There has been much press comment recently on the way the new e-commerce players are abusing patent law in the US to protect their market share. The headline example is Amazon.com’s ‘one click’ purchase patent which has successfully been used against competitor Barnes and Noble. James Gleick, writing in the New York Times described such patents as ‘a ridiculous phenomenon that could kill e-commerce.’ We have noted that a couple of the new websites for E&P related e-commerce boast patent applications, one in particular claims ‘Web site design and business method - patent pending.’
So it might be worth thinking through just how these various staked claims will affect the way we do our e-business in the future. No better place to start than Amazon, the grand daddy of e-commerce. Why is one of the first and most successful businesses so panicky that it has to protect itself by these ‘air we breathe’ patents? I think it is because we have not yet seen anything like the real impact of the Internet. Amazon’s business model is quite shaky and open to competition. It relies on the high street store kind of phenomenon with ‘faithful’ customers. But the power of the internet should allow an author sell his or her book (or e-book) directly to the reader. All that is then required is a search engine which locates the author-publisher or bookseller, large or small. Now the search engine business has the unfortunate attribute of being a low cost operation. OK you can make some sort money with advertising. But the service element conflicts with banner ads which are a source of irritation to most surfers. If you push the logic a little further, you can see that what the reader really wants is a peek straight into the authors website.
To achieve this, the book buyer needs a ‘url bank’ of writers and bookshop websites. This would at the very least allow you to locate a hard to find book - currently not a strong point with Amazon. What has this to do with E&P? Well a similar argument can be made in the field of acreage trade. The growing number of asset sale websites would tend to suggest that a trader might spend a day or so trawling through the various portals, each with their own deals and (patent) interfaces, just to build up a picture of what is on offer. Not really a great advance on what the scouts of yesteryear did over lunch.
Now if there was a standard way of presenting a deal, and if someone maintained a url bank of the dealers, then the trader could switch on his or her GIS browser in the morning which would already be populated with the latest offers. The cost of maintaining such a url bank, I would suggest, would be very low. The standards probably exist already, but if we don’t know what they are, this may reflect a conflict of interest between standards and commerce. A lack of standards acts in the same way as the dodgy patents in keeping newcomers out of incumbents’ business.
In the related field of on-line trading of oil and gas liquids, BP Amoco has been active in a spate of alliances with e-traders (see page 8). Tony Fountain, president of BPA’s North American Gas and Power unit said “BPA has invested in several neutral energy exchanges which harness the power of the Internet to bring a more transparent, low cost, multi-party market to a broader range of energy product buyers and sellers."
The intent is clear and I believe that as long as the internet can provide ’transparency and low cost’ then it will be viable. The alternative, of staking claims to bits of the action with spurious patent claims, and idiosyncratic interfaces will not. In Gleick’s words, “The [patent] battles will determine whether the essential tools and building blocks [of e-commerce] will continue to spread rapidly through the community of software designers and Internet pioneers, or whether they will be cordoned off as the private property of particular companies.
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