Question

select a recent legal case regarding Internet-related intellectual property What are the issues? How is the case important to the e-commerce business community?

Answer 1

An interesting case is Apistry v Amazon. Apistry obtained U.S. Patents and sued Amazon for patent infringement by Amazon using Apistry’s patented technology.

In December 2013, Apistry, Inc. filed a lawsuit against Amazon.com and Amazon Web Services, Inc. for patent infringement. It was alleged that Amazon’s Elastic Compute Cloud infringed US Patent Nos. 8,200,746, entitled “System And Method For Territory-Based Processing Of Information,” and 8,341,209, entitled “System And Method For Processing Information Via Networked Computers Including Request Handlers, Process Handlers, And Task Handlers.”

Ultimately, the Apistry patents were invalidated in line with the 2014 Alice Corp. v. CLS Bank International - Wikipedia US Supreme Court case as being patent-ineligible due to the inventions only being “abstract ideas”.

The more interesting aspect of the case was that Amazon partially successfully argued that as an Apistry employee had at one point signed up for an AWS service, and agreed to the click-through on the AWS (Amazon Web Services) Service agreement, Apistry was bound by that agreement and, as a result, Amazon got the case moved to the US District Court for the Western District of Washington.

The AWS agreement has an IP infringement escape clause that lives on forever, even after the contract ends, clause 8.5:

“During and after the Term, you will not assert, nor will you authorize, assist, or encourage any third party to assert, against us or any of our affiliates, customers, vendors, business partners, or licensors, any patent infringement or other intellectual property infringement claim regarding any Service Offerings you have used.”

Amazon argued that Apistry could not sue them for patent infringement on the strength of clause 8.5 of the AWS agreement and got some traction from that argument with the court before the US patents being invalidated meant that the case ended, leaving the question undecided by the court.

From Amazon’s argument in this case, it takes the view that Amazon can escape patent infringement or other IP infringement if the entity suing it has ever signed up for an AWS service. If correct, this has tremendous implications for the future as this would mean that the tens or hundreds of thousands of businesses that have at any stage used AWS are prevented from successfully suing Amazon, its affiliates, customers, vendors, business partners, or licensors for IP (including patent) infringement.

The take-home messages here are:

1. It does pay to understand the terms and conditions that you sign up to.
2. Merely because a corporation is big and trusted by many other businesses does not mean that it will respect your IP.
3. Following the crowd can hurt.