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Leading Nonprofits Take Stand Against Business Method Patents

March 23, 2005

Leading Nonprofits Take Stand Against Business Method Patents

EFF Joins Fight to Promote Technology Access for Charitable Groups

Note: The Electronic Frontier Foundation is recirculating this press release on behalf of NIA for your information.

Washington, DC - The Nonprofit Innovation Alliance (NIA) today announced that four of the nation's most prominent nonprofits - United Way of America, the American Diabetes Association, Network for Good and Electronic Frontier Foundation - have joined the growing movement against business method patents to help promote ongoing access by America's nonprofit organizations to innovative technology.

"As nonprofits recognize the threat posed by business method patent abuse, there is growing support for collective action to protect technology access for America's charities," said Shabbir Safdar, Acting Secretary of the Nonprofit Innovation Alliance. "The fact that the United Way of America, American Diabetes Association, Network for Good and Electronic Frontier Foundation have pledged their support for the NIA sends a strong message: business method patents are bad for the nonprofit sector and should be eliminated."

These four organizations have pledged support for the NIA's goals because they believe that nonprofits are best served if technology vendors and service providers help declare the nonprofit industry as a "business method patent-free zone." They are encouraging technology vendors and service providers working with them and other nonprofits to join the NIA. Support for NIA's goals from the Electronic Frontier Foundation (EFF) is especially significant because this group is the leading civil liberties organization working to protect people and organizations whose online rights and freedoms are threatened.

Nonprofit organizations can pledge support for the NIA.

The NIA consists of leading technology and consulting companies that provide products, services and/or consulting to help nonprofits optimize their use of the Internet for fundraising, advocacy, event management and other mission-critical activities. Alliance members agree to cross-license any current and future business method patents on a royalty-free basis for the benefit of their nonprofit customers.

Viewed by many to be a scourge in the for-profit world, business method patents would be even more so for the nonprofit sector. Instead of protecting a real technology invention, these patents typically cover a process of doing business on the Internet. Such patents, prone to abuse, could result in nonprofits spending much more out of every dollar raised on license fees to use the Internet for fundraising, communicating with constituents, advocating for public policies and managing events such as walks, runs and galas. Alternatively, to avoid the impact of royalty payments to business method patent holders or the threat of being sued, nonprofits may choose sub-optimal technology solutions.

Said Michael Schreiber, Executive Vice President for Enterprise Services, United Way Of America, "We're on board with the NIA and against business method patents because adoption of technology by nonprofits is accelerating and organizations are becoming much more sophisticated in how they use these new and powerful tools. There is a growing need to share and make use of technology innovation - not stifle its diffusion throughout the charitable sector."

Network for Good's Chief Executive Officer, Bill Strathmann, explained why Network for Good is supporting the NIA. "The alliance represents something nonprofits believe in and, to a large degree, rely on: collaboration. Like their customers, nonprofit providers must balance their business interests with those of the sector. Nonprofits need choices when it comes to the tools they use to help fulfill their missions. When providers collaborate, nonprofits win."

About Business Method Patents

First validated by the courts in 1998, business method patents are highly controversial because they typically do not cover innovations that solve a particular technology problem. Instead, holders of business method patents are claiming to be the first to engage in a transaction over the Internet in a particular way. Examples of business method patents include Amazon's one-click patent and Priceline's reverse auction patent.

Business method patents are prone to abuse. A patent holder can sue or threaten to sue anyone or an organization that uses a similar business method and seek to collect licensing fees, effectively extracting a "patent tax" for common ways of utilizing the Internet. However, charitable organizations today rely increasingly on the Internet to fundraise, communicate, advocate and manage events over the Internet. Business method patents will require nonprofits to spend much more of every dollar raised on coercive license fees to run their organizations, diverting funds away from the delivery of critical programs and services to constituents. Or groups may simply take the path of least resistance and use sub-optimal technology solutions to avoid the specter of litigation.

As an example, the following is the claimed invention described in a patent application filed with the US Patent and Trademark Office:

"A method for conducting a fundraising campaign by an organization or person over a wide-area network, comprising the steps of: hosting a website including a plurality of linked web pages, the website providing information about the fundraising campaign and soliciting potential donors to make a charitable contribution to the fundraising campaign registering on the website contacting third parties via email messages soliciting charitable donations and providing one or more reports, on the website, including information on the status of the fundraising campaign." (Patent application entitled: "Method and system for an efficient fundraising campaign over a wide area network" application number 764787.)

According to the NIA's Safdar, "This application describes widely used practices for online fundraising, taking dead aim at the nonprofit sector. It is easy to see why a patent covering these types of claims is neither unique, novel, nor in the best interests of nonprofit organizations."

NIA members currently include (listed alphabetically): Beaconfire Consulting, CharityWeb, CitySoft, Convio, GetActive, Mindshare Interactive Campaigns, Itero!, Public Interest Data, Inc., RightClicks and ROI Solutions.

The Nonprofit Innovation Alliance was established in January 2005 to help foster access to innovative technology for charitable groups so they can effectively utilize the Internet for fundraising, advocacy, event management and other mission-critical activities. Members of the alliance include leading companies that provide technology products, services and/or consulting to nonprofits. Admission is open to all interested technology and service providers. Nonprofits can participate by pledging their support for the NIA's goals.

Contact:

Shabbir Safdar
Acting Secretary
Nonprofit Innovation Alliance
ssafdar@mindshare.net

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