Washington Post: The man who invented Priceline.com wants to shake up America’s approach to patents, by Brian Fung
This article originally appeared in Washington Post on January 2, 2015.
In 1997, Jay Walker founded Priceline.com — the Web site many people use to get cheaper airfare by “naming your own price.” Patenting the solution, and allowing others to use the patents for a fee, helped drive Walker’s success. But, Walker argues in an interview, many patents remain underused. Now, the man who smoothed transactions for buyers and sellers of airplane tickets wants to do something similar for a key part of the nation’s information economy. Walker is developing something called the United States Patent Utility. Here’s what that means.
How did you get into this space, and why are you interested in patents after having worked on Priceline?
I think the old phrase that “necessity is the mother of invention” applies here. As you probably know, I have quite a few inventions to my name and quite a few patents to my name.
How many patents?
I have about 700 or so U.S. patents to my name. I think I’m about the 11th most-patented living inventor. So I know a few things about patents, shall we say. I have an expensive education, I think that might be the best way to say it. As an inventor, the vast majority of my patented inventions have not been commercialized, in large part because the licensing system in the United States is badly broken. It’s almost non-functional in the United States if you’re a small or mid-sized company or an independent inventor. It’s just barely working for giant corporations.
Let’s back up a little bit. Tell me about what kinds of patents are involved in Priceline, and how does it hook into this system here?
In putting together an R&D laboratory [called Walker Digital], one of the problems we worked on was, how do you see the demand curve below the price of a product? All sellers of products in the modern economy sell by posting a retail price, or they negotiate a price on a market basis. Most prices are set by the seller. When the seller sets the price, there’s a problem: They can’t see how much demand there is below the dollar price they’ve set. We said, “You know what? Could there be solutions in the new, modern age that would allow sellers to see the demand below the price line?” Hence the name of the company.
So the idea of a demand collection system was invented in that lab whereby people could make an offer, secured by a credit card, for a unit of supply. And so their demand would become visible for a brief period of time, and sellers could choose to either harvest that demand and fill it or let the demand expire unfilled. And that mechanism, that solution, is what led to a set of patents we applied for and were granted. Those patents ultimately became part of the start-up of Priceline and gave Priceline its competitive advantage — that it couldn’t just be copied by other companies.