Amazon’s 1-Click patent and its significance for inventors and tech entrepreneurs
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Patent rights, and in general Intellectual Property rights, are amazing and sometimes Patents play a critical role in protecting and incentivizing innovation. They grant inventors exclusive rights, fostering an environment where creativity and investment in new technologies are rewarded.
For tech companies, patents are strategic assets, often serving as key differentiators in competitive markets. In most tech businesses, patent rights are essential business tools that can help inventors and entrepreneurs protect their inventions and help their businesses generate revenue and compete in a challenging competition landscape.
In this case study we want to take you through how Amazon used patents to protect its 1-click technology, drive revenue for the company, foster strategic partnerships, and position the company for exponential growth in the e-commerce sector. Amazon’s 1-click patent is a great testament to the power of intellectual property and its potential to reshape industries.
In the late 90’s, Amazon introduced a groundbreaking feature called 1-Click shopping, which allowed users to make purchases with a single click, using pre-stored payment and shipping information. A patent application, co-invented by Jeff besoz, was filed in 1997 and later in 1999 was granted (U.S. Patent No. 5,960,411) by the USPTO. This patent was a pivotal moment for Amazon, cementing its status as a leader in e-commerce innovation.
The patent had 26 claims with 4 independent claims. Perhaps, the most interesting claim is the independent claim 11, reciting:
“11. A method for ordering an item using a client system, the method comprising:
displaying information identifying the item and displaying an indication of a single action that is to be performed to order the identified item; and
in response to only the indicated single action being performed, sending to a server system a request to order the identified item
whereby the item is ordered independently of a shopping cart model and the order is fulfilled to complete a purchase of the item.”
The technology is probably best illustrated by Fig. 3 of the patent application. The United States Patent and Trademark Office (USPTO) issued a patent for this technique to Amazon.com in September 1999. Amazon.com also owns the “1-Click” trademark. This is what we call IP layering which simply put, means protecting a business concept in multiple layers.
Amazon’s 1-Click patent is a prime example of how a single invention can provide a significant competitive edge. It not only streamlined the shopping experience but also demonstrated how a patent could be leveraged to enhance customer loyalty and drive revenue growth. Notably, Amazon licensed this technology to Apple, signifying its value in the tech world.
Instead of directly competing with Amazon, Apple opted to licence the technology in 2000 through a cross-licensing agreement. This allowed Apple’s customers to make 1-click purchases from the Apple Store, leading to a significant exchange of press.
“The Apple Store has been incredibly successful and now we’re taking it to the next level,” said Steve Jobs, Apple’s CEO. “Licensing Amazon.com’s 1-Click patent and trademark will allow us to offer our customers an even easier and faster online buying experience.”
“Apple has a long history of innovation,” said Jeff Bezos, founder and CEO of Amazon.com, “and we’re extremely happy to work with them.”
This instance is a clear example of how an IP strategy around patents can foster partnerships, innovation, and business growth.
On another event, Amazon filed a patent infringement lawsuit against Barnes & Noble in October 1999, reacting to their introduction of an ordering feature called “Express Lane” which was similar to 1-click. After evaluating the presented evidence, a judge granted a preliminary injunction, ordering B&N to cease their Express Lane service until a resolution was reached. What did B&D do? They designed around 1-click by implementing a method that required customers to click a second time to confirm their purchases! Eventually, the lawsuit was resolved in 2002, with an undisclosed settlement deal but the specifics of the settlement, including any licensing agreements or financial compensation to Amazon, remained confidential.
If you are interested in strategizing in a competitive market, here is an interesting read by Harvard Business Review on how Barnes & Noble went to compete back against Amazon in the E-book industry.
Yes, it can!
once a patent is granted, it means that the assignee (i.e. owner) of the patent has the exclusive right to stop others from commercially exploiting the patented invention in the territory where the patent is granted. But it does not mean that this exclusive right cannot be challenged! A granted patent can be challenged either via a patent office or a court of law. A court may invalidate or revoke a patent upon a successful challenge by a third party. In addition, many patent offices provide administrative procedures that allow third parties to oppose to the grant of a patent (including so-called “opposition systems”), for example, on the basis that the claimed invention is not new or does not involve an inventive step.
On May 12, 2006, the USPTO ordered a reexamination of the “One-Click” patent, based on a request filed by Peter Calveley. Calveley cited as prior art an earlier e-commerce patent and the Digicash electronic cash system.
On October 9, 2007, the USPTO issued an office action in the reexamination which confirmed the patentability of claims 6 to 10 of the patent. The patent examiner, however, rejected claims 1 to 5 and 11 to 26. In November 2007, Amazon responded by amending the broadest claims (1 and 11) to restrict them to a shopping cart model of commerce. In March 2010, the reexamined and amended patent was allowed again.
The 1-Click patent expired in 2017, opening the door for other e-commerce platforms to incorporate similar technology. This expiration marked a significant shift in the e-commerce landscape, as it allowed for more widespread adoption of convenient purchasing methods, further transforming online shopping experiences.
The story of Amazon’s 1-Click patent offers valuable lessons for entrepreneurs and startup founders. It highlights the importance of intellectual property in establishing market dominance and driving innovation. For tech entrepreneurs and inventors, it underscores the potential of patents to not only protect ideas but also to serve as vital tools in carving out a competitive edge in today’s fast-paced technological world and increase market share and dominance, thereby fueling revenue generation for the business. Additionally, exclusive IP rights, provided by granted patents, can foster strong partnerships with other industry leaders as was the case between Apple and Amazon, and subsequently drive innovation and new revenue channels.
Are you curious to learn more about the wonders of patent protection and how it can drive value for your business? Contact us!
