The squabble between Priceline.com and patent lawyer Thomas Woolston just got messier.
Woolston said Thursday he licensed the concept of reverse auctions to one of Priceline's chief rivals. This comes just as Priceline prepares for an initial public offering.
At the heart of the dispute is the lawyer's claim, vigorously denied by Priceline officials, that his company, MercExchange, patented the idea of letting customers set their own prices for air travel 16 months before Priceline received its own patent.
Last month, MercExchange asked the US Patent and Trademark Office to review Priceline's patent and see if it was granted by mistake. Woolston said he expects to have a decision on that request "any day now."
In the meantime, Priceline rival Cheapfares started its own buyer-driven auction after reaching a licensing agreement with Woolston, who is a patent lawyer with the Washington firm Hunton and Williams.
"The bottom line is that we now have an exclusive agreement with Priceline's leading competitor," Woolston said. As part of that agreement, Cheapfares' parent company, Aden Enterprises, will invest US$250,000 in MercExchange, which hopes to raise venture capital to expand its auction concept to include items such as antiques and sports memorabilia.
If the patent office sides with Woolston, Priceline may have to pay licensing fees to MercExchange as well.
Priceline launched its Web site last April, trumpeting the idea of buyer-driven commerce as a way to use the Internet to secure the lowest possible price on airline fares. The company filed plans for an IPO with the Securities and Exchange Commission in December and may go public as early as this month. Company spokesman Brian Ek said the dust-up with Cheapfares and MercExchange will not alter that plan.
"We do not believe that there is any substantial interference [with MercExchange's patent]," Ek said. "Yesterday's announcement has absolutely no effect on our views of the merits of the petition. This kind of thing is going to happen from time to time. It's all part of the playing field."
