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LEGAL ISSUES

Should You Be Able to Patent a Business Model?

Kickstarter is asking that a patent be invalidated--or at least, that it not be found to be infringing upon it.

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Kickstarter, the crowdfunding website that helps advance original ideas, is under attack for being a copycat.

In February, Brian Camelio, a former studio musician for Journey and Phish who some consider the father of crowdfunding, obtained a patent for a process that is similar to 2.5-year-old Kickstarter's business model. (He first applied for the patent in 2003.)

Called "methods and apparatuses for financing and marketing a creative work," the patent also is essentially the business model for ArtistShare, the website Camelio founded in 2000. ArtistShare lets fans contribute to musicians' recordings in exchange for VIP access, including special listening sessions, and possible listing on the album's credits. (Five Grammys have come from ArtistShare-funded projects.)

Within weeks of receiving the patent Camelio began demanding Kickstarter license it, according to a complaint Kickstarter filed in federal court Sept. 30. Camelio even turned up at the company's offices unannounced, they say. The company has pulled in a reported $75 million for 10,000 projects. (Its cut: 5 percent, but no ownership in the projects.)

Kickstarter is asking that the patent be declared invalid, making the company not liable for infringement. If it is valid and Kickstarter is found to be infringing, the consequences could be life-threatening: The site could be forced out of business, or to pay significant damages.

Critics say the patent isn't one that should have been granted in the first placethat it is, as TechCrunch put it, just an existing business strategy in internet form. "People have been collaborating on artistic projects in exchange for creative input for centuries," observes the site.

Camelio told PaidContent.org: "As an artist myself, I feel that KickStarter may be hurting artists by focusing on 'donating money' rather than celebrating the artist for what they do. Their model does not build fan relationships but just continually asks for hand outs."

Last updated: Oct 5, 2011

Inc. contributing editor COURTNEY RUBIN was for five years a London-based staff writer for People magazine. Rubin, a former senior writer for Washingtonian magazine, has written for the New York Times magazine, Time, Marie Claire, and other publications. She is the author of The Weight-Loss Diaries.




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