One man's fight to patent a 'process'

By CHRIS BARTON

Ed Pool has a plan to make New Zealand a "cyber Switzerland," but is having trouble getting anyone in government to listen.

The chief executive of Virginia-based DE Technologies wants to relocate his company's operations here, bringing with him an international e-commerce patent application that may be worth billions of dollars.

Mr Pool began a visit to New Zealand on Sunday and, despite an earlier cold shoulder from Trade New Zealand, is finding more receptive ears among our software developers and local government.

Southern hospitality features large on his tour. He has stops with the Canterbury Development Corporation and the Economic Development Unit of the Dunedin City Council.

After a Business Herald article last month about Mr Pool's rebuff by Trade NZ he also has an invitation to meet - albeit on his last day here - Gary Langford, the director of Investment New Zealand, the organisation's investment division.

Mr Pool's plan is to form a consortium and raise $US2.5 million ($NZ5.8 million) to build a working model of his "Universal Shopping Centre for International Operation". He has filed patent protection rights for it in 29 countries, including NZ.

He angrily rejects argument his patent falls into the controversial "business process" category - a type which critics say should never be granted because they cover obvious processes or are simply electronic forms of traditional activities.

"It's a software patent. I've got 11 years of my life and $US2 million of my own money tied up in this.

"What an insult to call it a business process. To this day no one has been able to duplicate this design."

The patent (PCT/US98/26220) covers a software design for international transactions - a cross border electronic pipeline from buyer to seller handling everything from letters of credit to shipping, freight forwarding, insurance, import duties and tariffs.

Mr Pool claims exporters and importers will cut costs by 20 to 30 per cent through efficiencies and the accuracy of the electronic process.

What's more, once goods are received funds would be transferred in a flash instead of the two-to-four- weeks common in paper-based export and import processes.

The software was born out of necessity in 1992 when Mr Pool was exporting night vision gear and other equipment from Russia to the US.

Every time a buyer wanted a price for goods he would have to make complex calculations based on the exchange rate of the rouble at the time, freights costs and tariff duties which also fluctuated wildly.

"It would take me six hours to do all the calculations - only to find when I'd ring up at the end of the day, the rouble had dropped 7 per cent and I'd have to redo them."

He started using a spreadsheet to make the exchange rate calculations on the spot and then worked with software developer Doug Mauer to add functionality covering freight, tariff and duty calculations. All that was missing was a means to electronically open a letter of credit and transfer funds. Mr Pool got round both by carrying briefcases of cash.

Believing he had struck on something unique, he applied in 1997 to the United States Patent Office to protect his and Mr Mauer's intellectual property - expanded by then to include credit authorisation, electronic transfer, language translation of the goods' description and costs.

Mr Pool believes his system is an ideal way for small exporters to expand into larger markets.

He'd like the New Zealand government to buy in - either in concept or literally, and is willing to assign the patent to the government and/or have it take a share of the company.

He points out it is not a bad way to kick-start a knowledge economy.

If New Zealand embraced the plan, Mr Pool's idea is for the government to choose a trading partner and build a pilot internet-based pipeline between the two countries.

The project would also generate work for software developers to make the interfaces between the components and the pipeline.

Instead of the normal 3 to 4 per cent letter-of-credit fee, Mr Pool is proposing to collect a fee equal to 0.3 per cent of each computerised trade deal across borders.

If such a system were to be embraced worldwide that 0.3 per cent could add up - Forrester Research predicts to about $US6.8 trillion in e-commerce in 2004. If 10 per cent of that is cross-border, DE Technologies' transaction fees could net $US2.4 billion in that year alone.

Mr Pool's own forecasts go higher - to $US80 billion - based on worldwide interbank transfers estimated in 2000 to be $US5 trillion a day.

Should such a system ever see the light of day, the implications for consumers are significant, too.

A buyer could cruise a virtual car lot in Japan - choose a secondhand car, see the costs, including shipping, tariffs and insurance delivered to NZ, and arrange for automatic electronic transfer of funds on delivery.

To Mr Pool, this is not a utopian dream.

Fulfilment hinges on just two things - the granting of a patent, and a government willing to take a punt.

With a patent in hand DE Technologies will also be able to pursue infringement claims through Boston-based legal firm Sullivan and Worcester which has an equity stake in the company.