• CNNMoney.com, Tuesday, October 24, 2006 11:46 AM

What is going on with Amazon.com and IBM? IBM is launching two separate patent lawsuits against the online retailer over the use of five patents it alleges Amazon has knowingly infringed upon: Amazon's customer recommendation and purchase system, advertising, Web site navigation and the way it stores data on its network.

Pundits and analysts have been puzzled by the news, some even saying the suit makes a mockery of the patent system. These are basic Web systems: a purchase system, peer recommendation, advertising, search and storage. Now, we're no lawyers here at MediaPost, but it sounds like IBM could sue just about anyone on the Web if its patents cover these areas.

Robert Toomey, an analyst with E.K. Riley Advisors, says the suit will likely end in an out-of-court settlement. "[Amazon] certainly would like to avoid a court outcome, and patent lawsuits are also known to drag on for a long time." IBM, the country's biggest computer-services company, claims it's been after Amazon for compensation for these alleged infringements since September 2002, saying it allows many other companies to license its intellectual property.

The suits were filed in two federal district courts in the Eastern District of Texas, recently the setting for many intellectual property disputes because it's a region believed to be particularly sympathetic to the charge.

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