E Commerce: They've Got The Patents But So What?

When Open Market Inc. announced in March that it had won three patents in electronic commerce, the scope of the claims was breathtaking. The fledgling Burlington (Mass.) company seemed to have staked out rights to some of the most widely used technologies in the exploding business of buying and selling over the Internet. Its patents cover electronic shopping carts, the authorization procedure for real-time payments over the Net, and "session identifiers," which let online merchants track a shopper's movements on a Web site. "There's really no form of Internet commerce that doesn't use one or all of those components," says analyst Christopher W. Stevens of market researcher Aberdeen Group Inc.

But Open Market is finding out that the patents' prestige is difficult to translate into financial benefits. Although players such as IBM, Microsoft, and Visa International use the technologies regularly, Open Market is having a tough time collecting royalties or using the patents to boost its own software sales. Experts say the company probably can't take competitors to court because its patents are so broad that they are unlikely to withstand legal attacks. What's more, the alleged infringers have such deep pockets that they could bury the smaller company under legal fees.