Financial Business Method Patents:
Nothing New under the Sun
P. Michael Nugent
In 1984 Jay Walker, founder of priceline.com, started Visual Technology Corporation. Visual Technology invented and manufactured plasma light sculptures that sold for $800 to $1,200 apiece. Visual Technology entered into a lucrative contract with Sharper Image to distribute the light sculptures through the famous Sharper Image catalog we all know and love. In the late 1980s, Radio Shack began to produce knockoffs of the light sculptures and sold them at half the price. Sharper Image ceased marketing Visual Technology's products and there ensued contractual disputes between the parties as to who was to pay for incurred catalog expenses and inventory.
Had Jay Walker obtained a patent for the plasma light sculptures— which he could certainly have done—Visual Technology would not have had a competitor in Radio Shack and the messy dispute would have been avoided. Jay Walker didn't make the same mistake with priceline.com.
In 1998, Walker Digital was issued the so-called priceline.com patent (5,794,207). Far from being a mere “business method” patent, far from being a patent on “reverse auctions,” the priceline.com patent is a method and apparatus patent for a cryptographically assisted commercial network system designed to facilitate buyerdriven conditional purchase offers over the Internet and other media. There is a raft of other patents underlying the priceline.com business, including so-called “adaptive marketing” patents, which cover methods and systems for inducing and offering on a real-time basis third-party cross-subsidies at point of purchase.
Citibank started early obtaining patents, in 1979 getting a seminal patent (4,134,537) on a “transaction terminal” that covered ATMs, smart phones, and handheld transaction devices of all kinds. In 1995, anticipating the coming surge in software-, system-, and business