NextCard to Receive Online Credit Patent

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.

NextCard (NXCD) 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 Internet.

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.

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."


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