July/Aug 2005

Brother, Can You Spare a Patent License?

by Jason Schultz, Staff Attorney for the Electronic Frontier Foundation, and Terri Forman, Director of Development for the Electronic Frontier Foundation

In recent months, there has been some controversy in the philanthropy world over an unusual topic — business method patents. The stink has arisen because a few companies that provide services to nonprofits are starting to patent their online techniques versus real technical innovations — things as basic as using email to alert friends to pressing social issues that need support or sending an online "thank you" card to acknowledge a donation.

This has raised concerns among various organizations, including the Electronic Frontier Foundation (EFF) and other nonprofits, because while technology patents do help spur some innovation, business method patents are another beast. Already a bane in the for-profit sector, if business method patents take hold in the charitable sector, nonprofits essentially face the prospect of being taxed for employing everyday online fundraising techniques. These patents also might dissuade many nonprofits from using common Internet practices because they cannot afford onerous licensing fees.

Patents, of course, are not inherently bad. In some fields, such as semiconductor manufacturing and biotech, they can provide important incentives to drive large leaps forward in science, especially when the research and development costs and risks are significant.  In this way, patents fulfill their federal constitutional mandate to "Promote the Progress of Science and the Useful Arts."  However, the primary goal of philanthropy is to maximize the progress of society in curing social ills.  When patents undermine the progress of society for the benefit of science, they are a disservice.  Such could be the case with business method patents.

For example, what if only one organization could accept online gifts to help rebuild after the December 2004 tsunami in Southeast Asia? And what if you could not tell your friends about how they, too, could help? Not only would the tsunami victims be far worse off today and government budgets stretched even further to help them, but the good impulses of millions of people to reach out and alleviate suffering would have been quashed.

Consider comparable examples from the offline world. Imagine a world where a single charity owned the exclusive right to use a telethon, a direct mail appeal, return address stickers or colored wristbands.  Would this be progress? How would allowing such ownership of a business method promote a better society?

What about auctions, bowl-a-thons, walk-a-thons, teams in training, etc.? And which nonprofit would you select to be the sole user of any one of these tools — the first one out of the box or the one that needed it most? Business method patents only reward the first user, not the most worthy.

One of EFF's fundamental principles is that we should be able to extend our freedoms in the offline world to the online world. The Internet should be about more freedom, more choice, and more opportunity to help people, not less. But business method patents on fundraising may hamstring many nonprofits with the result that they may end up doing less and helping fewer people online than offline. We cannot think of anything that is less helpful in promoting the progress of society.

One of the most compelling philanthropic motivators is when someone you know asks for support — for a donation or participation in an action alert or an event. Individual philanthropy, or the inclination to do good, has been at the heart of American society since its earliest days. As observed in 1840 by Alexis de Tocqueville, the French statesman and celebrated author of Democracy in America: "Enlightened self-love continually leads them [the American people] to help one another and inclines them to devote freely a part of their time and wealth to the welfare of the state."

Furthermore, online techniques used to maximize giving are far less expensive for nonprofits than those in the offline world. As donors demand more accountability, online tools make it more cost effective for organizations to raise money. They also make interaction between the donor and the nonprofit much more immediate and convenient.  In the ongoing quest to improve the ways for doing business, nonprofits borrow best practices from each other. This isn't stealing, this is community — the bedrock that philanthropy has relied upon for decades. Shouldn't technology enable us to do more and to do it more effectively? Restricting our use of fundraising tools limits the number of people we can engage, the volume of donations we will receive, and ultimately, the universe of people we can help.

Catastrophes, injustice, health crises, and so many other challenges bring out our best human instincts and inspire us to reach out and help others. By limiting how nonprofits can use the Internet, business method patents could limit our ability to help others. Winston Churchill had it right when he said, "We make a living by what we earn; we make a life by what we give." Let us encourage giving whenever and however we can to make a positive difference in more lives.

Jason Schultz, staff attorney for EFF, specializes in intellectual property and reverse engineering. He currently leads EFF's Patent Busting Project. Prior to joining EFF, Schultz worked at the law firm of Fish & Richardson P.C., where he spent most of his time invalidating software patents and defending open source developers in lawsuits.

Terri Forman, CFRE, is director of development for EFF. She has more than 20 years' experience leading development, marketing and communication efforts, raising more than $300 million for organizations including the Anti-Defamation League (West Coast Region), Congregation Emanu-El (San Francisco), United Way of the Bay Area, and others.

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