Before the patent infringement case filed by IBM against Amazon.com could go to trial, Amazon agreed to pay unspecified licensing fees to IBM making a court date unnecessary. Amazon, which had countered IBM was also infringing on its patents, also reached a long-term cross-licensing agreement with Big Blue. The issue at hand involved IBM's claim that Amazon had infringed on five 'seminal' patents to e-commerce, involving the back-office mechanics of how internet shopping works. Amazon responded that if how it operates constitutes patent infringement, than any business conducting commerce online would essentially have to pay IBM for the privilege to do so. The amount of the settlement was not disclosed; Amazon said the amount is immaterial to its earnings. IBM generally brings in about $1 billion a year in licensing fees for the broad portfolio of patents it controls.
Sources: Wall Street Journal, AP, TheStreet.com, Reuters
Commentary: Do We Really Need Patent Reform? Ask Amazon and IBM • Will IBM's Project LEAN Really Fatten Up Shares? • Amazon's Most Profitable Business: Buying Back Its Own Shares
Stocks/ETFs to watch: Amazon.com (NASDAQ:AMZN), International Business Machines (NYSE:IBM). ETFs: Internet HOLDRS (NYSE:HHH), Internet Architecture HOLDRS (NYSE:IAH)
Conference call transcripts: Amazon.com Q1 2007 Earnings Call Transcript • International Business Machines Q1 2007 Earnings Call Transcript
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