Can one guy bring the World Wide Web to a screeching halt?
Paul Allen is moving ahead with his patent-infringement lawsuit against dot-com's biggest darlings -- even if it was dismissed over the weekend by the federal judge in Seattle presiding over the case.
Allen will simply need to sharpen his language in filing an amended complaint later this month.
What's at stake if the suit has merit? The original lawsuit claims that an Allen-financed company that went kaput a decade ago holds at least four patents being trampled on by some of the Internet's biggest stars. You know how Amazon.com (Nasdaq: AMZN) and Netflix (Nasdaq: NFLX) offer up recommendations based on user behavior? You know how Google (Nasdaq: GOOG) and Yahoo! (Nasdaq: YHOO) can scour the web to find relevant news stories on particular subjects? That's just four of the companies -- and two of the patents -- that Allen is hoping to enforce.
All told there are nearly a dozen companies in Allen's crosshairs -- for now. Apple (Nasdaq: AAPL), Facebook, America Online, eBay (Nasdaq: EBAY), Google's YouTube, and even leading office supplies websites were named in the dismissed suit that will likely be reintroduced in two weeks.
You don't need to be a legal eagle to know that Allen's case is a long shot, but what if he's spot on? A sustainable decision in Allen's favor isn't going to shut these websites down, but it will make it more expensive for them to operate. It will then be up to the sites if they want to pass on the costs of compliance.
Netflix is already working on an unrelated price hike that kicks in next month. Amazon is coming under fire for its sales-tax pricing advantage over local competitors. Google and Yahoo! pricing is actually set by its keyword-bidding advertisers, at least when it comes to paid search.
As fellow Fool Eric Bleeker pointed out this summer, the only obvious company not named in the suit is Microsoft (Nasdaq: MSFT). It would be ironic and cruel if the company he financed from cashing out of Microsoft's billions would be implicated in the suit. However, let's not assume that Mr. Softy escapes the sting if Allen somehow wins against his first 11 targets.
The next few months will be interesting. I'd recommend staying abreast of the situation by checking out the leading news aggregator websites, but I'd hate to be slapped with a civil lawsuit as an accomplice.
Does Paul Allen stand a chance with this case? Share your thoughts in the comment box below.
