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Tuesday, October 24, 2006 - Page updated at 12:00 AM

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IBM says Amazon violated five patents

Bloomberg News

IBM filed two lawsuits Monday claiming Amazon.com "built its business" by infringing upon five IBM patents.

International Business Machines sued Amazon in federal court in eastern Texas, saying four years of licensing talks over the patents had broken down. The Texas court is known for patent expertise.

IBM said it's entitled to "royalties on the billions of dollars in revenue that Amazon has received."

"We filed this case for a very simple reason," John E. Kelly III, senior vice president of technology and intellectual property at Armonk, NY.-based IBM, said in a statement. "IBM's property is being knowingly and unfairly exploited."

IBM, which has one of the world's biggest collections of patents, claimed that Seattle-based Amazon is infringing patents on systems that fashion recommendations for customers based on past purchases, as well as patents on Web-site navigation and data-storage technologies.

"These patents are fairly core to Amazon's business," Edward Barbini, an IBM spokesman, said. "Amazon.com has built its business model on these patents."

The patents are based on electronic-catalog technology developed in the 1980s and electronic-commerce inventions from the early 1990s.

Amazon.com was founded in 1994.

"IBM is a very aggressive licensor but almost never sues," said Robert Yoches, a patent lawyer with Finnegan Henderson Farabow Garrett & Dunner in Washington, D.C., who isn't involved in the case.

"I guess after four years they figured they weren't going to wear down Amazon, Yoches said.

The suit isn't likely to affect Amazon's business, said Tim Ghriskey at Solaris Asset Management.

"There may be a royalty involved that they are going to start paying IBM if indeed there are patent violations," Ghriskey said.

"The fact they were willing to let IBM file a lawsuit means Amazon must disagree with IBM. Even if they lose, that shouldn't be that onerous an issue," he said.

Amazon.com spokeswoman Patty Smith said the company hasn't seen the suits and had no immediate comment.

Copyright © 2006 The Seattle Times Company

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