MANHATTAN (CN) - A federal judge ruled Monday that because crowdfunding is a concept that goes back "centuries," Kickstarter cannot be sued for infringing on a purported patent on a concept of online patronage.
ArtistShare founder Brian Camelio filed a patent for "Methods and apparatuses for financing and marketing of creative work," in early 2003.
Reflecting its time, the patent envisions a "system for raising funds for and marketing one or more of an artist's projects to patrons through the internet, without the necessity of a recording contract with a recording company and without the necessity of a production company."
The concept proposed in the patent is now an industry that Forbes estimated raised $2.1 billion in 2012.
On May 8, 2013, Kickstarter topped the Forbes list of "Top 10 Crowdfunding Sites for Fundraising." Neither ArtistShare nor its platform Fan Funded even made the financial magazine's list.
By that time, Kickstarter had been engaged in litigation for nearly two years against ArtistShare and Fan Funded, seeking a declaration from a federal judge that its operations did not infringe on its competitor's patent.
On Monday, U.S. District Judge Katherine Polk Failla rewarded Kickstarter's persistence.
The 31-page opinion notes that ArtistShare's patent is "directed to the concept of crowd-funding or fan-funding, i.e., raising funds for a project from interested individuals in exchange for incentives."
"Whether the abstract idea in play here is defined as 'crowd-funding,' 'crowd-based funding,' 'fan-funding,' 'incentive-based patronage,' 'incentivized crowdfunding,' or some other combination of these words is of no moment: the abstract concept at play in the patent remains the same," she wrote, adding later: "These claims are squarely about patronage - a concept that is 'beyond question of ancient lineage.'"
Citing a report submitted on Kickstarter's behalf by Wharton School professor Ethan Mollick, Failla likened the model of offering rewards for financial support to the business models of National Public Radio and the Public Broadcasting Service.
This model has a "history dating back centuries," Mollick said.
ArtistShare claimed to have originated "a particular system that allows users to automatically create, manage, and fund their own projects using a specific collection of software tools that are operable from a remote site."
But Failla failed to see the novelty in its invention.
"Beyond the abstract idea of patronage, the claims merely recite 'well-understood, routine conventional activities,' by requiring either conventional computer activities or routine data-gathering steps," the opinion states. "Considered individually or taken together as an ordered combination, the claim elements fail 'to 'transform' the claimed abstract idea into a patent-eligible application."
Neither of the companies' lawyers responded to a request for comment.
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