This post is part of a series of posts entitled A Legal Guide to the Internet. For a comprehensive list of articles contained in this series, click here.
A patentee obtains the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States, or importing the invention into the United States. If the invention is a process, the patentee obtains the right to exclude others from using, offering for sale, or selling throughout the United States or importing into the United States products made by that process.
Online sellers of products could potentially be liable for patent infringement. Patents related to electronic transactions using the Internet are being granted by the USPTO. For example, the E-Data Corporation owns a patent that covers electronic point-of-sale transactions involving digital data. The patent is related to manufacturing and distributing information embodying material objects by using point of sale machines that are in communication with a common host. Since the inventor of this process is Charles C. Freeny, Jr., it has become known as the “Freeny Patent.” Several thousand companies involved in electronic commerce have been contacted by E-Data and been asked to pay royalties. Some of these companies even entered into licensing agreements, including IBM and Adobe Systems.
It is not clear to what extent the Freeny Patent covers electronic commerce or if it will have only limited application. However, case law has begun to to define its scope. In Interactive Gift Express, Inc. v. CompuServe, Inc., 47 U.S.P.Q.2d 1797 (S.D.N.Y. 1998), the plaintiff alleged that CompuServe contributorily infringed and induced infringement by offering computer software via the Internet. The court suggested a very limited scope of the Freeny Patent and concluded that it applied only to electronic purchases made by buyers using kiosk-type terminal equipment in a retail setting and not any place where a computer was located and used to reproduce information in a material object for a price. However, the Federal Circuit vacated and remanded the decision, holding that the lower court erred on the construction of the claim limitations and interpreted the patent too narrowly, Interactive Gift Express, Inc. v. CompuServe, Inc., 2001 U.S.App. LEXIS 15711 (Fed. Cir. July 13, 2001).
Patent rights associated with the basic process of electronic transactions will certainly have a significant impact on the development of electronic commerce using the Internet. High speed modems, which are critical to the commercial future of the Internet, have also been the subject of patent claims and conflicts. It will be interesting to monitor the extent to which patents are actually issued by the USPTO for Internet related technology and whether such patents will impede or bolster the expansion of electronic commerce on the Internet. The following section discusses the wide range of Internet related inventions that may be patentable.
United States Patent   Patent Number: 4,528,643 Freeny, Jr.  Date of Patent: Jul. 9, 1985
 SYSTEM FOR REPRODUCING INFORMATION IN 4,209,787 1/1980 Freeny, Jr
MATERIAL OBJECTS AT A POINT OF SALE LOCATION 4,217,588 8/1980 Freeny, Jr
 Inventor: Charles C. Freeny, Jr., 4,220,991 9/1980 Ramane et al.
Fort Worth, Texas 4,232,317 11/1980 Freeny, Jr
 Assignee: FPDC, Inc., Oklahoma City 4,265,371 5/1981 Desei et. al
Okla. 4,265,371 5/1981 Desei et. al
 Appl. No. 456,730 4,270,182 5/1981 Asija
 Filed Jan. 10, 1983
 Int. Cl . . . . . . . . . . . . . . . . . . . . .G06F 1/00 Primary Examiner–Raulie H. Zache
 U.S. CL . . . . . . . . . . . . . . . . . . . . .364/900 Attorney, Agent, or Firm–Dunlap & Codding
 Field of Search ….364/200 MS File, 900 MS File
 References Cited
U.S. PATENT DOCUMENTS  ABSTRACT The present invention contemplates a system for
3,829.813 9/1974 FREENY, JR. reproducing information in material objects at a point of sale
3,911,397 10/1975 FREENY, JR. location wherein the information to be reproduced is provided
3,924,065 12/1976 FREENY, JR. at the point of sale location from a location remote with
3,945,220 3/1976 Brobeck et al. respect to the point of sale location, an owner authorization
1,970,952 7/1976 Boohrogrd et al. code is provided to the point of sale location in response to
4,071,911 1/1978 Mazur 364/900 receiving a request code from the point of sale location
4,112,433 9/1978 Freeny, Jr. requesting to reproducing predetermined information in a
material object, and the predetermined information is
reproduced in a material object at the point of sale location
in response to receiving the owner authorization code.
56 Claims, 4 Drawing Figures