IBM and Amazon settle patent dispute with cross licensing agreement

IBM and Amazon have settled a two-way patent dispute dating from 2002 and have agreed to cross-licence each others' technologies. The deal involves Amazon paying the computers and services giant an undisclosed sum.

Though legal action was only begun last year, IBM informed Amazon in 2002 that it believed that the company's web retail operation infringed some of its patents. IBM then filed two law suits in October 2006 alleging that Amazon's web operation used technology which it invented.

Five patents formed the basis of IBM's claim, and they related to recommendation systems, advertising and data storage technology.

When filing the law suits, IBM said that the technology behind its patents dated back to 1990 in some cases. It said that it had tried for four years to negotiate licensing deals, but that those negotiations had been fruitless.

Amazon fought back, filing a counter-suit claiming that in fact it was IBM which was infringing patents it held.

The two companies have now come to an agreement by which each company will licence the patents of the other. Amazon will pay IBM an undisclosed sum.

An Amazon spokeswoman told The New York Times that the deal would have no material impact on the web retailer's results. The sum to be paid has already been factored into its guidance to analysts and investors for its second quarter and annual results, said the spokeswoman.

IBM says that it applies for more patents per year in the US than any other company, spending $6 billion a year on research and development and earning $1 billion a year in patent royalties.