Do We Really Need A Patent Battle Over Group Buying?

from the seriously? dept

Mon, Nov 22nd 2010 4:36pm — Mike Masnick

Back in the early dot com days there were a couple different "group buying" sites. I remember Accompany (whose name confused people when employees called them on the phone: "Hi, I'm calling from Accompany" "What company?" "Accompany") and Paul Allen's Mercata. There were a few others as well, and they all went away. However, in the last year or so, group buying has picked up steam again, with Groupon leading the way and lots of others entering the space quickly. And, of course, as with any "hot" area, you have to expect patent lawsuits to follow, as jealous folks who couldn't or didn't execute start suing those who executed better. Earlier this year, we already noted that Groupon clone Tippr bought Mercata's patents and were threatening Groupon over them. More recently, the small MobGob sued Groupon over some other patents... and now Groupon has responded by suing back with its own (acquired) patents.

I'm really trying to figure out how patents are helping anyone here, so perhaps the regular patent defenders can explain. Here's a highly dynamic market, where there are lots of competitors entering the space and trying out different things. The general concept of group buying is pretty straightforward and simple. It's hard to see how or why that deserves a patent. In fact, if you look closely at the space, you begin to notice that Groupon's success has had very little to do with the idea -- but with a few underlying tricks: in particular the fact that Groupon works really hard at good content production. It employs a bunch of writers, which make their deals seem more fun. So, quite seriously, if someone could explain how patents have benefited this market, I'd like to know. Because right now it seems to only be helping out a bunch of lawyers, at the expense of users.

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Filed Under: group buying, patents
Companies: groupon, mercata, mobgob, tippr

15 Comments

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Anonymous Coward, 22 Nov 2010 @ 5:17pm

It's just more ways that the government takes the merritocracy of those who do well and gives to those who are least deserving.
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Anonymous Coward, 22 Nov 2010 @ 8:13pm

read that too fast
I just read that too fast. I thought it said groping, not group buying.
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staff, 23 Nov 2010 @ 6:27am

obstacles
"as jealous folks who couldn't or didn't execute start suing those who executed better"

Not necessarily. Each entity faces its own unique set of obstacles. Small entities are heavily dependent on patents to get funding. When they have to fight for their patents over a course of many years it greatly hinders and delays their ability to commercialize.
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Andrew D. Todd, 23 Nov 2010 @ 6:45am

History of Group Buying
Group buying isn't really new. Sears Roebuck was doing something approximately similar, circa 1909, in an attempt to work around the abusive monopolies of the railroad parcel express companies. They were encouraging their customers to organize in "Buyers' Clubs," which could order things in hundred-pound shipments, and get the best shipping rates. This was before there was such as thing as parcel post in the modern sense of the word. Of course, in 1913, the farm vote, orchestrated by the major mail-order firms (think Craigslist a hundred years ago) brought in parcel post.

See my comments to this article for more detail.

http://hnn.us/articles/116092.html
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Anonymous Coward, 23 Nov 2010 @ 6:46am

Re: obstacles
Small entities are NOT heavily dependent on patents to get funding. A good business plan with a staff that can execute will sometimes if not often trump a patent.
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Anonymous Coward, 23 Nov 2010 @ 7:06am

Re: obstacles
[Citation Needed]

Asking you for facts is pointless though.
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Bruce, 23 Nov 2010 @ 7:38am

On patents and lawyers
The patents here help by rewarding, albeit indirectly, those pioneers like Tom Van Horn, Richard Halber and Linda Perkins, who originated the idea, and encourage those risk takers like Paul Allen to invest in such things. In this case, Mike, you recognize that Allen's Mercata failed mostly due to timing (being ahead of its time). You conveniently neglected to mention this time (although you did previously) that Allen is co-owner of the plaintiff Tippr (having taken stock as part of the purchase price for his 12 patents), a major active competitor of Groupon. The patents are not for the overall concept of group-buying, but for a particular method of group buying using, among other things, a reserved limited time negotiated with the seller.

The claims are very broad, probably too broad to stand up in Court, either on subject matter or non-obviousness, as they appear about as mental and abstract in nature as those invalidated in Bilski and it is hard to see how having a private pre-sale could be nonobvious.

For example. claim 1 of US Pat No. 7263498:

"1. A method for sourcing a featured item for an on-line group-buying sale, comprising: communicating to a supplier a featured item quantity and a featured item time reservation; receiving the supplier's consent to reserve the featured item quantity for the negotiated featured item time reservation for sale in the on-line group-buying sale; conducting an on-line group-buying sale for the featured item during the featured item time reservation, selling at least a portion of the featured item quantity to one or more buyers; and supplying the featured items sold in the on-line group-buying sale to one or more buyers by instructing the supplier to provide the items to one or more buyers."

Now, another benefit of these patents, even if invalid as I suspect they are, is that they spur creativity. Groupon, if they have the creative ability, should be actively working on getting around these patents, and that activity may well lead to advances in the art of group buying online. If so, the patents will have helped an American company to progress the useful arts and sciences to create a competitive advantage by designing a better group buying experience. And Tippr, if it is to compete, will have to create a better method than the design around method Groupon will create, and so on. That is progress of the useful arts, promoted by patents, and is what the Constitution expressly sought to accomplish in Article 1, Section 8, Clause 8.

One final though about lawyers getting rich. Yes, lawyers will make money, but if a right is to be protected, it may take legal expertise to protect it, as it often must be, in the courts and administrative bodies. Lawyers are not the bad guys in legal battles any more than soldiers are the bad guys in military battles, unless they are on the side against you or lose your case. They are soldiers of the law and protectors of their clients as well as officers of the court and administrative bodies involved, and unlike their clients, must comply with an ethical code of conduct. For us lawyers it is better to win and be considered greedy and smart than to lose and be considered greedy and incompetent. In fact, in most cases it is the lawyers that act with civility and tone down the clients, not the other way around as commonly portrayed.
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Anonymous Coward, 23 Nov 2010 @ 7:57am

Mike, no one cares about your ideas about patents. Ideas are worthless, it is execution that matters, remember? Rather than spew worthless ideas go execute on something.
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Anonymous Coward, 23 Nov 2010 @ 9:08am

Re: On patents and lawyers
"The claims are very broad, probably too broad to stand up in Court, either on subject matter or non-obviousness, as they appear about as mental and abstract in nature as those invalidated in Bilski and it is hard to see how having a private pre-sale could be nonobvious."

and yet the USPTO granted the patent regardless. and you're OK with this? You're OK with the fact that lots of money and time and effort could be wasted to overturn a bad patent that shouldn't have been granted to begin with?
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Anonymous Coward, 23 Nov 2010 @ 9:09am

Re: On patents and lawyers
"Now, another benefit of these patents, even if invalid as I suspect they are, is that they spur creativity."

[Citation needed]

Sorry, getting a bunch of broad patents does nothing to spur creativity, it only restricts it by preventing anyone from doing anything. Telling someone what they can not do does not help them become more creative.
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Anonymous Coward, 23 Nov 2010 @ 9:11am

Re: On patents and lawyers
"and that activity may well lead to advances in the art of group buying online."

So a bunch of unsubstantiated speculation is all you have.

Killing people might actively lead the magic fairies to resurrect them. See, I can play this game too.
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Anonymous Coward, 23 Nov 2010 @ 10:07am

"Lawyers are not the bad guys in legal battles any more than soldiers are the bad guys in military battles...."

You haven't been paying attention, have you.
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Paul (profile), 23 Nov 2010 @ 11:39am

Re: On patents and lawyers
"Lawyers are not the bad guys in legal battles any more than soldiers are the bad guys in military battles, unless they are on the side against you or lose your case. "

Your analogy illustrates the distinction between actors (soldiers) and the system (the war) that simply doesn't exist with lawyers. Lawyers (for the most part) make the laws, make the regulations, become judges, and represent clients. Lawyers are thus far more responsible for the system in which they practice than any soldier might be.

Besides, just like we might "win" in Iraq and come home bankrupt and having utterly failed to make the world more secure, lawyers often deliver a "win" for their clients that means bankruptcy and business failure. In most cases, win or lose, the lawyer "wins" in a conventional sense (i.e. makes off with the cash) while the client/business/consumer pays.

Lastly, how did patents in this case do anything you claimed they did, when both sides of this fight went and bought their patents from some other organization? And I would also point out that working around patents does not uniformly progress "the useful arts" when such efforts could have been far more productively spent making their business as effective as possible.
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Paul (profile), 23 Nov 2010 @ 12:37pm

Re:
"Mike, no one cares..."

I think you should speak for yourself, as some of us that follow this blog do care about Mike's opinions, and admire how he is able to "execute" on his ideas with this blog and elsewhere.

Claiming Mike's ideas are worthless doesn't impress anyone if you cannot articulate *why* you think his ideas are worthless. You are just an anonymous Troll.
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Anonymous Coward, 23 Nov 2010 @ 1:08pm

Re: Re:
"I think you should speak for yourself"

Fair enough.

"Claiming Mike's ideas are worthless doesn't impress anyone if you cannot articulate *why* you think his ideas are worthless."

The same reason the ideas in patents are worthless, because ideas do not matter, only execution matters. That is the standard techdirt take on ideas. If that logic applies to patents then it certainly applies to techdirt too.

We have not heard about cwf+rtb lately, how is that working out? Mike's execution is poor as far as I can tell, based on that the ideas behind them are even worse.
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