Online credit card issuer NextCard,
Inc. Thursday took steps to dominate the online credit market by
receiving notice of allowance on a patent that protects its business model
for taking credit card applications.
received a Notice of Allowance from the U.S.
Patent & Trademark Office (PTO) for a patent entitled “Method and
Apparatus for an Account-Level Offer of Credit and Real Time Balance
Transfer.” It protects NextCard’s methodology of offering credit card
pricing terms based on automated balance transfers in real time on the
Under the U.S. patent system, the PTO issues notices of allowance to
inventors prior to the actual issuance of patents. The notices let the
inventors know which specific claims in their applications have been allowed
by the PTO as patentable.
“This patent will be a powerful validation of NextCard’s pioneering advances
in providing consumer credit on the Internet,” said Jeremy Lent, chairman
and chief executive officer of NextCard.
NextCard is the largest credit card firm exclusively doing business on the
Internet. With the patent, along with others it has filed, the company
intends to gain the sole right to take credit card applications online.
Experts say that if the patents are given, it may succeed.
“This is a sobering piece of information for competitors who might be
thinking of copying the business model of this Web site,” said Marc E.
Brown, chair of the Internet Patent Prosecution Team at Oppenheimer, Wolff &
Donnelly LLP. “In some ways NextCard now has the ability to create a
level of fear.”
Brown did say that it is possible that the patents may not close off the
space entirely to competitors.
“No competitor will be able to determine exactly what the patent prohibits,”
he added. “It could be something that could be very easily avoided without
seriously hampering the competitors’ ability to compete.”