Amazon 1-click is a billion dollar patent filed in 1997 and USPTO-approved in 1999. Yes, it is actually a patent! PCWorld disagrees but it has already happened... The value proposition of the Amazon 1-Click feature is that it simplifies online shopping check-out to a frictionless process. The result: extremely high conversion from existing customers. So what’s the problem with protecting this business innovation? The issue lies in fact that 1-click protects a very broad concept that millions of other online retailers would benefit from. In fact, Europe continues to reject Amazon’s ongoing attempt in the past 10+ years to file a patent in that continent.
4 criteria for ability to patent:
Useful. Yes
Useful. Yes
Novel. Perhaps.
Prior art. One-stop checkouts existed in the brick and mortar world but not the virtual world.
Obviousness. This idea seemed obvious to many, but as I mentioned in the Leo case where identifying a need or design meant the difference between obviousness and nonobviousness, perhaps the 1-click option was not obvious.
Indeed, the 1-click is a very powerful patent. Founder Jeff Bezos initially started Amazon as a book seller, quickly mounting in competition with Barnes and Noble. While B&N attempted to set up the 2-click feature on their website, Amazon regarded that as patent infringement and sued B&N, which ended in Amazon's favor. Most retailer companies who recognized the value of this feature decided to partner with Amazon instead, albeit at a price. E.g. Apple: incorporated 1-click into iTunes, iPhoto and Apple App Store through a license.
How much is the 1-click patent worth? In 2011, Amazon made 48.1 billion in revenue. If 1-click increase sales by 5% per year, that’s an additional 2.4 billion in revenue due to 1-click and an additional 40.8 million based on 2012’s 1.7% operating margin. This excludes licensing fees from Apple and multiple other partners
How long will the 1-click's patent value persist after expiration in 2017? Remember that 1-click is just one of Amazon’s 3 big disruptions in the retailer world: there is also Amazon Prime, and One Day shipping. They’re all business services ultimately. With continuous innovation, Amazon will continue to be a force to be reckoned with.
Hi Melissa,
ReplyDeleteI think you did a great job analyzing the value that one-click checkout provides Amazon, and the effect that this patent might have on other online retailers. The patent does seem a bit obvious to me. I think it could also be argued that other online retailers have since implemented different code to maintain their one-click purchasing systems, so I think it'd be interesting to see whether the patent covers the specific code, or the overall concept that Amazon is utilizing.