I hope all of you are having a great Saturday 😎
Today, I'm covering Amazon's 1-click patent that was filed back in 1999. It's one of the most important internet patents and also one of the most controversial.
The craziest part of the story is that a random guy from New Zealand was able to get it narrowed down because he wanted "to have fun".
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There goes my bank account
We're all probably familiar with the famous (or infamous, depending on your shopping habits) 1-click purchase button on Amazon. This button immediately uses your saved shipping address and payment info, so as soon as it's clicked, the package is queued for dispatch by Amazon. That button has single handedly destroyed thousands of people's saving goals 💰
But when did the 1-click feature even get introduced?
In 1997, Bezos and team filed for a patent that specifically covered the method where a customer could purchase an item by clicking a single button, after which the system would automatically use the customer's stored payment information and shipping address to process the order.
Note: both parts in the sentence above are key. 1) The one click part but also 2) The fact that the system was using a database of customer info in order to make the 1-click work.
In September 1999, the patent was granted and Amazon officially owned the rights to one of the most crucial e-commerce features of all time.
Customers loved being able to shop without the extra logistical steps. Very quickly, Amazon saw. a huge increase in returning shoppers.
A year after it secured the 1-Click patent, Amazon expanded its business to include Amazon Marketplace, a platform for third-party buyers and sellers to sell new or used products. The database of consumer information that 1-Click provided was critical for Amazon at that stage. - Wharton Knowledge
Lazy Patent System
Though this was a big win for Amazon, the reality is that even Bezos knew the actual patent was more of a competitive play rather than an innovative feature. Many people thought it was unfair for the USPTO (US Patent Office) to grant intellectual rights on a basic business tool that anyone should be able to implement.
However, in the business world, all that matters at the end of the day is who owns what.
Soon after the patent was granted, Barnes and Nobles tried implementing their own "express checkout" which was also 1-click. Amazon immediately sued them for patent infringement and the court issued an injunction for B&N to change their system. To workaround this, the execs at the traditional bookstore decided to use the next best thing...the "two-click checkout" process 😂 The most brutal part of this story is that the court proceedings were happening right around the holiday season which was the time of peak traffic.
After watching Barnes & Noble pay a hefty sum to Amazon for patent infringement, Apple decided to license the 1-click system from Amazon for the iTunes checkout.
But here's where things get a bit funny...
A few years after the patent went through and Amazon was well on its way to the top of the e-commerce hill, a fellow from New Zealand named Peter Calveley decides to have some fun with Amazon's legal team.
Peter ordered a package from Amazon that delivered late so he decided to look further into the company. He had always been interested in patents so after reading through the 19 page 1-click document. He realized there were a concerning amount of similarities with a previous patent by DigiCash in 1996. David Chaum, founder of DigiCash, presented an online system that processes sales transactions at a remote location using previously stored customer data. This overlapped with Amazon's implementation of having a stored customer database through which orders were processed.
However, filing a claim to appeal Amazon's patent would cost $2500 so he decided to write a blog post and crowdfund the money needed to bring the case to court! In 2007, the USPTO decided that Amazon had to narrow down their focus of the patent in order to keep it!
How crazy is that?? A random patent enthusiast was able to bring a group of people together to (partially) take down one of the most dominant e-commerce players.
I loved the fact that he simply used his blog to present the idea and bring people together. It underscores how much the internet democratizes the playing field for the average Joe.
Finally, Amazon's control over the 1-click checkout process ended when the patent expired in September 2017.
Immediately, tons of new companies and products popped up trying to gain some portion of the marketshare. But the reality is that the feature will forever be "Amazon's invention" no matter how basic it was.
The 1-click patent gave Amazon a head start with their customer database that no other e-commerce could compete with over the decades.
It's time for Patent Reform
One thing I realized as I was doing research for this post is how outdated and stupid the traditional patent system is today.
I always assumed patents were tracking innovation globally, but that's far from the truth.
Just because you file a patent in the US doesn't make it enforceable anywhere else. For example, if Amazon hadn't received approval from the European Patent Office, some random French company could implement the exact same thing without any penalties!
Technically, the Patent Cooperation Treaty (PCT) exists but really it's just a means to simplify the application process. It still goes through the independent national phases in order to get approved which doesn't fix the core problem.
Isn't that so silly?
Innovation and technology is a global process and phenomenon, why isn't there a standard to ensure the right people are getting the credit and payouts. So much money goes to waste each yea because of patent mismanagement.
I would love to see a world where the patent system is united across all countries and implements some sort of blockchain solution to ensure provenance and permanence.
From a few minutes of google searching, it looks like there are people and companies such as IBM actively thinking about this. But it is absolutely essential that the patent system is not owned or moderated by a single institution (company or government).
I'm going to be looking into further solutions on how things are changing in the patent world.
If you were the "head of product" for the global patent system, how would you change things up? Comment below, I'd love to see any ideas!
By learning tech history, it's easier to identify tricks & techniques that can help founders approach the idea maze even today.
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