Priceline.com Issued U.S. Patent No. 5,794,207 for the World's First Buyer-driven E-commerce system.

WASHINGTON, D.C.--(BUSINESS WIRE)--Aug. 11, 1998--

Millions of Consumers Have Already Experienced priceline.com's

Unique Commerce Web Site on the Internet

The U.S. Patent & Trademark Office (PTO) today issued Stamford, Conn.-based priceline.com U.S. patent No. 5,794,207 for the world's first buyer-driven e-commerce system.

By using priceline.com's patented system, consumers can go to the Internet to name their price for goods and services, and sellers electronically decide whether to accept the customer's price.

The patent is the first of many e-commerce patents filed since 1996 by Walker Digital, a Stamford intellectual property laboratory. The patent covers both the broad concepts and key functionality components of buyer-driven commerce. According to Walker Digital executives, tens of millions of dollars have been invested in developing, refining and implementing the patented priceline.com system.

"Following last week's decision by the Court of Appeals for the Federal Circuit upholding the patentability of software and business systems (State Street v. Signature Financial Group), this patent is a tremendously positive next step for all U.S. companies involved in creating Internet-based applications," said Jay Walker, chairman and CEO of priceline.com and founder of Walker Digital. "Traditionally, patents have been the bedrock on which inventors built long-term, thriving businesses. E-commerce is no exception. The PTO's actions support our nation's policy that cyberspace innovators should be encouraged and rewarded for advancing America's lead in Internet-based applications."

The concept of buyer-driven commerce was created over a period of three years by a dedicated team of inventors at Walker Digital, led by entrepreneur Jay Walker, noted cryptographer and security expert Bruce Schneier and Internet technologies experts Scott Case and James A. Jorasch.

"The biggest challenge for the team was the need to create a sustainable, compelling consumer benefit for new types of buyer-seller relationships in the Internet Age," said Jorasch. "When we began our work to conceptualize profitable models of Internet commerce in the mid 90s, e-commerce hadn't even reached its infancy. Even today, successful Internet commerce models are still few and far between. Our e-commerce system will benefit consumers for years to come as priceline.com continues to introduce new name-your-own-price services across a variety of product and service lines."

The invention team began with the central belief that, for many goods and services, there is significant, unfilled "open" consumer demand in the marketplace, at prices below the retail price. That demand creates a "catch-22" for sellers. One one hand, they want the increased sales revenue, particularly if the product is perishable (like airline tickets). However, if they publicly discount their retail prices, or sell their products through a liquidator, sellers risk harming their retail channels and profitability. The Walker Digital team worked for almost two years to find a real-world solution that benefits both buyers and sellers. After testing and refining their solution, the Walker Digital inventors submitted their first of over a dozen related patent applications in early 1996.

In the patented conditional purchase offer system, individual consumers go to the Web and name their price for the product, or range of products they want to buy, guaranteeing that purchase with a credit card. The system takes the offer and electronically presents it on a one-to-one basis to qualified sellers in a way that can't be seen by other retail customers. Sellers then selectively (and privately) choose which offers to accept.

Walker Digital subsequently sold its buyer-driven intellectual property to a new startup company, called priceline.com, in which it retained an equity position. In April 1998, priceline.com launched a name-your-own-price service for leisure airline tickets on the Internet. In July, the company launched a second service for new cars.

Consumer response to priceline.com and its underlying patented system has been overwhelming. Within its first six weeks, the priceline.com site, with William Shatner as celebrity spokesman, become one of the world's 10 most-visited e-commerce sites, with more than 1 million visitors coming to the site each week. In its first 120 days, the service has sold more than 40,000 airline tickets, making priceline.com one of the nation's 10 largest sellers of leisure airline tickets. On average, over $15 million of guaranteed offers are being received by priceline.com each week.

Priceline.com has announced plans to extend its e-commerce system to hotel rooms, rental cars, home mortgages, and other financial instruments in the near future.

CONTACT: For Press Information

priceline.com, Stamford

Brian Ek, 203/705-3026

[e-mail]

or

Connors Communications, New York 

Jennifer Kohn/Jennifer Carr

212/807-7500

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