BT's Hyperlink Claim: An Example of British Humor?

Not long ago, U.S. Vice President Al Gore took some serious ribbing for suggesting he played a major role in developing the World Wide Web. Now some of the same type of ridicule should be aimed at British Telecom for its pursuit of hyperlink patent royalties.

British Telecommunications plc (BT) has rung up the folks at America Online, Microsoft (Nasdaq: MSFT), Earthlink, and a handful of other major U.S. companies to suggest that they begin calculating their past due bills. Surely, they jest.

Not that BT's claim that it holds the patent is in itself absurd. What is laughable is that the company wants to cash in on back royalties for the billions and billions of hyperlinks that have connected Web surfers since it was granted the questionable patent in 1989.

Technological Gold Mine

British Telecom now says its patent for an "information handling system and terminal apparatus" covers the hyperlink technology that allows online surfers to jump from one page directly to another. For instance, by clicking on the name "British Telecom" highlighted in blue above, this column's readers can go straight to the BT home page.

The underlying technology for hyperlinks not only makes Web navigation faster and easier, but also makes banner ads, click-through partnerships, and other Internet-based advertising and promotions possible. In other words, a legitimate patent on the technology would be worth boatloads to its owner.

British Telecom just found the patent a few weeks ago -- apparently as it was cleaning out some closets and reviewing a pool of forgotten applications. Although its overseas counterpart has already expired, the patent -- if viable -- still has nearly a decade to run in the United States. Apparently, BT can hear the cash registers ringing all the way across the Atlantic.

Not So Fast

Nevertheless, there has been no sharp drop in the number of hyperlinks on the Web since BT made its belated claim a week or so ago. And I very much doubt that there will be a sea change in the near future.

This is a clear case of being a day late and a dollar short. Responsibility for oversight of the patent should fall to British Telecom itself -- not to the Web designers and service providers who have employed the technology.

When the patent was issued in 1989, the Internet had not yet taken off. So, maybe -- unaware of the treasure it held -- BT put the patent on a shelf and allowed it to get buried under an accumulation of faxes and sticky notes.

Buried Treasure

If that is anything like what happened, the company made a critical mistake. If British Telecom had said right from the start that it owned the technology to make the Web go, all the online services and Web site designers could have made a conscious decision about whether to use that technology for a fee or work around it.

If BT really invented hyperlinking, the company should get its due recognition. But compensation is another thing. The fact is, Internet companies could have chosen not to use hyperlinks if they did not want to pay the price -- any price -- or they could have attempted to develop alternate technologies of their own.

BT may have some basis for seeking payment for using the technology in the future, but retroactive riches should be out of the question.

Nevertheless, BT apparently thinks it has a right to collect royalties dating all the way back. Since it would be impossible to go after every person who has ever written a link in HTML, the firm is apparently going to try to get lucky by going after some big name, deep pocket companies.

Ready for Battle

Some legal experts think British Telecom may eventually prevail and collect a handsome royalty check. BT spokesman Simon Craven said the company is looking for "a reasonable royalty based on revenues others enjoy." Historical data about click-through rates and unique visitor counts may suddenly take on immense importance.

But British Telecom has some major obstacles to surmount before it can start counting its greenbacks. There is some evidence that other developers may have invented very similar technology before or at the same time as BT. Demonstrations of the existence of "prior art" could completely snuff out BT's patent.

Maybe the folks at British Telecom developed the technology -- maybe not. In any case, the company has certainly forged a great niche for itself in the Internet services area.

Unfortunately for BT, by keeping quiet for so long, the British giant has kneecapped itself with respect to any legitimate claims for back royalties. In this instance, late is no better than never.

So, the U.S. companies who are the targets of BT's wishful thinking should just relax and hold their ground. Actually, they should do more than that. They should laugh out loud.

What do you think? Let's talk about it.