Losing the war on patents

Attempts to fix the intellectual property system from below are faltering. Is it time to bring in the feds?

By Damien Cave

Feb 15, 2002 | Just three months after it launched in the fall of 2000, BountyQuest.com, a self-described "patent-busting" Web site, declared itself a success. In January 2001 it awarded four $10,000 prizes to individuals who had presented evidence that BountyQuest believed would successfully undermine a set of specific patent claims.

One award attracted widespread attention. In April 2000 a company called InTouch sued Amazon.com and five other companies for infringing on a pair of its patents covering a type of music sampling -- technology that lets users preview part of a song and tracks their preferences. But less than a year later, BountyQuest announced that it had found evidence of "prior art": an example of a similar digital music sampling technology that long predated -- and thus undermined -- InTouch's patent.

The Amazon angle added extra intrigue. Amazon, at the time, was the target of vocal criticism for its own heavy-handed approach to seeking patents on everything under the Internet sun. And Amazon's founder, Jeff Bezos, was an investor in BountyQuest. So when one of BountyQuest's first forays into patent-busting turned out to be a potential boon for Amazon, some eyebrows were raised at what could easily be seen as a conflict of interest.

Amazon itself wasn't the only problem with the patent system, however. To many observers, the corporate rush to stake intellectual property claims on every possible aspect of Internet life threatened to strangle future creativity and innovation -- not to mention trample all over work that had been done years earlier by programmers who had donated their code to the general public.

BountyQuest, as envisioned by its founders, was going to be a market-based approach to patent reform. By providing a forum in which interested parties could offer rewards for the discovery of patent-busting prior art, BountyQuest aimed to solve the problem of an out-of-control patent system.

One year later, BountyQuest's supposed patent-busting experiment appears to have itself gone bust. Only about 20 BountyQuest contests have resulted in bounty-winning prior art since the site's inception. New bounty offers, meanwhile, have slowed to a trickle; 23 contests were running when the company launched but only three contests are now open for submissions.

Most troubling of all, the InTouch case suggests that even in instances where BountyQuest has generated results, the company still hasn't achieved much. Last month, two defendants in the InTouch lawsuit, Amazon and Liquid Audio, settled their patent infringement cases with InTouch, agreeing to license the InTouch patent rather than fight it. And in both cases, say parties involved in the settlement, BountyQuest's discovery never came up.

"It was never used in the case," says Joshua Kaplan, founder of InTouch, a 12-year-old digital music company based in Berkeley, Calif. "The defendants didn't bring it up."

BountyQuest's CEO, Charles Cella, says his company's discovery of prior art came too late to play a role in the InTouch suit. But BountyQuest's failure to affect the InTouch patent, combined with the market's apparent lack of interest in the bounty-hunting approach, may signal more serious problems with the whole idea of market-based reform for the thorny legal problems involving intellectual property. Despite tremendous media attention and Bezos' star power, BountyQuest's impact has been minimal. The U.S. Patent Office continues to rubber-stamp thousands of computer-related patent applications while BountyQuest largely remains relegated to the sidelines.

Cella is optimistic, convinced that his company will survive, and that it fulfills a useful and important role. But can it stem the tide of bad patents? Can BountyQuest, or any market-based approach, create the kind of change that so many have been clamoring for since 1999?

Other opponents of the current patent law status quo are proposing their own reforms -- and some of the new ideas also aim to solve the problem from below, by creating market-based alternatives that use the profit incentive to force positive change. In a way, they are holding on to one of the cherished dreams of the Internet bubble -- that in the New Economy, everything will be different, and more efficient, if we can just figure out the right online business model. But BountyQuest's track record over the last year also suggests that a different, more traditional approach may be necessary -- legislative reform to fix a broken system.

Next Page: How could Amazon have its patent cake and eat it too?

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