If you haven't heard of a Hong Kong company called Pat-rights before, the name may become only too familiar to Apple Computer, eBay, America Online, and other major cyberspace players. The company is suing Apple for patent infringement and demanding up to twelve percent of all iPod and iTunes sales, while possibly looking to pry lucrative licensing fees from others—and even from the adult Internet.
Reports circulating the Internet this week indicated Pat-rights claims an American patent, granted in December 2003, for Internet User Identify Verification—which covers any online financial transactions requiring passwords for protection, the company says.
"(O)ur patent 6,665,797 is directed to restricting software to be used by its rightful user, by means of a psychological barrier," Pat-rights says in a statement. "Specifically, the software to be protected is authorized to be used on a user computer only if the user can submit confidential info for accessing an account or the same is existing in the user computer."
How does this apply to the adult Net? According to Pat-rights, the adult Net merely calls IUIV "age verification system" (AVS), and AVS, the company claims, infringes the IUIV patent. "AVS verifies a porn Website visitor as an adult basing on credit card information submitted, before allows the visitor to enjoy free porn content," Pat-rights said, on a site page describing the patent in basic detail.
The company has yet to make any known move against any adult Internet company whose primary business is AVS or which uses AVS systems Pat-rights could consider infringers.
Apple is claiming prior art against the Pat-rights patent claim, including an earlier patent for what the computer maker called "IC memory card and method of protecting data therein," which Apple in a reported communique to Pat-rights described as “a method of protecting data on an IC memory card having a ROM area and a RAM area and used as an external storage medium of a computer system, first key data for preventing copying is stored in the ROM area of the IC memory card and the copying of data that has been stored in the RAM area of the IC memory card is prevented using the key data."
Nonsense, Pat-rights rejoined. "The document mentions nothing about payment mechanism, account or password or the like," the company answered in a reply published on its Website, "it only mentions 'An individual wishing to purchase the information insert the IC memory card in any of the information servers….uses a sales control panel to specify the information desired to be purchased and pays the required fee by cash or by using a prepaid card or the like.'
"The inventor of this US Patent 5,428,685 lacks the concept of 'psychological barrier' and throughout the document it discloses nothing related to our Patent 6,665,797," Pat-rights continued. "Apple is wasting our time. This so called prior art patent is nothing at all."
Pat-rights is gunning for Apple's user verification regarding its iPod digital rights management technology. They're not the only company taking out after iPod: Advanced Audio Devices is also accusing Apple's iPod of infringing one of its patents, issued in 2000, involving a music jukebox, a method for storing music. AAD reportedly offered Apple a settlement in December but claims Apple rejected the attempt.
The Pat-rights litigation, though, could carry more broad implications since the company also claims its IUIV patent covers such "infringing parties" as eBay and AOL. Some analysts have said that "psychological barrier" is patent and Pat-rights-speak for passwords.
And while the company claims its ultimate aim is to become an Internet content distribution business, beginning with selling personal computer games online, those same analysts have suggested their real full-time business might become litigation, while the patent stands to be so costly to Internet-based businesses that eBay, AOL, and others won't hesitate to fight them back.
