Executive Intellectual Property Bulletin

How Broad is the E-Data Patent?

US Patent No. 4,528,643 to Freeny, Jr. entitled: System for Reproducing Information in Material Objects at a Point of Sale Location, filed January 10, 1983, has a lot of software companies worried. In fact, it is reported that up to 75,000 companies were mailed a letter informing them of the patent and offering a license to use it. Be assured that just because this letter is received, does not mean that you need a license. For one, it is unlikely that any detailed analysis of each and every company's method of software distribution has been performed. Second, the patent has not been tested in court. Third, the patent does not cover all forms of electronic distribution of software.

In discussing the patent with the attorney for E-Data, the letter was characterized simply as an invitation to take a license if after looking at the patent, it is felt that one is needed. Several large companies have been sued under the patent, and some have taken a license. IBM was the first reported to take a license prior to any litigation, and that fact may be a reason why some others have taken licenses. It could be viewed as a cheap insurance policy to avoid the expense of litigation.

As with any patent, the scope of it is determined by starting with the claims. This patent contains three independent claims, the first describing a method for reproducing information in material objects via machines located at point of sale locations. The information is obtained from a remote source. Reproduction is requested by indicating a unique catalog code, and then providing an authorization code to the point of sale machine. When the point of sale machine receives both the request and the code, it produces a material object with the information on it. The claim is just vague enough that it raises several unanswered questions. Is a personal computer in a home at a point of sale location? Does that term require money to change hands? What is an authorization code, is it a credit card number? Can an internet address where a program is stored be considered a catalog number? Is a password an authorization code? Does the information already have to be at the point of sale location. These questions can only be answered following a detailed analysis of the patent, its prosecution history and the prior art.

Since a patent can't cover things that were in the public domain, the providing of shareware or trial versions of software may not be covered depending on how it is obtained by a user. The precursor to the World Wide Web, Arpanet was in existence in 1971 with about 15 nodes and allowed downloading of programs (information) if you asked for it (by "catalog" number) and perhaps knew a password (authorization code.) There is likely much other prior art which will significantly limit the scope of the patent.

For more information on this topic or other intellectual property matters, please contact Brad Forrest or any one of the other attorneys at Schwegman, Lundberg & Woessner, P.A. at 612-339-0331 or by facsimile at 612-339-3061.

This bulletin is not intended to serve as legal advice. For a specific problem, legal advice and analysis should be sought from a qualified attorney. Do not rely on this bulletin to make decisions which may affect your liability.