Though legal action was only begun last year, IBM informed
Amazon in 2002 that it believed that the company's web retail
operation infringed some of its patents. IBM then filed two
law suits in October 2006 alleging that Amazon's web operation used
technology which it invented.
Five patents formed the basis of IBM's claim, and they related
to recommendation systems, advertising and data storage
technology.
When filing the law suits, IBM said that the technology behind
its patents dated back to 1990 in some cases. It said that it had
tried for four years to negotiate licensing deals, but that those
negotiations had been fruitless.
Amazon fought back, filing a counter-suit claiming that in fact
it was IBM which was infringing patents it held.
The two companies have now come to an agreement by which each
company will licence the patents of the other. Amazon will pay IBM
an undisclosed sum.
An Amazon spokeswoman told The New York Times that the deal
would have no material impact on the web retailer's results. The
sum to be paid has already been factored into its guidance to
analysts and investors for its second quarter and annual results,
said the spokeswoman.
IBM says that it applies for more patents per year in the US
than any other company, spending $6 billion a year on research and
development and earning $1 billion a year in patent royalties.
