Kickstarter Prevails After Crowdfunding Patent Threat

By Joseph Mandour on July 8, 2015

KickstarterOrange County – Since its launch in 2009, Kickstarter has funded $1.8 Billion dollars for businesses and other creative projects. Kickstarter utilizes a peer to peer crowdfunding model in which persons buy in early on a project. In addition to helping a budding business or artist, persons funding the project are the first to receive the products or services at issue.

Beginning in 2011, a battle began between Kickstarter and a rival called ArtistShare. ArtistShare claimed a crowdfunding patent for a “Method and Apparatuses for Financing and Marketing a Creative Work.” Both Kickstarter and ArtistShare are known for online crowdfunding websites, a platform where money is raised by donations from people from all over the world. Funding has been provided for projects such as virtual-gaming headsets, hover boards, and up-and-coming new artists.

Kickstarter sued ArtistShare due to ArtistShare’s threats that Kickstarter had infringed upon ArtistShare’s crowdfunding patent. A spokesperson for Kickstarter claimed that Brian Camelio of ArtistShare had requested payment from Kickstarter for using ideas protected by the ArtistShare patent. Reportedly ArtistShare also wanted compensation for a licensing agreement.

Kickstarter originally offered to buy the patent to avoid a costly and lengthy litigation battle. However, ArtistShare was not willing to hand over the patent. Instead of paying a license fee to ArtistShare, Kickstarter decided to take ArtistShare to court to get the paten invalidated as being too abstract. ArtistShare responded that the patent did not only include abstract ideas, but also new ways of managing and financing funding for projects.

Recently, U.S. District Judge Katherine Failla ruled that ArtistShare’s patent was invalid as not being capable of patent protection. Failla stated that the patent was too abstract ruling: “Nothing about the ‘887 Patent transforms the concept of crowd-funding into patent-eligible subject matter.”

Crowdfunding has become increasingly popular thanks to the simplicity and accessibility of the internet. ArtistShare and Kickstarter along with Indiegogo, Crowdfunder, RocketHub and Gofundme are some of the more popular crowdfunding web sites.

Beyond this litigation, Kickstarter was recently involved in two other patent lawsuits. In one case that recently settled, Kickstarter was sued by alleged patent troll AlphaCap Ventures. AlphaCap also sued Indiegogo. In 2012, Kickstarter was sued by Formlabs for being the crowdfunding platform for an alleged 3D printing infringer.

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Posted in: Patent Infringement