Amazon's 1-Click Patent Is About To Expire. What's The Big Deal?

DAVID GREENE, HOST:

Next week, a controversial patent from the early days of the Internet expires. It is known as the 1-click patent, and it belongs to Amazon. Julia DeWitt from our Planet Money podcast explains why this is such a big deal.

JULIA DEWITT, BYLINE: The Amazon 1-click patent is precisely what it sounds like. When you sign in on Amazon and you go to buy something, you can just press one button and bam, thing bought. Amazon patented that process back when it was just a little online bookseller in 1997.

KEN WILBUR: It's something that they probably never should have been able to patent.

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DEWITT: This is Economist Ken Wilbur. He's an associate professor at the Rady School of Economics at UC San Diego.

WILBUR: It's like imagine Wal-Mart patented only making their customers wait in the checkout line once. It's just ludicrous.

DEWITT: Ludicrous now, but in 1997, Amazon was just three years old. Google didn't even exist yet. Doing pretty much anything on this new World Wide Web seemed innovative. Mark Lemley is a patent lawyer and professor at Stanford. He, like many patent lawyers, knows this case well.

MARK LEMLEY: This was part of a class of patent applications filed in the '90s and 2000s that really were directed at kind of a business idea - a concept.

DEWITT: This was called a business method patent. Rather than a new technology, like a physical machine or a tangible thing, it's a patent on a process or even an idea. It just had to meet three criteria...

ROBERT STOLL: New, novel and non-obvious.

DEWITT: Bob Stoll is a former commissioner for patents and was at the U.S. Patent and Trademark Office back then. He defends the patent office's decision on Amazon. But he admits it was a confusing time. The novelty of the Internet made what looks in retrospect like kind of small changes to business methods seem newly patentable.

STOLL: And the capability of the examiners was not the best in this particular area. So a lot of improvidently granted patents were issued in the financial services business method area, which caused a lot of concern and, in fact, a lot of problems.

DEWITT: Back in 1999, almost as soon as Amazon got the patent, Barnes and Noble introduced their own system called Express Lane. Many people argued Amazon won the suit before it even started. The company got to stay on Express Lane for two holiday shopping seasons, getting them their first solid foothold in the book market they soon would dominate. Apple didn't even try to challenge the patent. They just went ahead and licensed it outright. When you impulse buy that Akon song in one click on iTunes, that's Amazon's 1-click.

Now with the patent set to expire on September 12, Facebook Google, Microsoft and other big players have been talking about how to develop an internet-wide 1-click checkout, where your credit card information moves with you from site to site. Ken Wilbur teaches business analytics, and he watches these kinds of trends in e-commerce.

WILBUR: So the main thing I would expect is the large tech companies that are not already licensing the patent from Amazon are very likely to implement their own versions of the technology immediately.

DEWITT: So get your index fingers ready because come September 12, it will get even easier to buy that third Snuggie you never needed all across the Internet. Julia Dewitt, NPR News.

[POST-BROADCAST CORRECTION: In this report, economist Ken Wilbur is described as being an associate professor at the Rady School of Economics at UC San Diego. In fact, it's the Rady School of Management at UC San Diego.] Transcript provided by NPR, Copyright NPR.