Amazon owes Chicago-based tech company $525 million for patent infringement, jury rules

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A federal jury found Wednesday that Amazon Web Services — the most lucrative subsidiary of e-commerce giant Amazon — infringed multiple patents owned by local technology company Kove. Amazon must pay more than $500 million in damages.

Kove is a Chicago-based company that specializes in computer storage and data management technologies. The West Loop firm owns three data storage patents and accused cloud computing platform Amazon Web Services of infringement, filing a lawsuit against the Amazon subsidiary in December 2018.

The three patents — invented by Kove CEO John Overton and Stephen Bailey — relate to systems and methods for managing the storage, search and retrieval of information across a computer network, according to the lawsuit.

The patented material helps decrease computer processing time for finding particular pieces of data and is “the foundation of a number of important technologies,” said Renato Mariotti, a lawyer representing Kove.

Bailey and Overton met in the 1990s when they were doctoral candidates at the University of Chicago. Bailey does not work for Kove.

Amazon Web Services used Kove’s technology as a building block for some of its cloud services, the lawsuit alleged. The Amazon subsidiary itself is like an “on-demand cloud computing platform,” Mariotti said. Its offerings are used by other companies like Netflix and Reddit to store massive amounts of data.

The jury also found Amazon Web Services’ infringement was “not willful.” When patent infringement is willful, Mariotti said, a party knows of a patent’s existence and disregards it. It often results in higher penalties.

Nonetheless, the ruling is a huge victory for Kove.

“This … vindicates and proves that if you invent technology, that you can even — despite all the odds —you can fight and obtain justice,” Mariotti said. “The patent system can and does work. Despite ... [the] David versus Goliath struggle, there’s no question that the court system, delivered a very important victory for a booming small company.”

Mariotti says he’s sure there will be an appeal. But Kove’s team believes the evidence in its favor is strong and expects to win if an appeal is filed.

An Amazon spokesperson said in a statement: “We disagree with [Wednesday’s] ruling and intend to appeal. We thank the jury, which also acknowledged that AWS did not willfully infringe on patents.”

Kove sued Google separately for infringing the same patents.

Overton told the Sun-Times that despite the yearslong litigation, he wasn’t going to let go.

“Kove has always represented building the best possible innovation, so that we could help people actually pursue their transformative dreams, whatever those are,” Overton said.

This story has been updated with a comment from Amazon.