Amid the great Wall Street feeding frenzy over all things digital, the E-data Corporation is taking a seat at the last supper of capitalist gluttony. It all started with a group of Nasdaq hacks who saw the latent potential in US Patent No. 4,528,643, granted to computer scientist Charles C. Freeny back in 1985. The patent envisions an electronic distribution system that covers any point-of-sale transaction involving the purchase of digital data products, including software, music, fonts, news stories, digital images, and video.
Of course, that covers just about every form of commerce conducted over the Internet. Now, having purchased Freeny's patent, E-data is suing 43 companies for patent infringement, including big fish such as CompuServe, Br�derbund, Ziff-Davis, and Waldenbooks.
Freeny's patent prescience has become E-data's winning ticket. Before getting into the patent infringement business, E-data was called Interactive Gift Express Inc., and the company still runs Dial-A-Gift, which distributes gift packages of plush toys, bathroom soap, and glazed ham."
I was asked to look at the patent by a group of investment bankers," recalls Arnold Freilich, president and CEO of E-data. "We then acquired the patent after we obtained control of E-data. At the time, there was virtually no on-demand electronic distribution system, so I was amazed by the vision expressed in the patent."
Amazed, no doubt, by just how easy it is for a corporation with a lame-duck product to make a mint on someone else's intellectual property. In its latest ploy to persuade "infringers" to start shelling out cash, E-data sent amnesty packages to 75,000 companies. The amnesty program gives companies until August 31, 1996, to buy a license for the E-data patent ... or else. Adobe and IBM have already caved in and paid their dues, which involves sending the company an annual renewal fee plus an "affordable" check based on e-commerce revenue."
Our files are growing every day, and we continue to watch all areas of the market with vigilance," Freilich asserts. "We will continue to vigorously enforce our patent's claims, but our amnesty gives companies the perfect opportunity to line up for a license instead of a lawyer."
Of course, even without a license, you can still get in on electronic commerce - if you don't mind waiting a while. Mark your calendar: E-data's killer patent expires on January 10, 2003.
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