The Netcentives patent follows close on the heels of patents awarded to NETDelivery Corp., CyberGold Inc. and Priceline.com, all for Internet-related ideas. Netcentives' patent, in fact, sounds similar to the one CyberGold received, which covers rewarding consumers for reading ads and filling out surveys online. But Netcentives CEO West Shell III says the fundamental theory behind them is very different.
"We're all about electronic commerce, and driving shopping and purchasing online," he said, while CyberGold's patent is more oriented towards driving clicks to advertisers.
Similar patents a good sign
Having several highly specific patents is probably better for the market than granting one big one, said Scott Smith, director of Internet commerce at Current Analysis in Sterling, Va.
"If you look at the scenario of a broadly defined patent, such as when Open Market came out with its patents for shopping cart technology, there's a short-term hesitation in the market as vendors take what resources they have and turn them toward legal analysis," he said. "The more broadly defined patents create more uncertainty. The more narrowly defined ones answer a few questions before they're asked."
Smith said the timing of the CyberGold and Netcentives' patents reflects the spurt of interest in incentive programs.
Indeed, there are several places online where consumers can sign up to win points for shopping online, looking at ads or reading email. And the process has taken place in the real world for years.
Development won't slow
Jordan Stanley, CEO of Free Ride Media Inc. which gives people credit for buying products from a select list of merchants, said that his company's lawyers are examining the recent patents, but he thinks the market will continue to thrive despite any legal claims.
"Any publicity is good publicity," Stanley said. "The Internet has so many choices and so much going on that I suppose anything that puts forward discussion of these types of programs will bring attention to the concept and bring scrutiny. And as far as Free Ride is concerned, I think that's probably good."