Patently Absurd

Priceline’s Litigious Founder Jay Walker: I Am Not a Troll

The Silicon Alley vet defended his many patent lawsuits on stage at NYU Steinhardt this week.
jay walker inside internet garage Pricelines Litigious Founder Jay Walker: I Am Not a Troll

Mr. Walker. (Photo: Inside the Internet Garage)

In Connecticut in 1997, Jay Walker, inventor, created the idea for a “demand collection system,” which is how he describes the mechanism behind Priceline.com. Priceline, of course, lets customers name their own price and other conditions, input their credit cards and agree to rent a hotel, flight, car or whatever, typically sight unseen.

At the time, the New York Times called Priceline a “reverse auction,” a term that has stuck around long enough to work its way into the consciousness of moderator and adjunct professor Aaron Cohen, who made the mistake of employing it during an interview on Tuesday night at NYU for a series called Inside the Internet Garage produced by NYU Steinhardt.

Priceline is not a reverse auction, emphasized Mr. Walker—a slight, grey-haired man with dark eyebrows and a sense of righteousness—before an audience of students. “Saul Hansell, who was the journalist for the New York Times, was lazy and stupid,” he declared, “and I told him so numerous times.”

The quibble was the beginning of an at-times contentious look back at the history of Priceline, now one of the most valuable Internet companies based in New York with a market cap of $37.21 billion, and whether Mr. Walker’s numerous lawsuits over patent infringement constitute a tax on innovation.

Priceline, which went public in 1999, first spiked spectacularly and then dove spectacularly, at one time considered just another dot-com flop. Mr. Walker exited the company in 2000. Since then, he’s been tinkering at Walker Digital, his privately-held “innovation and development” lab founded in 1994 and based in Stamford, which has filed a lot of patents. Walker Digital, which says it has spent $100 million on research and development, holds between 800 and 1,000 patents, Mr. Walker estimated.

Betabeat found 483 patents assigned to Walker Digital in the U.S. Patent and Trademark Office’s online database. Those patents cover a sweeping range of business models, from a method to remind consumers to take their medicine to a system for instant online lotteries. Many of the ideas were never built into companies.

Mr. Walker himself is named on 633 patents, which Wikipedia says makes him one of the world’s most prolific inventors. “We only work at Walker Digital on inventions that we can patent,” a younger Mr. Walker told Charlie Rose in 1999. “If you look on the Internet today, there are no patented business methods other than ours to speak of… what makes our business different is literally over 20 patents.”

Unfortunately for Mr. Walker, Walker Digital’s patents aren’t getting the respect he’d hoped for. The lab brought a few cases related to Priceline in 1999, 2000 and 2001, then laid low for years. During this period, Mr. Walker said he approached companies such as Microsoft, Facebook, Google, Apple, and Zynga in order to strike licensing deals for activity he said infringed on Walker Digital’s patents. The companies blew him off, he said. In order to be taken seriously, he had to take them to court. “They said, ‘if you don’t sue us, you’re not serious,'” he recalled.

In October 2009, Walker Digital sued Microsoft, Hewlett-Packard, and Dell, Inc. over infringements that included “the function in Microsoft Word that allows a user to look up information about a user-selected term or terms located in a document being created without having to stop work on the document.” In 2011, a judge ruled there was no infringement.

In November 2010, Walker Digital sued Facebook over the concept of “friending,” or a “method and system for establishing and maintaining user-controlled anonymous communications.”

In April 2011, Walker Digital filed 15 lawsuits against more than 100 companies.

Walker Digital has brought about 80 lawsuits for patent infringement, according to the federal courts database PACER. The vast majority of the cases are outstanding, but seven have been dismissed with prejudice—meaning the judge forbade Walker Digital from attempting to bring the suit again—including a case against Facebook, a case against the game maker Activision, and a case against Mastercard. It’s unclear whether Walker Digital has won any victories on the settlement side, though eight more cases were dismissed or voluntarily dismissed. Walker Digital did not respond to request for comment.

“The patent is the most public of all documents,” Mr. Walker extolled on stage. “Is Jay Walker jealous of Paul Allen?” wrote PaidContent at the time, invoking the Microsoft cofounder who drew ridicule for his 11 lawsuits over “related links” and other blindingly obvious ideas.

“A patent is a teaching, so a patent is a bargain between the inventor and society where the inventor, in return for disclosing his or her complete operating details of how to build the invention, receives a limited period of exclusivity from the government.”

Companies should all be checking the public U.S.P.T.O. database, Mr. Walker said, to verify that their own inventions have not been previously patented. The companies that infringe on Walker Digital’s patents have a policy of not checking the patent database, he said, because intentionally infringing on a patent can be punishable by three times the damage of unintentionally infringing. “Anybody who wants to can search the patent files and see, ‘are we practicing something which somebody else has invented, in which case we probably ought to contact them and get a license, or are we not?'”

The fact that it was possible for someone else to independently think of and execute an idea Mr. Walker once had did not sway Mr. Walker from asserting that the idea still merits protection.

“Last year, you got into some litigation with some gaming companies,” Mr. Cohen said, prodding his subject toward the issue. “Walker Digital, I think in the year 2000, got a patent for, and I’m paraphrasing here, the ability to share the results of a game with a central repository for the purpose of comparing those results with others, a kind of leaderboard-like construct. Is that fair?”

“I don’t want to characterize any one patent, because that’s unfortunately legally admissible in court,” Mr. Walker said.

Before the Internet became popular, the businessmen at Walker Digital—Mr. Walker doesn’t employ technologists, he has no use for them, he said—sat down and said, “What problems might the Internet solve in the video game space?” It was such thought experiments that led to Walker Digital’s portfolio of patents, which take between three and seven years to get granted.

Mr. Walker acknowledges that patent trolls, companies that use their patents only to extort money from legitimate businesses, are a problem. The issue is that in the early days of the Internet, the patent office was stuffed with time-crunched examiners who granted sloppy patents because they didn’t understand the Internet and probably didn’t speak English very well. “The problem is that very few of them are born in America. Almost all patent examiners are foreign,” he said. “That’s a real problem when they’re examining English patents.”

Lumping Walker Digital in with poorly-described patents is unfair, he said. “It’s a bit like blaming knife manufacturers for knife murders,” he said.

“As inventors, we risk capital and resources and time. When we invent something that turns out to be useful, there’s absolutely no reason we shouldn’t get an economic rent for that invention,” Mr. Walker said. “There’s nothing wrong with inventing things and paying the cost… to seek a patent, if you’ve really invented something.”

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