Trial Near in Patent Case on Key Internet Technology

[Dave Farber <dave () farber net>]

Trial Near in Patent Case on Key Internet Technology

February 20, 2003
By JOHN MARKOFF 




 

SAN FRANCISCO, Feb. 19 - The patent claims of a 74-year-old
inventor over a technology that is the foundation of
virtually all online commerce will come to trial next week
in a court test that could force huge payments from some of
the Internet's most powerful companies.

The legal challenge was filed two years ago against
VeriSign Inc., RSA Security Inc. and four other companies
by Leon Stambler, a retired electronics engineer who lives
in Pompano Beach, Fla. He is contending that software they
use to let Internet commerce companies authenticate their
customers and secure communications with customers violates
his patents. 

Beginning in 1992, Mr. Stambler obtained seven patents
covering the creation of a code to be used in electronic
transactions, making it possible for one party to
authenticate another and to create a secure transmission of
data. 

In 1999 he began contacting a wide range of technology and
electronic commerce companies, asserting that his patents
covered an Internet Web security standard known as the
Secure Sockets Layer, or S.S.L., which was developed by
Netscape Communications, now part of AOL Time Warner. The
approach, which scrambles the data passing from a Web site
to its customers, has become the industry-standard method
for protecting Web communications and is widely used in all
popular Web browsing software.

In February 2001, Mr. Stambler sued RSA Security, VeriSign,
the First Data Corporation, the Openwave Systems
Corporation and OmniSky in the United States District Court
in Delaware. In September, he added a Canadian security
company, the Certicom Corporation, to the lawsuit. Several
of the companies have since settled with Mr. Stambler in
response to the threat.

The patents have infuriated Internet security experts who
contend the Stambler patents simply imitate the original
work done by cryptographers at Stanford University and
Massachusetts Institute of Technology during the 1970's and
1980's. The technology underlying Netscape used public
algorithms licensed from RSA Data Security, a company
started by the M.I.T. researchers, based in Bedford, Mass.

"This is outrageous, there's nothing novel here," said
Bruce Schneier, chief technology officer and founder of
Counterpane Internet Security Inc. in Cupertino, Calif. "I
believe this is a classic submarine patent."

The phrase submarine patent refers to the practice
popularized by a Nevada inventor, Jerome Lemelson, to take
advantage of the patent application process by extending
and continually broadening the scope of initial patent
claims to encompass technologies created and commercialized
by others. 

The United States patent process has recently been altered
in an effort to try to restrict such tactics.

Internet technologists also say that the United States
Patent Office is overburdened and is frequently not able to
discover prior inventions that would invalidate new patent
claims. 

"The Patent Office is woefully overworked," said Jack
Russo, an intellectual property lawyer at Russo & Hale in
Palo Alto, Calif. "It is not uncommon to see stuff slip
through." 

Mr. Stambler, however, has had success in persuading
several corporations to license his patents. First Data, a
credit card processing company, has paid $4 million for
access to the technology, according to a person close to
the dispute. A spokesman for the company said it had taken
a license on the patents but said that under the terms of
the agreement the amount of the license was confidential.

Such settlements frequently do not reflect the strength of
the patent claims as much as a judgment made by defendants
about what it might cost to go to court, Mr. Russo said.

"Patent litigation is fairly expensive and you will see
people settle for what seems to be large sums," he said,
adding that it was often simply based on an analysis of the
potential risk. 

Openwave and Certicom have also struck licensing deals with
Mr. Stambler, according to Securities and Exchange
Commission records. OmniSky, a wireless Internet company,
has filed for bankruptcy protection and was recently
acquired by EarthLink, the Internet service provider.

A spokesman for VeriSign said the company would not comment
on pending litigation.

A spokesman for RSA Security said, "We believe that Mr.
Stambler's claims are without merit, and we intend to
defend the lawsuit vigorously."

Telephone calls to Mr. Stambler in Florida went unanswered.


http://www.nytimes.com/2003/02/20/technology/20NET.html?ex=1046766279&ei=1&e
n=e85ce3107d721be0



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