Accompany Wins Group-Buying Patent

SAN FRANCISCO (03/22/2000) - Fueling the debate over patents, group-buying site announced today that the U.S. Patent and Trademark Office has approved its application for a patent on its group-buying and volume-based pricing technology.

Accompany has received a 'notice of allowance' for a patent application it filed in August 1998, a couple of months before its founding. The notice means that, while the patent has not yet been awarded and its contents made public, Accompany should receive the patent in a few months, after the PTO reviews necessary paperwork.

The race to own technologies that a number of Netcos use has prompted concern that patents, intended to foster innovation and creativity, might end up stifling both online. For example, group-buying site Mercata has filed 11 patent applications, some of which relate to Mercata's "business methods and technology," according to Leslie Wallis, Mercata's general counsel. Wallis adds that "we are quite pleased with the progress to date of our pending applications," but if the company's technology resembles Accompany's, Mercata won't receive its patent. It could also be taken to court by Accompany to stop it from running its Web site.

It's this kind of potential bullying that worries Rich Gray, an intellectual property attorney with the firm Outside General Counsel Silicon Valley.

"Whoever just happens to be first at the patent office's door, with the patent application, for something that any one of a dozen people could have filed, is then in a position of being able to obtain a patent, and an injunction," he says. "I'm fearful that that could have an impact on innovation."

Accompany CEO and cofounder Jim Rose ducked the question of how the company might enforce its patent - whether it would be content collecting royalties from companies using the same technology, or whether it would seek to shut them down. Releasing news about the patent before the patent itself hits the public domain, Rose said, "would be a warning if you were going to be very litigious."

But he refused to specify whether that attitude applied to Accompany.

If history's any indication, though, Accompany might certainly be looking to frighten off the competition. Another well-known Internet patent - Amazon's "one-click" shopping - led the retail giant to sue for infringing on its property. Amazon later took a less-bullying stance, but it has made clear that it will continue to seek patents and enforce those it's been granted.

But some industry experts question whether the existing patent laws suit Internet businesses, or whether they might result in overly broad patents. Rose also emphasized the breadth of his new patent. The qualities necessary to obtain a patent - newness, usefulness, and non-obviousness - took on a new twist two years ago, when an appeals court ruled that business models could be patented. This means that a business model used offline for years - auctions, say - theoretically fits the criteria for a patent once it moves online.

The PTO, though, disputes that separate rules should apply to online ventures, saying the existing ones work just fine, and the patents are rarely as broad as they sound. "I just know from our number that [patents] are anything but stifling," says PTO spokeswoman Brigid Quinn. Computer-related patent applications, she says, doubled from 1998 to 1999.

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