Nonprofits: A Patent-Free Zone?

Opinion: The Nonprofit Innovation Alliance hopes no-cost cross-licensing agreements among business process patent holders will cut out the lawyers. But there's one key holdout.

It isnt hard to dislike the business method patent. Unless, of course, you own one.

Fights between tech companies, between patent holders and suddenly successful startups, and between competitors or former partners are nothing new. And the protection of intellectual property is the bread and butter of any tech law practice. But business method patents take things to a new level. Perhaps the best-known example is Amazons suit against rival over use of "one-click" purchasing. That case, filed in 1999, was seen as both innovative (for patent holders), a disaster (for those who value the sharing of ideas) or just plain odd (for consumers and the general public).

It was the best known, but Amazons suit wasnt the last to claim that a process—a way of using software, not necessarily the software itself—was unique. Patent issues of all sorts have gotten so contentious that some lawyers and patent holders worry that companies have begun to use their patents as profit centers, entering into litigation—not manufacturing or code writing—to make money.

Against this background, Shabbir Safdar, CTO of Mindshare Interactive Campaigns, a Washington firm that runs many nonprofit and political fundraising efforts, has created a cross-licensing patent pool for nonprofits who do the kind of work he does. And while many organizations like his have endorsed the idea, hes not exactly being greeted with open arms by one company known for the software it has developed to help nonprofits raise money online.

Safdars worried that nonprofits—whose resources are spent on fundraising—will not be able to protect themselves if theyre accused of violating patents. There havent been any suits yet, but Safdar worries that the fight over the patents used to register and protect the various processes involved in online fundraising—currently the focus of most online political activity—isnt far away.

"When a law firm with a patent portfolio goes up against a commercial company, the royalty can fit into that," he says. In other words, the company, a for-profit entity, can charge more. Or it can marshal its financial resources and fight.

Nonprofits dont have that luxury, he says. "They will almost always crumble."

So Safdars created the Nonprofit Innovation Alliance. The group, which includes Beaconfire Consulting, CharityWeb, Convio, GetActive, Mindshare Interactive Campaigns, Itero, Public Interest Data Inc. and RightClick, hopes its no-cost cross-licensing agreements among patent holders will cut out the lawyers. The group is hoping to expand.

"No one may be refused," Safdar joked of the organizations motto. "Our goal is to make the nonprofit marketplace a business method patent-free zone, he said.

Well, theres one hurdle to that idea becoming reality. Kintera, possibly the best-known nonprofit software company, isnt really interested. Or if it is, its CEO, Harry Gruber, has a funny way of showing it. "I think its naïve, he said.

Gruber compared the Nonprofit Innovation Alliances idea to cross-license patents to the possibility of licensing the right to breathe. "Lets all share the air, he said. "Ill share the air with you." Since theres no charge to breathe—air is free—theres really no commercial transaction. "The air is owned by everyone, he said, adding that the idea is "a relatively deceptive process."

Claiming that none of the Innovation Alliance members have patents to share with his company, Gruber said it makes little sense for Kintera to enter into any sharing agreements with them. "Its like saying, Lets go play marbles. You have marbles, I dont."

Besides, he doesnt see the same problem with business method patents that Safdar does. "Business method patents go back to the 1700s. Theyre as old as the country."

/zimages/3/28571.gifIs it time we get rid of software patents once and for all? Read why Steven Vaughan-Nichols says yes.

Well, not quite. Theyre a relatively recent innovation, part of how the U.S. Patent and Trademark Office attempts to cope with the transition to an online world. Theyre not the "mom and apple pie" issue that Gruber wants to make them out to be. The patents—which protect the computerization of various processes—are highly controversial and something of a recent innovation, and they have been criticized in a variety of forums, from eWEEK to The New York Times magazine. And they have wreaked havoc for many online entities, not just, which after the Amazon suit was forced to change its online purchasing software.

"Business method patents regulate how my clients can talk to their donors, said Safdar. "If someone out there with a patent lawyer can tell you how to talk to your supporters, thats a problem."

Without Kintera, of course, the Nonprofit Innovation Alliance has an uphill fight. But given Grubers attitude—one thats sadly common among patent holders—it may not have a choice. Technology and Politics columnist Chris Nolan spent years chronicling the excesses of the dot-com era with incisive analysis leavened with a dash of humor. Before that, she covered politics and technology in D.C. You can read her musings on politics and technology every day in her Politics from Left to Right Weblog.

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