Pitney Bowes to License PC Metering Technology

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DMers interested in using online postage for their direct mail programs can add Pitney Bowes to their roster of possibilities.


Last week, the Stamford, CT, postage meter maker said it is opening its doors to its competitors, allowing them to license 15 of its U.S. patents for personal computer metering technologies. It also said it soon will market Click Stamp, its own version of a PC postage product.


The licensing patents being discussed are related to PC metering technologies, which let customers purchase stamps online as part of the USPS' Information Based Indicia Program (IBIP). This program eventually may phase out the need for USPS customers to use mechanical or electronic meters and force companies such as Pitney Bowes to replace their core meter products with newer, more secure digital counterparts.


Executives at Pitney Bowes said the company has a long history of licensing its intellectual property in the marketplace and this announcement is part of its strategy as it enters the PC postage arena and begins to work with IBIP.


"This is a logical progression in the development of this new PC postage market," said Sheryl Battles, a spokeswoman for Pitney Bowes. "It certainly is indicative that just as we have been a leader from a technical perspective in the mailing technology market, we continue to invest in research to make sure that we develop the kinds of products that will help make mailing simple, convenient and cost effective."


Experts, however, say that offering companies the chance to license Pitney Bowes' technology is a last ditch effort for the company to gain the position in the online PC market that it has in the traditional postage meter market, where it reportedly has nearly 85 percent of the market. They are saying Pitney Bowes was a little too late in getting its PC metering products out to the public, especially since many smaller technology companies had introduced beta products earlier this year.


For example, E-Stamp Corp., Palo Alto, CA, a little-known player, was the first company approved by the USPS to participate in a beta test of IBIP technology with small business customers in Washington, DC, this past spring. Its product, called E-Stamp Internet Postage, is expected to cost less than $200 and is scheduled to hit the market later this year or early next year. Another small company, StampMaster, Westlake Village, CA, also will debut its product soon.


All of these smaller technology companies are taking a bite out of Pitney Bowes' meter market, and its aggressive tactics to license its technology is really, "an effort by the company to tap into the fast-growing market for PC-generated stamps," said Raymond L. Boggs, an analyst at International Data Corp., Framingham, MA. "Pitney is using its heavy artillery as a way of telling the market it intends to compete aggressively in PC postage."


Battles said all of the PC postage companies out there had to meet a stringent set of specifications from the USPS for their systems to be accepted into the IBIP programs. The other products were accepted by the USPS before Pitney's because "we didn't look at this as just a single product," she said. "We looked at it as a whole new category, and we looked at the product architecture as [something] built into all of our PC metering products. We really wanted to take our time and get that done."


The patented technologies that Pitney Bowes is interested in licensing to its competitors include:


* Affixing a cryptographic signature on data to secure postage dispensed from a vault.


* Coding a message, such as an address, on a mail piece and then verifying the authenticity of the mail piece by decrypting the message.


* Authenticating a mail piece by linking the recipient address with encrypted data printed on the mail pieces.


Battles said Pitney Bowes is talking with E-Stamp and StampMaster about licensing agreements and the company is willing to license their patents in exchange for other technologies, royalties or a combination of the two. E-Stamp CEO Sunir Kapoor reportedly acknowledged the discussion. StampMaster offered no comment.


David Pitchenik, associate deputy general counsel at Pitney Bowes, said it would be inappropriate to talk about the negotiations while they are ongoing, but added, "I wouldn't be surprised if [the negotiations don't]wind up being resolved by license agreement."


Meanwhile, the postal service is moving ahead with IBIP. It has just announced that network security solutions provider Cylink Corp., Sunnyvale, CA, will offer a public key infrastructure to the postal service that will serve as the foundation for the program.
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