout steps. Thus viewed in the best light for
Defendants, the Netscape reference fails to anticipate any of the claims of the
'411 for the same reasons [**32] as Web Basket: it does not include
a single-action ordering component. Moreover, it does not appear to be
independent of a shopping cart model, as required by claims 1 and 11.
11. Similarly, the Oliver's Market reference, when read as a whole,
plainly discloses a multi-step shopping cart model. It, therefore, also lacks
the same elements that are missing from Web Basket and Netscape: a single-action
ordering component that is independent of a shopping cart model.
'780 patent entitled "Internet Server Access Control and Monitoring System" also
fails to anticipate any claim of the '411 patent. As discussed above the system
described in the '780 patent controls access to certain web pages. Even assuming
that a web page is an "item" to be ordered as that term is used in the claims of
the '411 patent, the access control system described in the '780 patent is not
an ordering system.
13. Each claim of the '411 patent requires that the
server system generate an order for the item requested by the customer. The
requirement is described in slightly different terms in each of the independent
claims but the import is the same: "generate an order to purchase the requested
item" (claim [**33] 1); "locate additional information needed to
complete the order and so that the server system can fulfill the generated
order" (claim 6); "uses the retrieved information to place an order for the
indicated user for the item" (claim 9); "whereby the item is ordered
independently of a shopping cart model and the order is fulfilled to complete a
purchase of the item" (claim 11).
14. The system described by the '780
patent merely delivers the requested web page to authorized users as would any
other web server. The fact that the user may later be billed based on a log of
pages that he or she has visited does not turn the standard delivery of web
pages requested by a client into an order generation and fulfillment system as
required by the claims of the '411 patent.
15. In addition, claims 6-10
of the '411 patent require a shopping cart ordering component in addition to the
single action ordering component. The '780 patent does not disclose a shopping
cart ordering component. That it appears impossible to "order" web pages using a
shopping cart model suggests that web pages are not items to be ordered within
the meaning of the claims '411 patent. In any case, the access control system
[**34] of the '780 patent lacks the other claim elements, i.e.,
order generating step/component and the shopping cart ordering component
required by the claims of the '411 and, therefore, does not anticipate them.
16. Finally, the CompuServe Trend service does not anticipate any claim
of the '411 patent. Each claim of the '411 patent (except 9 and 10) requires
(with slightly different language) displaying information identifying the item
to be ordered and a single action to be taken to order the item: "displaying
information identifying the item; and in response to only a single action being
performed, sending [*1241] a request to order the item" (claim 1);
"a display component for displaying information identifying the item; a
single-action ordering component that in response to performance of only a
single action, sends a request to a server system to order the identified item"
(claim 6); "displaying information identifying the item and displaying an
indication of a single action that is to be performed to order the identified
item" (claim 11).
17. In the CompuServe Trend system, to receive a chart
the user has to type in the ticker symbol identifying the stock for which they
want to order a [**35] chart. The system does not, therefore,
identify an item that a user could order with a single action. Thus, CompuServe
does not anticipate claims 1-8 or 11-26.
18. As described above with
respect to the '780 patent, claims 6-10 of the '411 patent require a shopping
cart ordering component in addition to the single-action ordering component.
There is no evidence that the CompuServe Trend service included a shopping cart
component. It therefore does not, as Defendants acknowledge, anticipate claims
19. "Included within the
presumption of validity mandated by 35 U.S.C. ¤ 282 is a presumption of
nonobviousness which the patent challenger must overcome by proving facts with
clear and convincing evidence. The presumption remains intact even upon proof of
prior art not cited by the Patent and Trademark Office (PTO), though such art,
if more relevant than that cited, may enable the challenger to sustain its
burden." Perkin-Elmer Corp. v. Computervision Corp., 732 F.2d 888, 894
(Fed. Cir. 1984) (citations omitted).
20. The issue of obviousness is a
mixed question of fact and law. The ultimate question is one of law, but
[**36] it is based on several factual inquiries, including: (1) the
scope and content of the prior art; (2) the differences between the prior art
and the claims; (3) the level of ordinary skill in the pertinent art; and (4)
applicable secondary considerations. See Weatherchem Corp. v. J.L.
Clark, Inc., 163 F.3d 1326, 1332 (Fed. Cir. 1998).
evidence relating to invalidity of claims of the '411 patent on the ground of
obviousness consists largely of Dr. Lockwood's statements that he could modify
his Web Basket system to actually be a single-action ordering system, and that
doing so would be an "obvious" or "trivial" modification of the Web Basket
system. (Tr. at 229; Ex. A-56, Lockwood Del. P51) Dr. Lockwood, however,
testified (as did Mr. Mulligan), that it had never occurred to him to do this.
(Tr. at 277:19-23 (Lockwood); Tr. at 199:2-15 (Mulligan)). Mr. Mulligan further
produced credible testimony why one skilled in the art would not, at the time
the invention was made, have considered this modification. (Tr. at 190:21-191:2;
22. In any event, whether it would be, at the present time,
an "obvious" or "trivial" modification of the Web Basket [**37]
system to include the "single action" feature of the '411 patent is legally
irrelevant. The law is clear that the time period for any obviousness
determination is "at the time the invention was made" 35 U.S.C. ¤ 103(a).
See also, In re Dembiczak, 175 F.3d 994, 998-99 (Fed. Cir.
23. "Objective indicia 'may often be the most probative and
cogent evidence of nonobviousness in the record.'" Gambro Lundia AB v.
Baxter Healthcare Corp., 110 F.3d 1573, 1579 (Fed. Cir. 1997) (quoting
Stratoflex, Inc. v. Aeroquip, Corp., 713 F.2d 1530, 1538 (Fed. Cir.
1983)); see also, Arkie Lures Inc. v. Gene Larew Tackle, Inc.,
119 F.3d 953, 957 (Fed. Cir. 1997) ("Indeed, evidence of secondary
considerations may often be the most probative and cogent evidence in the
record. It may often establish that an invention appearing to have been obvious
in light of the prior art was not.").
24. "Such secondary considerations
as commercial success, long felt but unsolved needs, [and] failures of others"
are relevant [*1242] as evidence of obviousness. Graham v. John
Deere Co., 383 U.S. 1, 17-18, 86 S. Ct. 684, 15 L. Ed. 2d 545 (1966).
[**38] See also, Arkie Lures Inc., 119 F.3d at 957
(Considerations of commercial success, licensing activities, and copying may be
"highly probative of the issue of nonobviousness.").
25. Copying of the
invention by Barnesandnoble.com and others is additional
evidence of nonobviousness. "It gives the tribute of its praise to the prior
art; it gives the [invention] the tribute of its imitation, as others have
done." Diamond Rubber Co. v. Consolidated Rubber Tire Co., 220 U.S.
428, 441, 31 S. Ct. 444, 55 L. Ed. 527 (1911).
26. The adoption of
single-action ordering by other e-commerce retailers following
Amazon.com's introduction of the feature, coupled with the need
to solve the problem of abandoned shopping carts by e-commerce customers, is
additional evidence of nonobviousness. See Hayes Microcomputer
Prod, Inc. v. Ven-tel, Inc., 982 F.2d 1527, 1540 (Fed. Cir. 1992) ("The
commercial success of the invention, the failure of others to solve the problem
addressed by the patented invention, and the fact that the [invention] has
become the industry standard is compelling objective evidence of the
nonobviousness of the claimed invention. [**39] ").
light of its consideration of the factors and evidence related to the question
of obviousness, the Court finds Barnesandnoble.com is unlikely
to succeed in showing by clear and convincing evidence that the claims of the
'411 patent were obvious. Barnesandnoble.com's reliance on the
simplicity of the invention is unavailing. "Defining the problem in terms of its
solution reveals improper hindsight in the selection of the prior art relevant
to obviousness." Monarch Knitting Machinery Corp. v. Sulzer Morat
GMBH, 139 F.3d 877, 881 (Fed. Cir. 1998).
28. In their initial opposition
to Plaintiff's motion for a preliminary injunction, Defendants argued that the
'411 patent was unenforceable due to alleged inequitable conduct on the part of
the one of the inventors, Shel Kaphan. Specifically, Defendants alleged that Mr.
Kaphan's failure to cite to the PTO an Internet Engineering Task Force draft
entitled "State Management Mechanism" ("IETF Draft"), in which he is
acknowledged as a contributor by the authors, constituted inequitable conduct.
Defendants deposed Mr. Kaphan and submitted brief excerpts from his deposition
to the Court. [**40] None of those excerpts related to his knowledge
of the IETF Draft or any intent to deceive the patent office. The Court assumes
that Defendants have abandoned their inequitable conduct claim, at least for the
purposes of their opposition to the preliminary injunction motion. Indeed,
Defendants presented no arguments based on unenforceability in their closing
argument or in their proposed findings of fact and conclusions of law.
29. In any event, the Court finds that Defendants' arguments regarding
unenforceability lack substantial merit. The testimony of Mr. Mulligan, a member
of the IETF, that the IETF Draft is less relevant to the '411 patent than cited
references including one in a publication entitled "Dr. Dobbs Journal" that
itself references the IETF Draft, is unopposed and dispositive. (Tr. at 174:
13-25 (Mulligan)) A "patentee need not cite an otherwise material reference to
the PTO if that reference is merely cumulative or is less material than other
references already before the examiner." Baxter Int'l, Inc. v.
McGaw, Inc., 149 F.3d 1321, 1328 (Fed. Cir. 1998).
30. Defendants have also
argued that Plaintiff has not [**41] demonstrated that the "Express
Lane" feature infringes any claims of the '411 patent. "Analysis of patent
infringement involves two steps: (1) claim construction to determine what the
claims cover, i.e., their scope, followed by (2) determination of whether the
properly construed claims encompass the accused structure." Cole v.
Kimberly-Clark Corp. 102 F.3d 524, 528 (Fed. Cir. 1997). The former
[*1243] is a question of law; the latter is a question of fact.
See Voice Techs. Group v. VMC Sys, Inc., 164
F.3d 605, 612 (Fed. Cir. 1999). For ease of reference, the Court includes its
entire infringement analysis in the Conclusions of Law section, even though it
presents mixed questions of law and fact.
31. The parties do not dispute the meaning of most
of the terms in the patent claims including: "client system"; "server system";
and "method for ordering." (See Tr. at 434:1-435:13 (King)). The
parties disagree, however, as to the meaning of the terms "shopping cart model,"
"fulfillment," "single action," and "single-action ordering component."
32. Claims must be read in view of the specification of which they are a
part. See [**42] Markman v. Westview
Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995). Words defined in the
specification should be given the same meaning in the claims. McGill, Inc.
v. John Zink Co., 736 F.2d 666, 674 (Fed. Cir. 1984), cert.
denied, 469 U.S. 1037, 105 S. Ct. 514, 83 L. Ed. 2d 404 (1984),
overruled on other grounds, Markman, 52 F.3d at 967. See
also Standard Oil Co. v. American Cyanamid Co., 774 F.2d 448, 452
(Fed. Cir. 1985) (the specification is the primary basis for construing claims).
33. The term "shopping cart model" is described in the Background of the
Invention section of the '411 patent beginning at column 2 line 17: "The
selection of various items is generally based on the 'shopping cart' model. When
the purchaser selects an item from the electronic catalog, the server computer
system metaphorically adds that item to a shopping cart. When the purchaser is
done selecting items, then all the items in the shopping cart are 'checked out'
(i.e., ordered) when the purchaser provides billing and shipping information."
As described at column 2 lines 34 through 43, in some cases the billing and
[**43] shipping information may be prestored by the merchant and
need only be confirmed to complete the checkout process.
definition of shopping cart model in the background section of the '411 patent
is consistent with that provided by Amazon.com's e-commerce
experts Dr. Johnson and Mr. Mulligan. (See Ex. 10, Johnson Decl. at P
14; Ex. 12, Mulligan Del. at P 7; Tr. at 167:19-168:9 (Mulligan)).
Dr. Lockwood defined a shopping cart model more broadly in a manner that could
potentially include any method for buying on-line. (Tr. at 279:5-282:4). In
general, the Court found Dr. Lockwood's description of the term "shopping cart
model" to be confusing and inconsistent. Barnesandnoble.com's
Chief Information Officer, Mr. King, gave a similarly broad definition of
shopping cart model. (Tr. at 428:1-21). According to its own expert Dr.
Lockwood, under Defendants' definition of shopping cart model, claims 1 and 11
would appear to be internally inconsistent. (See Tr. at 284:22-285:22).
Similarly, Mr. King testified that with Barnesandnoble.com's
definition of shopping cart model, claims 1 and 11 would not cover the
single-action purchasing method described in the '411 patent. [**44]
(Tr. at 428:1-21).
36. A claim interpretation that excludes the
preferred embodiment is "rarely, if ever, correct." Vitronics Corp. v.
Conceptronic, Inc., 90 F.3d 1576, 1583 (Fed. Cir. 1996). "When claims
are amenable to more than one construction, they should when reasonably possible
be interpreted so as to preserve their validity." Modine Mfg. Co. v. U.S.
Int'l Trade Comm'n, 75 F.3d 1545, 1557 (Fed. Cir. 1996). The Court,
therefore, rejects the definition of "shopping cart model" propounded by
37. The Court adopts instead a definition which is
consistent with the patent specification, preserves the validity of the claims,
and allows the claims to be read on the preferred embodiment described in the
patent specification. In construing the [*1244] claims, the Court,
therefore, takes the term "shopping cart model" to mean a method for on-line
ordering in which a user selects and accumulates items to be purchased while
browsing a merchant's site and then must proceed to one or more checkout or
confirmation steps in order to complete the purchase. (Ex. 12, Mulligan Supp.
Decl. PP 5-6).
38. The second point of disagreement is the meaning of
[**45] the terms "fulfill" and "order fulfillment component" in
claims 6 and 9, and in particular whether "fulfill" or "fulfillment" refer to
computer or physical processes. Though the patent specification does not
explicitly define the phrase, order "filling" and "fulfillment" is discussed at
length at column 8 and figure 7 in the context of Amazon.com's
order consolidation algorithm. That discussion and the entire specification
describe only computer processes and an order is defined to be filled "when all
its items are currently in inventory (i.e. available) and can be shipped." In
addition, Amazon.com's expert Mr. Mulligan testified that an
"order fulfillment component" of a "server system" as required by claim 9 is
"the software that takes the information provided by the database of the user
information and the inventory database and combines those into a shipment order
. . . and then notifies that the order is ready for shipment." (Tr. at
39. Mr. Mulligan's above definition of "order fulfillment
component" as a computer program is consistent with the out of court statements
by Barnesandnoble.com's Chief Information Officer, Mr King,
regarding Barnesandnoble.com's "fulfillment [**46]
application" in a recent interview with an industry trade press. (See
Ex. 8). During cross-examination Mr. King testified that "fulfillment
application" was a commonly used term in the industry to refer to computer
programs associated with the fulfillment process. (Tr. at 432:25-433:8). The
Court therefore finds that "order fulfillment component" as used in claim 9
refers to order fulfillment application software described by Mr. Mulligan and
40. Similarly, the Court finds that the term "fulfill" as used
in claim 6 in the phrase, "so that the server system can fulfill the generated
order," refers to processes performed by the order fulfillment component of (or
order fulfillment application running on) the server system and does not include
the physical steps of handling or packing tangible items.
41. The third
point of disagreement concerns the terms "single action" and "single-action
ordering component" as used in claims 1, 6, 9, and 11.
42. The term
"single action" is not defined by patent specification. However, the patent
specification provides that "once the description of an item is displayed, the
purchaser need only take a single action to place the order to
[**47] purchase that item." (Ex. A-1 at col. 3, II. 64-66). The
specification also provides that "a single action may be preceded by multiple
physical movements of the purchaser (e.g., moving a mouse so that a
mouse pointer is over a button)." (Ex A-1 at col. 10, II. 2-4). In addition, the
specification indicates "in general, the purchaser need only be aware of the
item or items to be ordered by the single action and of the single action needed
to place the order." (Ex. A-1 at col. 4, II. 14-17 (emphasis added)). As a
result, the term "single action" as used in the '411 patent appears to refer to
one action (such as clicking a mouse button) that a user takes to purchase an
item once the following information is displayed to the user: (1) a description
of the item; and (2) a description of the single action the user must take to
complete a purchase order for that item.
43. The parties dispute what
mouse clicks "count" in determining whether the single-action requirement of the
'411 patent claims is satisfied. The Court finds that clicks "count" after both
information identifying the item and a description of the single action the user
must take to complete a purchase order for that [**48] item are
displayed to the user.
[*1245] Comparison of the
'411 Patent Claims to Defendants' Express Lane Feature
its opening papers, Amazon.com provided a declaration from its
expert Mr. Mulligan explaining in detail where every element of claims 1, 2, 3,
5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 21, 22, 23, 24 is present in
Barnesandnoble.com's Express Lane ordering system. (Ex. 9,
Mulligan Decl.). Mr. Mulligan described his analysis with respect to independent
claims 9 and 11 in his testimony before the Court. (Tr. at 161:2-169:4).
45. In their pre-hearing briefing, Defendants only disputed Mr.
Mulligan's analysis with respect to the meaning of fulfillment in claims 6 and 9
and the meaning of "shopping cart model" in claims 1 and 11. (Ex. A-16, King
Decl. PP 8-12). Mr. King acknowledged that Barnesandnoble.com's
Express Lane included every element of claim 11 except the last, which requires
that the item is ordered independently of a shopping cart model. (Tr. at
46. Because the Court adopts the patent specification's
description of the term "shopping cart model," which is consistent with Mr.
Mulligan's testimony, the Court finds that Barnesandnoble.com
[**49] infringes claims 1, 2, 3, 5, 11, 12, 14, 15, 16, 17, 21, 22,
47. The Court has also found that the terms "fulfill" and "order
fulfillment component" in claims 6 and 9 do not include the retailer's acts of
physically locating, packaging, and shipping a tangible item after a purchase
order is completed. The Court, therefore, finds that
Barnesandnoble.com also infringes claims 6-10 of the '411
48. At the hearing on this motion, Defendants argued that
Barnesandnoble.com's Express Lane option was not a
"single-action ordering component" as required by claims 1, 3, 5, 6, 7, 8, 9,
10, because a user of Express Lane must take more than one action from the first
time that some information regarding an item is displayed. The Court finds this
argument unavailing. Except in court, Barnesandnoble.com
everywhere has described its Express Lane option as "one-click ordering,"
including on its web site and its communications with shareholders and
prospective shareholders filed with the Securities Exchange Commission. (Tr. at
464:3-8; Tr. at 464: 24-467: 22 (Bulkeley); Ex. 36 at 6, 44, 47). Moreover, the
Court agrees with the testimony of Mr. Mulligan that browsing a site is not
ordering [**50] and that one does not begin the ordering process
until one is past the home page and is presented with an opportunity to order an
item. (Tr. at 185:3-8; Tr. at 191:7-15). This occurs for the first time at the
product or detail page on the Barnesandnoble.com site.
(Id. and Ex. 9, Mulligan Decl., Ex, R). From there, as noted on
Barnesandnoble.com's own web page, ordering with the Express
Lane option requires only a single click. (Id).
49. Mr. King
testified that he was provided with a copy of the '411 patent by
Barnesandnoble.com's outside counsel in early October, 1999.
(Tr. at 417:9-19). It was the first time that Mr. King had ever received a
patent from Barnesandnoble.com's outside counsel. (Tr. at
417:20-22). "Where, as here, a potential infringer has actual notice of
another's patent rights, he has an affirmative duty to exercise due care to
determine whether or not he is infringing." Underwater Devices, Inc. v.
Morrison-Knudsen Co., 717 F.2d 1380, 1389 (Fed. Cir. 1983).
50. Based on the foregoing, the Court
finds that Plaintiff has demonstrated a reasonable likelihood of success on the
merits at trial.
B. Irreparable Harm [**51]
51. The Court finds that Plaintiff has made a strong showing that the
'411 patent is valid and that Defendants' Express Lane feature infringes the
patent. Plaintiff is therefore entitled to a presumption of irreparable harm.
See, e.g., Smith Int'l, Inc. v. Hughes Tool Co., 718 F.2d
1573, 1581 [*1246] (Fed. Cir. 1983) (holding "where validity and
continuing infringement have been clearly established . . . immediate
irreparable harm is presumed"). While Defendants have raised a number of
defenses regarding validity, noninfringement, and enforceability, the Court
finds that Plaintiff has established that these defenses lack substantial merit.
52. In light of Plaintiff's strong showing of validity and infringement,
Defendants can rebut the presumption of irreparable harm only in limited
circumstances not applicable here, such as that (1) the allegedly infringing
activities have ended or will soon end; (2) the movant has engaged in a pattern
of granting licenses; or (3) the movant unduly delayed in bringing suit. See
Polymer Techs., Inc. v. Bridwell, 103 F.3d 970, 974 (Fed. Cir.
1996). Absent these facts or Defendants' "proffer of similar evidence," the
Federal [**52] Circuit has indicated that "infringement of a valid
patent inherently causes irreparable harm." Id. at 975.
Defendants attempt to invoke the category of undue delay, arguing that
Amazon.com should have filed their suit immediately upon
issuance of the patent. However, Amazon.com filed this action
22 days after its patent was issued. The Court is unaware of any authority
indicating that filing a motion for a preliminary injunction less than a month
after a patent is issued constitutes an undue delay. Instead, cases citing undue
delay as a factor to be considered on a motion for preliminary injunction
address delays of months or years, not days. See Mentor Graphics
Corp. v. Quickturn Design Systems, Inc., 999 F. Supp. 1388 (D. Or. 1997)
(delay of more than one year between the filing of patent infringement action
and the filing of a motion for a preliminary injunction did not bar the patentee
from obtaining a preliminary injunction), aff'd 150 F.3d 1374 (Fed.
Cir. 1998); Rubbermaid Commercial Prods., Inc. v. Contico Int'l., Inc.,
836 F. Supp. 1247 (W.D. Va. 1993) (eight months no bar); Motorola, Inc. v.
Alexander Mfg. Co., 786 F. Supp. 808 (N.D. Iowa 1991) [**53]
(three months no bar); SMI Indus. Canada Ltd. v. Caelter Indus., Inc.,
586 F. Supp. 808 (N.D.N.Y. 1984) (six months no bar).
also suggest that Amazon.com engaged in undue delay by not
paying its Issue Fee for the '411 patent until six weeks after receiving the
Notice of Allowability for the patent. Defendants cite no authority which
indicates that this type of delay is either undue or even relevant. Moreover, as
former PTO Commissioner Harry Manbeck testified, taking six weeks between the
Notice of Allowability and payment of the Issue fee is not unusual, and is
probably shorter than average period. (Ex. 13, Manbeck Dec P 17).
Beyond the presumption of irreparable harm, there is additional evidence of
irreparable harm in the record. Irreparable harm can also be shown by
demonstrating that damages are an inadequate remedy. The Federal Circuit uses a
variety of factors to determine whether irreparable harm exists. See
Mills, "The Developing Standard for Irreparable Harm in Preliminary Injunctions
to Prevent Patent Infringement," 81 J. Pat. & Trademark Off. Soc'y 51, 65-66
(Jan. 1999) (listing factors); see also Jacobson v. Cox Paving
Co., 1991 U.S. Dist. LEXIS 17787, 19 U.S.P.Q.2D (BNA) 1641, 1653 (D. Ariz.
1991) [**54] (listing factors and noting that courts have issued
injunctions after finding only a few), aff'd 949 F.2d 404 (Fed. Cir.
56. All of the following factors here weigh in favor of a finding
of irreparable harm: the parties are direct competitors trying to influence the
same group of customers; Amazon.com spent significant time and
effort on market development; Defendants' continuing infringement is likely to
undermine Amazon.com's market position, and Defendants'
unchecked infringement will encourage others to infringe. See Mills,
supra; see also Atlas Powder Co., 773 F.2d 1230 at 1233 ("If
monetary relief were the sole relief afforded by the patent statute then . . .
infringers could become compulsory licensees for as [*1247] long as
the litigation lasts."). These sorts of indirect effects are the reason the
statute includes injunctive remedies. See Hybritech, 849 F.2d
at 1457 ("The patent statute provides injunctive relief to preserve the legal
interests of the parties against future infringement which may have market
effects never fully compensable in money.").
Amazon.com has presented the testimony of its founder and
chairman, [**55] Jeff Bezos, and of an e-commerce expert, Dr. Eric
Johnson, explaining the significance of single-action ordering and of reducing
"friction" in customer experiences of-shopping on-line. They provided both
opinion and empirical evidence that reducing the number of steps a customer must
take to make a purchase increases the likelihood that the customer will complete
that purchase. (See Ex. 10, Johnson Decl. P 10; Ex. 11, Bezos Decl. P
8) A single-action ordering method is valuable because it reduces the steps that
an on-line customer must take when making a purchase. The evidence adduced from
Barnesandnoble.com regarding the problem of abandoned shopping
carts (an "industry standard" 65% of them are never checked out) and the
popularity of its single-action Express Lane feature corroborate the commercial
value of the '411 patent. (See Ex. 28; Tr. at 418:1-11; 420:9-421:18
(King); 473:14-474:5 (Bulkeley)).
witnesses also described how and why the upcoming holiday season will be
critical to the online retailing industry. (Ex. 10, Johnson Decl. PP 16-17, Ex.
11, Bezos Decl. P 20). They presented evidence that invaluable customer loyalty
and goodwill will be irreparably [**56] lost to Defendants if they
are allowed to continue to infringe, particularly in the next two critical
months for e-commerce retailing. As the Federal Circuit has explained,
"Competitors change the marketplace. Years after infringement has begun, it may
be impossible to restore a patentee's . . . exclusive position by an award of
damages and a permanent injunction." Polymer Tech., 103 F.3d at 975-76.
Again, the testimony from Barnesandnoble.com corroborates
Amazon.com's claim that the 1999 holiday season will be
extremely important commercially to on-line retailers. (See Tr. at
59. Defendants argue that
Amazon.com is not entitled to an injunction because its
injuries can be compensated in money damages. The cases they cite all hinge on a
finding, not applicable here, that the patentee was not entitled to a
presumption of irreparable harm because it had not made a clear showing of
validity and infringement. See Nutrition 21 v. Thorne Research,
Inc., 930 F.2d 867, 871 (Fed. Cir. 1991); Eli Lilly & Co. v.
American Cyanamid Co., 896 F. Supp. 851, 860 (S.D. Ind.
1995). Where the presumption of irreparable harm [**57] applies,
that plaintiff's injuries are fully compensable cannot alone justify a finding
that defendants rebutted the presumption of irreparable harm. Polymer
Techs., 103 F.3d at 975-76.
60. Here, Amazon.com
has presented ample evidence that the harm it asks the Court to prevent --
losing the opportunity to distinguish itself and build customer loyalty at a
critical time -- cannot be reduced to a simple formula. See
Hybritech, 849 F.2d at 1456-57 ("It is well-settled that . . . the
nature of the patent grant weighs against holding that monetary damages will
always suffice to make the patentee whole."). There is no easy way to determine
the value of the relationships and loyalties that millions of customers
establish with Internet retailers over the next several months.
Neither side is able to offer any formula that is readily available for
determining what damages might be.
patent entitles it to the exclusive right to offer its single-action ordering
invention, and to reap the value that feature adds to its site. Defendants' use
of the Express Lane feature, as currently configured, would deny
Amazon.com of the benefit of its [**58] patent.
Barnesandnoble.com has failed to demonstrate that the
[*1248] value of the use of the patent can be calculated in dollars.
63. Amazon.com is presumptively and actually suffering
irreparable injury because of Defendants' infringement. The Court concludes that
only a preliminary injunction will prevent that harm.
64. The balance of hardships between the parties
also favors granting Amazon.com's motion for preliminary
injunction. The Court must weigh the threatened injury to the patent holder if
injunctive relief is not granted against the injury to the accused infringer if
the preliminary injunction is granted. See Hybritech Inc., 849
F.2d at 1457. Here, the balance of hardships tips in
Amazon.com's favor. Any harm suffered by
Barnesandnoble.com would result directly from its
misappropriation of Amazon.com's patented purchasing method.
The balance of hardships does not favor a defendant where the defendant "took a
calculated risk that it might infringe [plaintiff's] patents" Smith Int'l,
Inc. v. Hughes Tool Co., 718 F.2d 1573, 1581 (Fed. Cir. 1983).
Moreover, the evidence indicates that Barnesandnoble.com
[**59] can modify its "Express Lane" feature with relative ease to
avoid infringement of the '411 patent. For instance, infringement can be avoided
by simply requiring users to take an additional action to confirm orders placed
by using Express Lane. (Tr. at 530:8-13).
66. The harm to
Amazon.com is more extensive. Without this injunction,
Amazon.com will lose the primary value of the 1-Click (R)
option: its role in distinguishing the Amazon.com site from the
site of a key competitor. (See Ex. 10, Johnson Dec. PP 8-12).
67. Aside from the need to take steps to modify its Express Lane
feature, Defendants' only testimony or evidence of any harm it will suffer if it
is enjoined from infringing the '411 patent is that calls to its customer
service phone lines will increase because of the change to its users'
experience. (Tr: at 458:15-19). Barnesandnoble's concerns about
customer service calls or possible temporary interruptions in its web site
operation would not tip the balance in favor of an infringing defendant. See
PPG Indus., Inc. v. Guardian Indus. Corp., 75 F.3d 1558, 1567
(Fed. Cir. 1996) (it was less burdensome on infringer to suffer "a temporary
interruption" [**60] in the infringer's production and sale of its
product where patentee would suffer significant harm from denial of preliminary
68. As Dr. Johnson points out, on-line retailers have great
freedom with which they can create their own unique consumer experiences. (Ex.
10, Johnson Decl. P 15). As noted above, Barnesandnoble.com
could modify Express Lane to employ any non-infringing ordering system,
including any that requires two or more actions. Moreover, in addition to
"Express Lane," Barnesandnoble.com offers a multi-step
"shopping cart" ordering system, so it does not need single-action ordering to
keep its site running. Many other on-line retailers operate their businesses
using multi-step ordering, and Barnesandnoble.com can as well.
(See Ex. 11, Bezos Decl. at P 21).
69. Mr. King testified that
it would be possible to remove the Express Lane feature from the
Barnesandnoble.com site and that he has already met with his
developers to discuss it. (Tr. at 435:14-19).
70. Finally, the question
of whether the balance of hardships tips in Amazon.com's favor
is necessarily related to its showing of a likelihood of success on the merits.
"Because the court must balance [**61] the hardships, at least in
part in light of its estimate of what is likely to happen at trial, it must
consider the movant's showing of likelihood of success." Illinois Tool
Works, Inc. v. Grip-Pak Inc., 906 F.2d 679, 683 (Fed. Cir. 1990).
Amazon.com's strong showing of likelihood of success further
tips the balance of hardships in its favor.
71. The public is served by innovation on the Internet
and in electronic [*1249] commerce, particularly now while it is
still developing rapidly. Competition to provide unique, effective and enjoyable
consumer experiences will lead to innovation and diversity in on-line commerce.
(Ex. 11, Bezos Decl. P 22). On the other hand, innovation will be discouraged if
competitors are permitted a free ride on each other's patented inventions.
Protection of intellectual property rights in innovations will foster greater
competition and innovation. (Ex. 11, Bezos Decl. P 22; Ex. 10, Johnson Decl. P
72. Granting Amazon.com's preliminary injunction
will serve the public interest. The public has a strong interest in the
enforcement of intellectual property rights. The purpose of the patent system is
to reward inventors [**62] and provide incentives for further
innovation by preventing others from exploiting their work. See
E.I. du Pont de Nemours & Co. v. Polaroid
Graphics Imaging, Inc., 706 F. Supp. 1135, 1146 (D.Del. 1989),
aff'd 887 F.2d 1095 (Fed. Cir. 1989). Encouraging
Amazon.com to continue to innovate -- and forcing competitors
to come up with their own new ideas -- unquestionably best serves the public
73. Defendants' argument that the injunction would not serve
the public interest presupposes that the '411 patent is invalid and not
infringed. Amazon.com has established that Defendants' defenses
lack substantial merit. The Amazon.com inventors are therefore
entitled "to reap the benefits of their labor" and "prevent others from
practicing what they have invented." E.I. duPont de Nemours & Co.,
706 F. Supp. at 1146. This is particularly true in a rapidly developing industry
where the window of opportunity to reap the benefits is likely to be
short-lived, given the fertile climate for e-commerce inventions.
E. Other Arguments
74. Defendants have also
offered a variety of other arguments against issuance of the preliminary
[**63] injunction. They have suggested, for instance, that: (1)
Amazon.com should have warned potential infringers that a
patent application was pending for the '411 patent prior to its issuance; (2)
Amazon.com somehow inequitably timed the issue date of the
patent to fall near the 1999 holiday season; and (3) Defendants' due process
rights would be abrogated if they only had a few weeks to prepare for a hearing
on Amazon.com's motion for a preliminary injunction. Defendants
have cited no relevant case law to the Court in support of these arguments, and
the Court finds these arguments unpersuasive.
Therefore, the Court hereby ORDERS that Defendants
Barnesandnoble.com LLC and Barnesandnoble.com
Inc., their officers, agents, servants, employees and attorneys and those in
active concert or participation with them or Defendants ARE HEREBY RESTRAINED
AND ENJOINED from continuing to infringe United States Patent No. 5,960,411,
including by continuing to make or use within the United States Defendants'
Express Lane feature as currently configured or any other single-action ordering
system that employs the methods or systems of the '411 patent, or by inducing
others to make [**64] or use within the United States Defendants'
Express Lane feature as currently configured or any other single-action ordering
system that employs the methods or systems of the '411 patent. Defendants may
continue to offer an Express Lane feature if the feature is modified to avoid
infringement of the '411 patent in a manner that is consistent with the findings
of fact and conclusions of law set forth above.
The above Preliminary
Injunction is effective at 12:01 a.m. P.S.T. on Saturday, December 4, 1999, and
upon Amazon.com's filing an undertaking in the sum of $
10,000,000, and shall remain in effect during the pendency of this action.
The clerk is directed to provide copies of this order to all counsel of