Federal Judge Makes Ruling in Electronic Commerce Patent Case

15 April 1999

Federal Judge Makes Ruling in Electronic Commerce Patent Case

    INDIANAPOLIS--April 14, 1999--On April 9, 1999, Judge Larry J. McKinney of the United States District Court for the Southern District of Indiana issued an opinion that could have an effect on the way electronic commerce is currently being conducted on the Internet.
    That opinion interpreted the meaning of certain words in United States Patent No. 5,528,490 (the "490 patent"), owned by Charles E. Hill & Associates, Inc. of Indianapolis, in a case brought by it against CompuServe Incorporated and CompuServe Interactive Services, Inc. According to Charles E. Hill, the CEO and founder of that company, the Court's ruling "confirms our opinions regarding the broad scope of the claims of the `490 patent. It further affirms my belief that our legal system works. Without our patent system, large corporations would simply seize the intellectual rights of the individual inventor who would receive little or nothing for his or her creative efforts."
    In the present suit, Hill is seeking royalties for CompuServe's electronic commerce sites and the millions of copies of client software containing the allegedly infringing technology that have been distributed by CompuServe since the issue date of the `490 patent, June 18, 1996. The Court's opinion will now be used by a jury to determine if CompuServe is liable for infringing the `490 patent. According to statements made by CompuServe in the proceedings leading to Judge McKinney's ruling, Charles E. Hill & Associates, Inc. could be entitled to "hundreds of millions of dollars per year from the on-line industry" based on Hill's current license fee schedule, if infringement is found by the jury. If willful patent infringement is found, the Court may also award treble damages and attorney's fees. If patent infringement is established, an injunction can also be requested to prohibit CompuServe from utilizing the technology of the `490 patent in the future.
    CompuServe reviewed Hill's pending technology that resulted in the `490 patent during 1992 with the idea of possibly jointly marketing this technology with Hill. CompuServe evaluated Hill's proprietary software for compatibility with CompuServe's communications network and certified it as fully compatible on August 18, 1992. This evaluation provided CompuServe access to Hill's software and ideas of the `490 patent.
    Hill & Associates, Inc. currently has a B2B electronic commerce application that is marketed under the trademarked name ED_MIDS(R). They consider this product to offer the next evolution of technology for B2B electronic commerce. The ED_MIDS(R) product is covered by the `490 patent, additional issued patents no. 5,754,864 and no. 5,761,649 and additional awarded and pending patent claims.

    Note to Editors: In the text above, the symbol between "ED" and "MIDS" should be an underscore. This symbol may not appear properly in some systems.