Web Systems Design and Online Consumer Behavior [Electronic resources] نسخه متنی

Issues for the Web Systems Designer

One-Click Online Shopping

Designing a commercial Web site generally includes providing a method for consumers to pay
for their purchases and this interface has been the focus of much of the litigation. Over time, the
shopping cart metaphor has come to permeate the Web, allowing a consumer to flag items the consumer
wishes to buy and place them in a virtual shopping cart. However, placing items in a cart does not
necessarily mean a purchase will result.

Some studies show that the average abandonment rate for a shopping cart is 30% or higher
(Lewin, 2002). Although high shipping costs encourage abandonment, ease of use is also a factor.
For example, requiring users to click a “Buy” button to add each item to the cart, or to view the
shopping cart each time an item is placed there, discourages purchase. Other chief annoyances that
lead to abandonment include requiring users to register before adding items to the cart or to enter
personal information before providing a total.

As a means to reduce shopping cart abandonment, Amazon.com developed a system to allow users
to order, pay, and specify delivery arrangements for items sold via a Web site, with a single mouse
click (Petty, 2001). In 1999, Amazon.com filed US Patent No. 5,960,411, entitled “Method and system
for placing a purchase order via a communications network.” The patent is not particularly long or
complicated but the monopoly it claims is quite broad. The first claim from the patent, which is a
formalized “word picture” of the invention, reads as follows:

A method of placing an order for an item comprising: under control of
a client system, displaying information identifying the item; and in response to only a single
action being performed, sending a request to order the item along with an identifier of a purchaser
of the item to a server system; under control of a single-action ordering component of the server
system, receiving the request; retrieving additional information previously stored for the
purchaser identified by the identifier in the received request; and generating an order to purchase
the requested item for the purchaser identified by the identifier in the received request using the
retrieved additional information; and fulfilling the generated order to complete purchase of the
item whereby the item is ordered without using a shopping cart ordering model.

Although the claim would be read in light of other information provided in the patent, it
seems like just about any method, which requires the user to click only once to place an order,
would infringe (violate) this patent.

Infringement of this patent became an issue during the 1999 holiday shopping season.
Amazon.com persuaded the US District Court for the Western District of Washington to enjoin
Barnesandnoble.com (B&N) from using its Express Lane ordering system (Amazon.com, Inc. v. Barnesandnoble.com, Inc. (1999)) The Express Lane
feature allowed registered customers to purchase items by clicking on the Express Lane button
displayed beneath the product. The button displayed the message, “Buy it now with just 1 click!”
B&N described this feature as a “major enhancement” to its e-business (Jarvenpaa & Tiller,
2001).

In response to Amazon’s suit, B&N appealed the preliminary injunction to the Court of
Appeals for the Federal Circuit, which handles patent matters (2001) and the Court vacated the
injunction. The basis for the Appeals Court decision was that the District Court had misread the
references (prior art) provided by B&N, which indicated that the Amazon patent might, in fact,
be invalid. If the patent were invalid, infringement would be a non-issue and an injunction
unnecessary.

In order for an applicant to obtain a patent, the USPTO must determine that the invention in
question is new or novel. Sometimes mistakes are made. By supplying evidence that One-Click was not
a new idea, B&N could cause the USPTO to invalidate the Amazon patent. However, the Court also
noted that Amazon would probably succeed with its infringement suit, unless its patent was
invalidated. On March 6, 2002, a press release stated that Amazon and B&N had settled the case
out of court (Dunnam & Washburn, 2002).

Organizations such as the Free Software Foundation (Stallman, 1999) and the League for
Programming Freedom (2003) spoke out against Amazon’s lawsuit because of its perceived negative
impact upon programming innovation. Given that many prevalent programming techniques have not been
formally published, the lawsuit created the possibility that anyone could apply to patent a given
technique and thus obtain a monopoly on its use, despite the fact that the technique was not new at
all. The PTO would have no way of knowing what was new because there was no database of existing
software techniques to search. Most patents would not be contested because the cost and effort
involved in contesting a patent’s validity is considerable and most independent programmers would
not be able to mount the effort. In the long run, consumers would be the losers as they would not
have access to convenient methods of shopping, except on Web sites owned by organizations, which
could afford to license patents.

Because this case was settled and did not result in a court decision, its impact is somewhat
limited. Nevertheless, it probably is reasonable for a Web designer to pay attention to the various
payment options in use on the Web, and to avoid copying a particular method, unless the designer is
certain it is not subject to copyright or patent protection. Managers, marketers, and others
involved in e-commerce should also be prudent in implementing business methods on the Web, given
the cost of litigation and the effect that an injunction could have on a business’s bottom
line.

Digital Wallet

Another approach to purchasing goods on the Web, designed to appeal to consumers, is the
digital wallet. The wallet is a storage vehicle for usernames, passwords, addresses, credit card
numbers and other personal information. In return for the convenience of using the wallet and not
having to type in identifying information to place an order, consumers agree to view ads, which are
downloaded to their screens. Although this business model appears to be relatively benign, Gator, a
company which offered consumers a free digital wallet called the e-wallet, soon began to
superimpose pop-up advertisement windows on Web sites, without permission and in a way that
infuriated both consumers and Web site owners. For example, a digital wallet subscriber might be
viewing a travel Web site, such as Concierge.com, and without warning, an ad for Gator client
Travelocity.com, a discount travel site, would suddenly pop up (Schuchman, 2003). As a result, Dow
Jones & Co., The New York Times Co., and Washington Post Co. sued Gator for trademark and
copyright infringement, unfair competition, and unjust enrichment, asking for $46 million in
damages.

This case was settled out of court in February, 2003 (Weiss, 2003) but the decision in a
newer case, U-Haul Intern., Inc. v. WhenU.com, Inc. (2003), indicates that pop-ups of the Gator
type appear to be legal (U-Haul Intern., Inc. v. WhenU.com, Inc.(2003)).

In this case, the Plaintiff, U-Haul, argued that WhenU’s pop-up window, which obscured the
U-Haul trademark, was an unlawful use of the U-Haul trademark The Court found for the defendant,
WhenU, stating that the pop-ad was not a use of U-Haul’s trademark, did not interfere with U-Haul’s
right to display its trademark and did not create a derivative work based on U-Haul’s trademark.
This decision indicates that for now, a designer may have some freedom in placing pop-up windows,
wherever the designer wishes. However, the wide availability of pop-up blocking software and the
consumer’s unwillingness to view pop-ups have lessened the impact of this decision on short-term
Web site design.

Banner Ads

Another advertising device, which Web site designers may not need to eschew, is the banner
ad, although this was not clear until recently. In December, 2000, NetZero, an Internet service
provider (ISP) sued Juno Online Services, a rival ISP, alleging that Juno infringed a patent
NetZero had licensed. The patent, U.S. Patent No. 6,157,946 (2000) claims the following:

1. 
   

   A communications system comprising an information provider which provides a connection to the
   World Wide Web, and a terminal which accesses the World Wide Web through the information provider,
   wherein, the terminal has:

   
   
   • 
     

     a means for establishing a communication line to the information provider;

   
   
   • 
     

     a means for transmitting user information about a user of the terminal to the information
     provider;

   
   
   • 
     

     a means for activating a browser for displaying a browser window and a first image provided
     on the World Wide Web;

   
   
   • 
     

     a means for establishing a first TCP/IP link with a first link identification on the
     communication line;

   
   
   • 
     

     a means for receiving the first image from the information provider using the first TCP/IP
     link and displaying the first image within the browser window; and

   
   
   • 
     

     a means for establishing a second TCP/IP link on the communication line with a second link
     identification, the second link identification being different from the first link
     identification;

   
   
   
   
   
   
   • 
     

     a message database storing second images; and

   
   
   • 
     

     a means for transmitting one of the second images selected from the message database based on
     the user information, to the terminal through the second TCP/ IP link; and

   
   
   • 
     

     the terminal further has;

   
   
   • 
     

     a means for activating a viewer for displaying a viewer window and the second image;
     and

   
   
   • 
     

     a means for receiving the second image through the second TCP/IP link and displaying the
     second image within the viewer window.

   
   
   
   

The business method claimed above resulted in a monopoly for Net Zero on displaying
advertisements or messages to the consumer, including banner ads, in a separate window from the
browser window. In January, in response to Net Zero’s infringement suit, the U.S. District Court in
Los Angeles granted a motion for a temporary restraining order which prevented Juno from running
banner ads, in violation of the patent. However, in April, the same court lifted the restraining
order entirely when it determined that NetZero’s patent might be invalid (Olavsrud, 2001). For the
moment, it seems that banner ad technology is the property of no one and any Web site can use it.
On June 7, 2001, Net Zero and Juno Online Services merged, forming a new company called United
Online and eliminating the need for continuing the law suit (Alliance, 2003).

Coupon Distribution

Coupons are certainly not a new idea. Reportedly, Asa Candler issued the first coupon in
1894. Candler, a druggist, had purchased the secret formula for Coca Cola® and wanted to test the
market. He hand-wrote the coupons, which entitled the customer to a free glass. In 1998, companies
distributed about 280 billion coupons (History of coupons, 2001).

Not surprisingly, coupons made their way to the Web. Coolsavings.com, Inc. (Coolsavings)
distributed coupons, both printed and electronic, and other incentives from its Web site, after
collecting personal information from each user including demographic information, shopping
preferences, and category interests. The user’s site activity was also tracked, enabling the
company to compile a database, which advertisers could use to identify their most likely prospects.
In 2001, Catalina Marketing International, Inc. sued Coolsavings claiming that it had violated
Catalina’s patented system of coupon dispensing terminals disclosed in U.S. Patent No. 4,674,041
(1987). This patent discloses a system by which a consumer could select and print the coupons the
consumer wanted, from video terminals located at retail stores, which were connected to a remote
host. At the host end, the manufacturer would control the number of coupons printed and their
expiration dates and retrieve consumer credit card information.

The Court decided in favor of defendant Coolsavings holding that the monopoly of the Catalina
patent was limited to terminals “located at predesignated sites such as consumer stores” and that
this did not include computers located at consumers’ homes. This decision was based upon the
wording of the patent and had the terms used been broader, the decision might have gone the other
way. This lawsuit demonstrates that the courts may not be likely to interpret a patented business
method that preceded the Web, as foreclosing a Web-based innovation of the same type. Web designers
may have some lee-way in adapting older methods to the Web environment.

Reverse Online Auction

The reverse online auction was patented by Jay Walker, the founder of Priceline.com (U.S.
Patent No.5,794,207, 1998). This business model enables the consumer to identify the service or
product the consumer wants, as well as the price the consumer is willing to pay for it, rather than
having the vendor offer a price, to which the consumer then responds. While some have characterized
Walker as a modern day Edison, others feel he is more appropriately described as an “intellectual
property parasite” (Gimein, 1999). His firm, Walker Digital, has hundreds of Internet-based
patents, which the company offers for licensing and Priceline is a publicly traded company with a
bullish outlook for the fourth quarter of 2003 (Smolinski, 2003).

In October, 1999, Priceline sued Microsoft, the major shareholder of Expedia Hotel
PriceMatcher service. The parties settled in 2001 and Microsoft and Expedia joined other reported
licensees, such as Budget Rent-A-Car, in paying royalties to Priceline.com (Petty, 2001). What this
means is that any site wishing to offer consumers the reverse auction feature will have to license
this technology from Priceline or find a way to design around the Priceline patent. Neither of
these alternatives will be cheap and therefore, the consumer will find fewer sites offering the
reverse auction than desirable.

Hyperlinking

Although the inability to include a reverse auction or one-click shopping might cramp a Web
site designer’s style or limit the consumer’s options on a given Web site, the case of British
Telecom (BT) v. Prodigy (2002) posed the most severe threat to both. In 2001, BT sued Prodigy
claiming that its 1989 US Patent No. 4,873,662 covered hyperlink technology. Part of claim 1 reads
as follows:

A digital information storage, retrieval and display system
comprising: a central computer means in which plural blocks of information are stored at
respectively corresponding locations, each of which locations is designated by a predetermined
address therein by means of which a block can be selected, each of said blocks comprising a first
portion containing information for display and a second portion containing information not for
display but including the complete address for each of the other plural blocks of
information.

Responding to the threat from BT, critics of the BT patent identified much prior art that
showed hyperlink technology existed as far back as 1968, long before the BT patent was filed. For
example, conference papers in the 60s and 70s discuss the technology (Petty, 2001). Although a link
of sorts is described in this claim, the court held that the Internet was not the sort of system
described in the Sargent patent because the Internet contains no central computer (Sandburg,
2002).

The BT case demonstrates the important role the Internet community can and perhaps, should
play in discouraging aggressive, unjustified patent assertion, which would prove harmful to
e-commerce. Whether this should be done informally, or through a structure of sorts, remains to be
seen.

Deep Linking

Another type of linking that has been litigated is linking to a page deep within another web
site. Deep linking benefits the consumer in that the consumer is efficiently directed to a site the
consumer might not have known about and can access information that is unavailable on the referring
Web site. In 2000, Ticketmaster sued Tickets.com because Tickets.com linked to a page within the
Ticketmaster site, bypassing Ticketmaster’s home page and its advertising (Ticketmaster v.
Tickets.com, 2000).

The reason for the link was that Ticketmaster is the exclusive ticket vendor for certain
events and the Tickets.com Web site informed the consumer that the consumer was being directed to
another Web site for this reason. In order to obtain the information on Ticketmaster’s exclusive
sales arrangements, Tickets.com copied a lower-level Ticketmaster page to its system, extracted the
relevant information, and posted it on the Tickets.com system (Lunseth, 2001). The court held that
Tickets.com was not liable for copyright infringement because the copy was destroyed and only used
for factual information, not for competitive purposes. Accordingly, it is unlikely that deep
linking will cause legal problems for Web designers and this is one instance in which the consumer
will clearly benefit.

Pictures

Due to changes in digital signature technology, Web site designers should be particularly
cautious about using pictures without permission, no matter how convenient or how effective in
attracting consumer interest. Corbis, a Bill-Gates owned company with three million digitized
photos for sale and use online, is in the process of filing numerous lawsuits against infringers,
having received a one million dollar settlement from The Movie Market, an online movie memorabilia
store (Cohen, 2003.) Corbis has also sued Amazon.com alleging that the movie site IMDB.com, an
Amazon.com subsidiary, displayed infringing celebrity photos, which linked visitors to Amazon.com,
so that they could purchase the photos from a list of suppliers (Naraine, 2003).

Notably, Corbis alleged that Amazon was in violation of the Digital Millennium Copyright Act
(DMCA) (1998) which makes it illegal to distribute, import for distribution, broadcast or
communicate to the public, without authority, works or copies of works, knowing that electronic
rights management information has been removed or altered. Corbis is seeking damages of up to
$150,000 for each infringing image. Amazon countered that it was protected under the Act because it
was covered by a safe harbor provision. This provision has been used to shield sites that link to
other sites that infringe, when the sites share an e-commerce partnership (Naraine, 2003). This
case has yet to be decided.

Corbis successfully identifies 30 to 60 commercial copyright infringements each month using a
patented technology for embedding digital signatures or watermarks within visual images. The
watermark contains transactional information such as whether the image was downloaded for a trial
evaluation or for educational use. Corbis’ partner, Digimarc, trawls the Web and generates a report
of where the Corbis images were found and Corbis staff determines if the image is being used past
the evaluation period, or by an organization, which is not authorized for educational use. So far,
the watermarking cannot be inserted into analog images such as posters, postcards, and newspaper
photos, which feature the Corbis images (Naraine, 2003). Corbis’ interest is to encourage Web sites
to self-manage potential infringement. Digimarc is developing software which will enable users to
crawl their own sites for illegal images. In a recent out-of-court settlement, with online consumer
photo printing service Ofoto, Ofoto agreed to adopt the watermarking technology to pick out
commercial images from those it is asked to print for consumers (Sayer, 2003). Web designers should
keep in mind that in the long run, obtaining a license is far cheaper than defending a
lawsuit.

License Acceptance

The case of Specht v. Netscape Communications Corp. (2001) is important because it
demonstrates that the manner in which a Web site is designed may result in an unenforceable license
agreement (Petty, 2003). In this case, the court had to decide whether Specht was bound by the
license terms for using Netscape’s free SmartDownload program. The court’s decision that Specht was
not bound was based upon the fact that the consumer could download the program, without first
agreeing to the license terms. The text that described these terms became visible only after the
consumer scrolled past the download button to the next display screen.

Consequently, Web designers would be well advised to display the terms of any license
agreement in a highly visible location, with a button displaying language such as “I Agree,” which
the consumer must click before downloading occurs. Notifying the consumer that clicking “I Agree”
results in forming a legal contract is also advisable. Finally, the license should be
understandable by the typical consumer (Petty, 2003). Although some companies may rely on legal
review of their Web sites, it is important for designers to understand why they are bound by
certain design constraints and to appreciate the consequences of a design, which can cause
unexpected legal entanglements.