Updated: Kickstarter’s Patent Battle Over Crowd-Funding

The startup Kickstarter is suing to stop what it says is a shakedown by a former musician from the band Journey. The musician has obtained a patent for a process that resembles Kickstarter’s own crowdfunding model — whereby a member of the public can invest in artists, musician and inventors. (This story has been updated to include the patent owner’s response)

In a claim filed in New York, Kickstarter says Brian Camelio repeatedly turned up to demand that the website license his patent related to crowd-funding. Camelio is a studio musician and the CEO of ArtistShare, a site that lets fans contribute to musicians’ recordings in return for an opportunity to participate in the creative process. He obtained a patent for the process earlier this year.

Kickstarter launched in Manhattan in 2009 and is reported to have already raised $75 million for more than 10,000 projects in fields like music, design and publishing. It takes a 5% cut of the funds it raises but is popular with participants because it doesn’t demand an ownership stake in the project.

Camelio is a musician-turned-businessman who has worked with artists like Journey and Phish. He founded ArtistShare in 2000, and recordings that the site helped fan-fund have since won five Grammies. In an email to paidContent, Camelio said Kickstarter’s court action was “shocking” and that the company had recently offered to buy the patent. He also expressed dismay for the company’s business model.

“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.”

In its filing, Kickstarter ask a federal court to declare that the patent is invalid and that the company is not liable for infringement. If the patent, described as “methods and apparatuses for financing and marketing a creative work,” is valid and Kickstarter is infringing, the site could be forced to shut down or pay significant damages.

The “invention” in this case appears to be a species of software and business method patents. Critics say such patents, which began proliferating in the 1990’s, should be ineligible for protection because they are obvious and because they harm the high tech industry. In regard to Camelio’s patent, readers can decide for themselves:

The present invention is directed to a system and method for raising financing and/or revenue by artist for a project, where the project may be a creative work of the artist. The method including registering, by at least one artist, with a centralized database, at least one or more projects, offering, by the at least one artist, an entitlement related to the artist in exchange for capital for the project of the artist.

What this seems to mean is “a website where artists can solicit money from the public by offering a stake in their project.” I am no patent examiner but this does sound rather obvious. We’ll see if the court agrees and rules for Kickstarter.

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