Kickstarter's Future Put in Judge's Hands

A 3-year-old patent lawsuit over the popular crowdfunding platform nears an important ruling

Who invented the idea of sourcing the funding of movies, songs and other artistic endeavors to fans?

In the eyes of Kickstarter, which has raised over $1 billion for projects like a Veronica Mars movie and a reboot of Reading Rainbow, that's like asking the silly question of who invented money. It's an abstract idea, or as its lawyers would say, a "fundamental economic practice" that's been exploited for quite some time.

ArtistShare, Kickstarter's nemesis in a 3-year-old legal dispute, disagrees. This company claims to hold a valid patent that covers "specific systems for allowing artists to manage creative works and obtain funding for them," and in summary judgment papers revealed in a New York federal court this past week, asserts that Kickstarter is stepping on its invention.

The lawsuit started in October 2011 when Kickstarter sued ArtistShare, seeking declaratory relief from its rival's threats.

ArtistShare is run by Brian Camelio and describes itself as the "Internet's first fan funding platform." Launched in 2003, before such similar platforms as Sellaband and Indiegogo, ArtistShare touts being artist-friendly and cites such achievements as kicking off projects that have garnered nine Grammy Awards, mostly in the jazz and classical composition categories.

The neat history is attacked by Kickstarter's lawyers, who bring up the name of Robert Thompson, a professor of entertainment business and law, who in 2002 was the director of a music publishing house when he allegedly began collaborating with Camelio on a solution to the music industry's file-sharing problem. The two are said to have conducted a "brainstorming" session where they hit on the idea of soliciting fans to contribute funds that would normally be advanced by a record label or production company.

Eventually, ArtistShare was born, but after three years of discovery in this lawsuit, Kickstarter now accuses Camelio of going behind Thompson's back to submit paperwork at the U.S. Patent Office that would lead to Patent #7,885,887, titled "Methods and Apparatuses for Financing and Marketing a Creative Work." Kickstarter believes that the patent is invalid because Camelio failed to list Thompson as a co-inventor.

Kickstarter brings other arguments to the judge's chambers.

Most notably, the plaintiff believes that the '887 patent is invalid because it's nothing special.

"Indeed, the experts in this case agree: outside of the abstract idea of crowdfunding, the patent discloses only conventional computer software and hardware, none of which was invented by Defendants," says Kickstarter's summary judgment memorandum.

Kickstarter also points to "prior art," or those who had accomplished the claimed invention before ArtistShare came forward. Among its examples is idealive — an online system for funding artistic projects which ironically closed in 2001 due to its own funding problems. There's also Blackbaud, a suite of software tools still in operation that once published books like The Fundraiser's Guide to the Internet. Then, there are bands such as Marillion and the November Project whose use of their respective websites to raise funds to make albums predated ArtistShare.

In response, ArtistShare says that Thompson has expressly denied that he is an inventor, that Kickstarter has referenced prior art but hasn't explained how to combine them, and finally, that its patent pertains to specific systems for marketing and funding creative works rather than just an abstract idea. "Notably, Kickstarter has not challenged the validity of any of the dependent claims asserted by ArtistShare on the grounds of obviousness," say the defendant's court papers.

The defendant also says that its patent wouldn't preclude any of the claimed prior art, but that to "hold that the claims of the '887 Patent are drawn to an abstract idea would mean that any invention even loosely related to crowdfunding is ineligible for patent protection."

In reply to the notion that ArtistShare has invented a "superior" fan funding system, Kickstarter says, "Such techniques have been used throughout history, including in 1883, when funds for the Statue of Liberty were raised by soliciting donations of $1 or $5, for models of the Statute of various sizes, through newspaper ads."

Here's Kickstarter's summary judgment memorandum, ArtistShare's opposition and Kickstarter's reply. The plaintiff has sourced its future to a crowd of lawyers at Foley & Lardner while ArtistShare is using Lando & Anastasi.

Twitter: @eriqgardner