In the vast ether of information on the Internet, Ophir Frieder knows how to search like few other web surfers.
That’s because Frieder, chair of IIT Research Institute and professor of computer science at IIT, is one of the pioneers of online search technology. He has developed search engine algorithms and specialized search tools used by giant companies such as NCR Corporation, IBM Corporation, and America Online. He is the joint-holder of five different patents owned by the United States Air Force and Army, big defense contractor Northrop Grumman Corporation, and Telcordia Technologies Inc., a former research arm of the regional Bell companies. And he has nine more patent applications awaiting approval.
Indeed, the 39-year-old computer wizard acknowledges that many of his search engine ideas-developed while at IIT, as well as in his days as a consultant to a variety of governmental agencies and contractors-are even used in places and for purposes that the U.S. government doesn’t publicize. “We’ve helped many commercial organizations and government bodies-both openly and in private.”
So, when lawyers from the Washington, D.C.-based law firm of Hunton & Williams called him two years ago to consider testifying in a patent infringement case filed against e-commerce juggernaut, eBay Inc., their own search turned up an expert par excellence.
As chief technical witness for the 176 patent in the case of MercExchange LLC v. eBay Inc., Frieder provided expert testimony that led to one of the largest payouts in an Internet patent infringement case since the web boom began in the late 1990s. And the aftershocks from the jury’s decision are already affecting Frieder and his research at IIT.
Here’s how the case unfolded: In April 1995, a visionary inventor named Thomas Woolston applied for several so-called “business-method” patents: one that covered a process for listing goods for purchase in an online marketplace, and another which involved a means to search for that merchandise across different online marketplaces. “Business-method” patents, unlike patents that cover physical inventions, apply to a process-and critics contend that they inappropriately extend to basic business practices.
Woolston says he came up with the idea after hearing a story on the radio about a Virginia-based baseball-card shop that was losing business as a result of the 1994 Major League Baseball strike. The problem, however, was that Woolston could never find venture capitalists to finance his dream project. Still, his patent was filed years before eBay became one of the most successful Internet companies-and his “business-method” for searching online marketplaces appeared to cover the technical processes of many e-commerce firms, such as GoTo.com and Half.com, that blossomed at the height of the go-go Internet era.
As chief technical witness for the plaintiff, Frieder reviewed Woolston’s patent application and concluded that, indeed, he had “a vision of the Internet as this big electronic marketplace.” His search methodology would enable buyers to move away from so-called “catalogue” purchasing, in which consumers can order from a list of products, but don’t know if they are actually still available or if their price has changed. Instead, Woolston envisioned a process where buyers online could purchase a specific product and compare prices across marketplaces-and know that they would receive the exact product that they intended to buy.
That “business-method,” Frieder says, is what eBay now provides. “I believe that they are infringing,” Frieder argues. Last month, a jury in federal court in Norfolk, Va. agreed with him. They found that Woolston’s patent was infringed by eBay and awarded $35 million to the 40-year-old inventor, adding that eBay “willfully” infringed his patents. That finding might allow a judge to triple the $35 million jury award.
Timothy Holbrook, an assistant professor of law at IIT’s Chicago-Kent College of Law, who specializes in patents, agrees that the eBay decision bolsters the legal standing of “business-method” patents, although an appeal could still overturn the ruling. “The decision is interesting in that a lot of people viewed eBay’s process as pretty obvious,” says Holbrook. However, “the jury said the patents are valid.”
What’s more, Holbrook, who tried many patent cases while in private legal practice, says Frieder probably played a critical role in the jury’s decision. “Expert technical witnesses are essential because you have to explain to the layman what the patent is,” says Holbrook. “You definitely need someone who is credible, intelligent, and also personable.” To the jury, it seems, Frieder fit the billing.
“The size of the jury verdict shows how serious a problem we have in how the patent office is issuing business-method practices,” says Henry Perritt, professor of law at Chicago-Kent. Despite recent amendments to patent law by Congress, Perritt thinks it may take action by the Supreme Court to reign in what he perceives to be business-method patenters run amok. “There are people who lie in the weeds, file a business-method patent and then file for patent infringement,” he adds.
Expert witnesses such as Frieder are vital to the proper functioning of the U.S. legal system. According to Perrit, “Almost any case of any patent significance relies on expert testimony.”
The effects of the ruling are already being felt. Frieder says he has turned down several new requests to act as an expert technical witness in other patent infringement cases. And, “I’ve been offered many consulting jobs in the last month,” he says. He doesn’t have any current plans to leave IIT, he says. But after years in which his 14 approved and pending patents have been reaping benefits for the companies-like Northrop Grumman-that own them, he won’t be giving up lucrative rights to future income. “I was the fool who went for it,” he says. “That won’t happen very much longer.”
But the larger impact of the eBay ruling, he says, is this: “It legitimizes business-method patents and the notion of these patents on the Internet,” he says. Despite critics who argue that “business-method” patents are excessively broad, and that a raft of lawsuits over such patent rights could stymie innovation, “the ruling demonstrated that there are differences in business-method patents on the Internet,” says Frieder.
As a result, Frieder’s own research may shift. After years conducting the typical “deep but narrow” academic research on subjects like algorithms, XML and text searches, “it may now worth looking more at practice,” he says. Specifically, the University of Michigan-trained PhD in computer science and engineering may focus on how Internet search technology ranks subjects or sorts them according to the relevance of the individual’s search.
It’s those types of “business-methods” that could be valuable new inventions for the future of the Internet. After years in which Frieder didn’t see a penny from any of his inventions-such as a search engine previously used by the National Center for Complementary and Alternative Medicines, a former unit of the National Institutes of Health, to disseminate information about alternative disease treatments-the eBay case has been a watershed for both “business-method” patent owners and Ophir Frieder.
In the marketplace of ideas, Frieder’s next invention could prove highly lucrative.