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CLSR Briefing

• While the overwhelming majority— 96% of those with a website useit for providing general information,less than half are selling directlyfrom it.

• Only 11% of commercial insurerswere writing business online andmore than 40% of respondents feltthat they would not transact com-mercial business this way.

• Use of the Internet was significantlygreater in the personal lines and thelife insurance sector. Forty four per-cent of personal lines business waswritten online,and 38% of life insur-ance business.John Kemble, the Association’s

Manager of Electronic Commerce, said:“The greatest progress in Internet

selling has been with lower pricedgoods such as CDs and books.Insurance faces additional barriers suchas product complexity, regulation andlegacy business, which has meant itsprogress is slower than high-volume,low unit-costing trading areas.

It will take time for public confi-dence in using the Internet to buylonger-term products to grow. Thismeans that there is still time for thoseinsurers who are not currently sellingdirectly on the Web to decide to do so.The danger is that new competitors,will not face many of the barriers thatthose with legacy business are facing,and that they will be able to steal amarch on the established players.”

EEddiittoorr’’ss NNoottee: Further informationfrom the Association of British Insurers,Tel: +44 (0)20 7600 3333 or Fax: +44(0)20 7696 8999. Internet:<www.abi.org.uk>.

Monopoly on the WorldWide Web

The recent announcement that BT is setto enforce its claim over the use of hyper-links has fired the debate over theincreasing trend for patenting businessmethods.After rediscovering the ‘HiddenPage’ patent three years ago, BT nowhopes to capitalize on the Internet explo-sion by demanding usage fees or licenceagreements for its intellectual property.Inview of current estimations that there arean average of 52 links on approximately1.5bn pages displayed on the World WideWeb, BT’s new found revenue potentialcould prove very lucrative. The Hidden

Page patent,which was originally grantedin 1989, applies to the process of usinghyperlinks to move from one Web pageto another by clicking on text,pictures oricons.Because hyperlinks are well-knownand widely-used, BT run the risk of sus-taining a certain amount of commercialdamage in trying to enforce its claim.Thecase mirrors the attempt by Amazon.comlast October to enforce its ‘1-Click’ tech-nology patent,which enables goods to bepurchased over the Internet with just oneclick of the mouse.

While the Amazon patent is widelyregarded with scepticism and has evenbeen compared to the equivalent ofpatenting taking orders over the tele-phone, the outcome of the case couldpotentially affect an estimated 50% of E-retailers currently using variations onthis technology.

Although,primarily,BT will be target-ing only US Internet Service Providers, ifsuccessful its case may open the flood-gates of litigation even wider and resultin a significant increase in disputesbetween patent owners and companieswithout patent protection. This particu-lar instance also highlights the need forcompanies to keep their intellectualproperty rights under regular review —BT discovered the ‘Hidden Page’ patentonly by chance,during a standard searchof its 15 000 patents.Although it had filedpatents on the hyperlink idea in othercountries, these claims have nowexpired,leaving just the US patent to pur-sue which runs out in 2006.The fact thatthey have only just now been able to fol-low up on the patent potentially raisesthe argument that BT may have waivedtheir rights to claim upon technologythat people have, up until now, beenallowed to use for so long and withoutquestion. BT has hired QED which spe-cializes in recovering revenues fromunused patents to assist in the recovery.

While there is no doubt that patentsoften prove to be very profitable,whether by attracting new business,increasing share values,garnering retro-spective damages or license fees —IBM generates an estimated $1 bn ayear from its patent portfolio — com-panies should be wary of capitalizingon patents which monopolize E-tradingmethods and risk stifling E-commerce.

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.com’s dilemma“The US case of NNeettwwoorrkk SSoolluuttiioonnss IInncc..vv.. UUmmbbrroo IInntteerrnnaattiioonnaall IInncc. has causedconsternation in the dotcom communi-ty”,according to IT specialist Susan Hallof independent law firm Cobbetts.

“Domain names such asamazon.com are valuable businessassets of online businesses. Not surpris-ingly, online businesses are concernedthat a US court has held that domainname registrations are not “valuableintangible property” but instead thatthe registrant of a domain name with acompany such as Network SolutionsInc. (NSI) receives “only the conditionalcontractual right to the exclusive asso-ciation of the registered domain namewith a given IP number for a given peri-od of time”.

In short, the right is one purely ofcontract, like the allocation of a tele-phone number and not like the registra-tion of a trademark or a property right.This means that such names are subjectto the contractual restrictions includ-ing the right to revoke with or withoutcause imposed by NSI.

The decision, and the underlyingpolicy of NSI which it upholds, hascaused shock. Why spend vast sumsadvertising a domain name if one doesnot own it? The attitude of otherdomain name allocating authorities isunclear, but the current position ishighly unsatisfactory.”

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ArmorGroup warns Internetshopping is a ‘dot.con’

The Internet is a paradise for fraud-sters. Thirty five percent of all luxurygoods for sale on the Web are fake,according to estimates, and the figure isgrowing.

Irrespective of Internet shopping,youngsters in some areas of the coun-try are already surrounded by counter-feits — as much as a quarter of thegoods 16-35 year olds living in theNorthwest encounter during their day-to-day lives are fake, according to cor-porate security specialists ArmorGroup

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