Crowdfunding Patent Battle Between Kickstarter & ArtistShare Nears End. Judge Set to Rule on Creation of Crowdfunding

Boxing FightThree years ago, crowdfunding leader Kickstarter became embroiled in a legal battle with musician and creator of website ArtistShare, Brian Camelio. Now it looks like the battle of who invented (or at least controls the intellectual property) crowdfunding is finally about to come to end.

According to an article in BetaBeat, who referred to the ArtistShare creator as a “Patent Troll,” and said the claim seemed “absurd” back in 2011, Kickstarter claimed Camelio had demanded on multiple occasions they pay up – to license his patented technology.  ArtistShare is a site that allows users to contribute to musicians and participate in the creative process.  The website is described as “specific systems for allowing artists to manage creative works and obtain funding for them.” Cameilio obtained a patent for the “process” back in 2011 – several years after Kickstarter had started its climb to become a global crowdfunding site.

A portion of Camelio’s patent reads:

One Thousand Dollars in Hundred Dollar Bills“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. The method and system may also include searching, by an interested party, the centralized database, for the least one artist, registering, by the interested party, with the centralized database and accepting the offer by the interested party for the entitlement related to the project. The capital may then be forwarded to the artist and the entitlement provided to the interested party.”

Brian CamelioIt gets a little fuzzy here as The Hollywood Reporter states that Kickstarter’s lawyer says Camelio’s patent is invalid because Camelio failed to list Robert Thompson as a co-inventor.  Thompson, a professor of entertainment business and law, allegedly began to collaborate with Camelio on a solution to the music industry’s file-sharing “problem.” The two were said to have brainstormed on solutions to this enigma when the light bulb came on and they birthed crowdfunding.  Thompson for his part claims no association to the invention.

While this may be a bit of legal wrangling the base of Kickstarter’s defense is that it is silly to patent the process of using computers to raise money.

In a “here we go again moment” Kickstarter points out that group funding has been around for quite some time – noting the Statue of Liberty used crowdfunding to fund the now iconic monument. Of course no computers were around – so they used the hot technology of the time:  newspapers.

It should be noted that Camelio is not alone in pursuing crowdfunding patents. Gust recently attempted to patent the process and their are other entities that hold crowdfunding patents today.

Funded With KickstarterKickstarter’s summary judgment memorandum reads, “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.”

ArtistShareKickstarter’s lawyers also pointed to “prior art,” also known as those who had accomplished the claimed invention before ArtistShare came forward. Idealive, an online system for funding artistic projects that closed in 2001 due to its own funding problems, was a prime example.

While it is hard to imagine someone owning a concept like crowdfunding our legal system never ceases to amaze.  Since Kickstarter recently surpassed $1 billion in funding a ruling against Kickstarter could have significant material impact. For Camelio – a win would certainly serve him well.  For now we all wait as it is up to the Judge to decide.

If you are really into the legal jousting between Camelio and Kickstarter the legal filings are embedded below. Enjoy.

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