EBAY INC.v.Advanced Auctions LLC

Patent Trial and Appeal Board

Jun 25, 2014

12880110 (P.T.A.B. Jun. 25, 2014)

Trials@uspto.gov Paper No. 15
571.272.7822 Entered: June 25, 2014

UNITED STATES PATENT AND TRADEMARK OFFICE
____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

eBAY, INC.,
Petitioner,

v.

ADVANCED AUCTIONS LLC,
Patent Owner.
____________

Case CBM2014-00047
Patent 8,266,000 B1
____________

Before GRACE KARAFFA OBERMANN, SUSAN L. C. MITCHELL, and
JO-ANNE M. KOKOSKI, Administrative Patent Judges.

KOKOSKI, Administrative Patent Judge.

DECISION
Denying Institution of Covered Business Method Patent Review
37 C.F.R. § 42.208
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I. INTRODUCTION
eBay, Inc. (“Petitioner”) filed a Corrected Petition (“Pet.”) to institute
a covered business method review of claims 1-7, 10-15, 17-21, and 23-26 of
U.S. Patent No. 8,266,000 B1 (“the ’000 patent,” Ex. 1001). Paper 7. Patent
Owner Advanced Auctions LLC (“Patent Owner”) filed a Preliminary
Response on April 8, 2014. Paper 13. We have jurisdiction under 35 U.S.C.
§ 324.
The standard for instituting a covered business method patent review
is set forth in 35 U.S.C. § 324(a):
THRESHOLD. – The Director may not authorize a post-grant
review to be instituted unless the Director determines that the
information presented in the petition filed under section 321, if
such information is not rebutted, would demonstrate that it is
more likely than not that at least 1 of the claims challenged in
the petition is unpatentable.
Upon consideration of the Petition and Preliminary Response, we
determine that Petitioner has not demonstrated that it is more likely than not
that at least one of the challenged claims is unpatentable. Pursuant to 35
U.S.C. § 324, we deny the institution of a covered business method patent
review.
A. The ’000 Patent (Ex. 1001)
The ’000 patent, titled “Real Time Auction With End Game,” is
directed to a real time auction system that operates in two modes. Ex. 1001,
Abstract. According to the ’000 patent, the auction system “describes a new
paradigm for conducting an auction on a remote information server such as
the Internet.” Id. at 1:12-14. The ’000 patent states that “the most serious
and competitive bidding can occur at the end of the auction.” Id. at 1:29-30.
The ’000 patent explains that, when the auction has a fixed end time, the
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auction ends at that time, even if the bidding is most intense, and if “a bid is
placed but not received before the instant of the auction end, the item will
sell.” Id. at 1:37-39. Internet delays, therefore, “can cause a product to sell
for less money than it otherwise would have sold for.” Id. at 39-40.
The ’000 patent describes a first operating mode where “[t]he bidding
is actually carried out within a virtual environment created by the central
‘server’ computer” that “keeps track of all the bids, and produces the
graphical environment that is displayed on each of the remote
terminals . . . .” Ex. 1001, 2:17-23. Figure 2 of the ’000 patent is
reproduced below:

Figure 2 depicts a flowchart of operation according to the first operating
mode. The server “runs the beginning part of the auction as a conventional
Internet auction, shown generally as step 200.” Id. at 2:29-30. The item that
is offered for sale is displayed, and “this portion of the auction also accepts
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bids, e.g. via a bid agent.” Id. at 2:48-49. According to the ’000 patent:
This bid form continues until some specified time period (x)
before auction close, e.g. one hour prior to auction closing.
Step 205 shows detecting that predetermined time, shown as
time T-X. The auction mode changes to a mode that indicates
the higher energy and interest associated with this portion of the
auction. Step 210 shows calling the “end game”, which is the
routine that runs this higher energy portion of the auction. This
changes the auction mode to a more interactive atmosphere.
Id. at 2:51-59. After the end game is called, the participants in the auction
are sent a message, as shown in step 220.
The end game mode “uses automatic information update to provide up
to date information to the bidders.” Ex. 1001, 5:10-11. Automatic
information update can be implemented, for example, by sending “an update
command to the browser at specified intervals,” which “causes the browser
to request a refresh, thereby loading the new and updated forum scene.” Id.
at 5:13-16. Figure 4 of the ’000 patent is reproduced below:

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Figure 4 depicts a flowchart of the operation of the end game. At step 400, a
new bidder enters the end game, and the bidder’s identity is verified at step
402. Id. at 4:42-50. After verification, the bidder is added to the
participant’s list at step 404, and is displayed, at step 406, in the graphical
forum in which the end game is carried out. Id. at 4:53-57. At step 408, a
signal is sent to the web browser “requesting at least the new bidder’s web
browser to refresh.” Id. at 5:28-30. A new bid is detected at step 420, step
422 obtains the amount of the bid, and the bidder that placed the bid is
moved to the “current bids” area at step 424. Id. at 6:13-15. At step 426,
“[t]he current bid amount is fed to [an agent win] routine to determine if the
current bid is a winner, and to take action based thereon.” Id. at 6:17-19.
Step 430 shows when the time for the auction is about to expire
(either at the time of expiration, or minutes before). Id. at 7:38-40. At
step 432, the word “going” is displayed, which “is like a real auction, where
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the auctioneer warns the audience using this key word,” and all bidders are
sent an update at step 434. Id. at 7:42-47. To allow bidders time to send in
bids, the second “going,” shown at step 435, preferably follows the first by
at least thirty to sixty seconds. Id. at 8:13-17. Another global update is sent
at step 450, and, “[a]fter additional time has elapsed at step 452, without
additional bids being detected at 454, the item is indicated sold at 460.” Id.
at 8:19-21.
B. Related Matters
The ’000 patent is asserted against Petitioner in Advanced Auctions
LLC v. eBay Inc., No. 3:13-cv-01612 (S.D. Cal.). Pet. 4.
C. Illustrative Claim
Petitioner challenges claims 1-7, 10-15, 17-21, and 23-26 of the ’000
patent. Claims 1, 10, 17, and 23 are independent claims. Claim 1 is
illustrative, and reads as follows:
1. A method of hosting a computer-based auction over the
internet, comprising:
using a computer to produce information representing a
webpage indicative of an electronic auction, where said
webpage shows bid amounts and accepts bids over the internet;
said computer producing second information as part of said
information representing a webpage, said second information
having a first parameter indicative of an ending time for said
electronic auction;
said computer also storing a predetermined set time before the
ending time;
prior to said set time before said ending time, said computer
carrying out the auction in a first mode, in which information
that represents a webpage with information about the auction is
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updated only based on a manual request for update received
from a client over the internet and is not automatically updated;
after said set time before said ending time, said computer
changing a mode of carrying out the auction to a second mode,
wherein said second mode, said computer automatically
updating said information that represents the webpage to have
new information and automatically sending said new
information over the internet to each of a plurality of clients to
automatically display said new information without making a
request for said new information.
D. The Prior Art
Petitioner relies on the following prior art references:
Fisher et al., U.S. Patent No. 5,835,896, issued November 10, 1998
(“Fisher”). Ex. 1009.
Rackson, et al., U.S. Patent No. 6,415,270 B1, issued July 2, 2002
(“Rackson”). Ex. 1011.
Friedland et al., U.S. Patent No. 6,449,601 B1, issued September 10, 2002
(“Friedland”). Ex. 1008.
Lin-Hendel, U.S. Patent No. 7,542,920 B1, issued June 2, 2009 (“Lin-
Hendel”). Ex. 1010.
E. The Asserted Grounds of Unpatentability
Petitioner challenges the patentability of claims 1-7, 10-15, 17-21, and
23-26 of the ’000 patent on the following grounds:
1

1
Petitioner supports its challenge with a declaration executed by Sky Kruse
on December 17, 2013. Ex. 1007.
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Reference[s] Basis Claims challenged
Friedland and Fisher § 103(a) 1-7, 10-15, 17-21,
and 23-26
Lin-Hendel and
Fisher
§ 103(a) 1-7, 10-15, 17-21,
and 23-26
Rackson and
Admitted Prior Art
§ 103(a) 1-7, 10-15, 17-21,
and 23-26

II. ANALYSIS
A. Claim Interpretation
As a step in our analysis for determining whether to institute a review,
we determine the meaning of the claims for purposes of this decision. In a
covered business method patent review, a claim in an unexpired patent shall
be given its broadest reasonable construction in light of the specification of
the patent in which it appears. 37 C.F.R. § 42.300(b). Under the broadest
reasonable construction standard, claim terms are given their ordinary and
customary meaning, as would be understood by one of ordinary skill in the
art in the context of the entire disclosure. In re Translogic Tech., Inc., 504
F.3d 1249, 1257 (Fed. Cir. 2007).
For purposes of this decision, we construe terms in the claims
according to their ordinary and customary meaning, consistent with the
specification, and determine that no term needs express interpretation for the
purposes of this decision.
B. Standing
Section 18 of the America Invents Act provides for the creation of a
transitional program for reviewing covered business method patents. See
Leahy-Smith America Invents Act (“AIA”), Pub. L. No. 112-29, 125 Stat.
284 (2011). Section 18 of the AIA limits the filing of petitions for covered
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business method patent reviews to persons, or their privies, that have been
sued or charged with infringement of a “covered business method patent.”
AIA §§ 18(a)(1)(B), 18(d)(1); see 37 C.F.R. § 42.302(a). As noted in
Section I.B above, Petitioner has been sued for infringement of the ’000
patent. Pet. 4. A “covered business method patent” is a patent that “claims
a method or corresponding apparatus for performing data processing or other
operations used in the practice, administration, or management of a financial
product or service, except that the term does not include patents for
technological inventions.” AIA § 18(d)(1); see 37 C.F.R. § 42.301(a). A
patent need have only one claim directed to a covered business method to be
eligible for review. See Transitional Program for Covered Business Method
Patents—Definitions of Covered Business Method Patent and Technological
Invention; Final Rule, 77 Fed. Reg. 48,734, 48,736 (Aug. 14, 2012)
(Comment 8). Thus, a threshold question is whether the ’000 patent has at
least one claim directed to a “covered business method,” as defined by the
AIA. For the reasons explained below, we conclude that the ’000 patent is a
“covered business method patent” eligible for review.
1. Financial Product or Service
Our inquiry is controlled by whether at least one claim of the
’000 patent “claims a method or corresponding apparatus for performing
data processing or other operations used in the practice, administration, or
management of a financial product or service.” 37 C.F.R. § 42.301(a).
Patent Owner does not dispute Petitioner’s contention that, because the
subject matter of the ’000 patent is directed to “a sales methodology,” it
claims “methods and computer systems for activities that are financial in
nature, i.e., automated auctioning including customer interfaces related
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thereto.” Pet. 5. We agree with Petitioner that the claims of the ’000 patent
satisfy the “financial product or service” component of the definition of
“covered business method patent” set forth in section 18(d)(1) of the AIA.
2. Technological Invention
The definition of “covered business method patent” in section 18 of
the AIA does not include patents for “technological inventions.” To
determine whether a patent is directed to a technological invention, we
consider “whether the claimed subject matter as a whole recites a
technological feature that is novel and unobvious over the prior art; and
solves a technical problem using a technical solution.” 37 C.F.R. §
42.301(b). The following claim drafting techniques, for example, typically
do not render a patent a “technological invention”:
(a) Mere recitation of known technologies, such as computer
hardware, communication or computer networks, software,
memory, computer-readable storage medium, scanners,
display devices or databases, or specialized machines, such
as an ATM or point of sale device.
(b) Reciting the use of known prior art technology to
accomplish a process or method, even if that process or
method is novel and non-obvious.
(c) Combining prior art structures to achieve the normal,
expected, or predictable result of that combination.
Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,763-64 (Aug.
14, 2012).
Petitioner contends that the ’000 patent is not directed to a
technological invention. Pet. 7-8. Petitioner contends that the ’000 patent
“acknowledges that ‘[a]uctions should be carried out more like a real live
auction’ and repeatedly analogizes to ‘a real auction’ and a ‘conventional
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auction.’” Id. at 8 (citing Ex. 1001, 2:33-34 and 46-49). According to
Petitioner, automating updates of current bid amounts as claimed in the
’000 patent is not a technological feature because “accomplishing a business
process or method is not technological, whether or not that process or
method is novel.” Id. Petitioner further contends that “automating an age-
old auction is neither technological nor novel” and, therefore, “the
’000 patent claims do not solve a technical problem using a technical
solution.” Id.
Patent Owner contends that the ’000 patent defines a technological
invention, and is ineligible for covered business method patent review,
because it “addresses and solves problems in client-server web-based
auctions.” Prelim. Resp. 16. According to Patent Owner, “complex issues
arise [in online auctions] as to the technical mechanism that triggers the
update, when to update, and how and whether to filter the updates.” Id. at
16-17. Patent Owner’s argument is not persuasive.
Specifically, Patent Owner contends that “all the claims speak in
terms of servers, clients, memory, modes, timers, automatic mode transitions
based upon preset timing, and more,” and this technology is “assembled in a
new and different manner not obvious to others–not a mimicry of some
preexisting auction format.” Prelim. Resp. 17. Patent Owner argues that the
transition from manual updates to automatic updates of the webpage during
the end game of the ’000 patent’s auction can be done in different ways,
such as sending an update command to the browser at specified intervals.
Id. at 17-18.
Patent Owner has not shown sufficiently that the ’000 patent’s
requirement that the operating mode of the auction transitions from manual
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to automatic updates of the webpage requires anything more than
technologies that were already known in the art. The technological features
recited in the ’000 patent were well-known at the relevant time period. For
example, the ’000 patent states that “[t]he bidding is carried out within a
virtual environment created by the central ‘server’ computer” and that the
server “may be more than one computer, which operate to execute a program
as described herein.” Ex. 1001, 2:17-20. The ’000 patent further states that
the server “keeps track of all the bids, and produces the graphical
environment that is displayed on each of the remote terminals . . .” and that
the remote terminals can include “every computer on the Internet.” Id. at
2:21-25. The ’000 patent also discloses that the “automatic information
update can be done in different ways,” including sending an update
command to the web browser at specified intervals, causing “the browser to
request a refresh, thereby loading the new and updated forum scene.” Id. at
5:12-16.
Accordingly, Patent Owner has not shown persuasively that any
specific, unconventional software, computer equipment, tools, or processing
capabilities are required. Further, Patent Owner does not point to anything
in the claim requiring specific computer hardware alleged to be novel and
unobvious over the prior art. The ’000 patent is a “covered business method
patent” that is not excluded for being a “technological invention,” and
therefore, is eligible for covered business method patent review.
C. The Asserted Grounds of Unpatentability
Petitioner’s asserted grounds of obviousness each relies on a reference
that is prior art under pre-AIA 35 U.S.C. § 102(e). Section 102(e) prior art
references, however, do not qualify as prior art on which a covered business
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method patent review may be based. See AIA § 18(a)(1)(C); Liberty Mut.
Ins. Co. v. Progressive Cas. Ins. Co., CBM2012-00010, slip op. at 28
(PTAB Feb. 25, 2013) (Paper 16) (recognizing that § 102(e) references do
not qualify as prior art under AIA § 18(a)(1)(C)); MeridianLink, Inc. v. DH
Holdings, LLC, CBM2013-00008, slip op. at 2 (PTAB Sept. 12, 2013)
(Paper 24) (stating that, although a reference may be prior art under
§ 102(e), it does not meet the criteria to support a challenge under AIA
§ 18(a)(1)(C)).
The ’000 patent was filed September 12, 2010, and claims priority to
application No. 09/699,805, filed September 26, 2000, and to provisional
application No. 60/169,725, filed December 8, 1999. Ex. 1001. Friedland
issued in 2002 from an application filed in 1998, and was not published prior
to issuance. Ex. 1008. Thus, Friedland is prior art to the ’000 patent under
pre-AIA 35 U.S.C. § 102(e), as Petitioner acknowledges. Pet. iii.
Accordingly, Friedland is not prior art upon which a covered business
method patent review may be instituted.
Lin-Hendel issued in 2009 from an application filed in July 2000, and
was not published prior to issuance. Ex. 1010. Thus, Lin-Hendel is prior art
to the ’000 patent under pre-AIA 35 U.S.C. § 102(e), as Petitioner
acknowledges. Pet. iii. Accordingly, Lin-Hendel is not prior art upon which
a covered business method patent review may be instituted.
Rackson issued in 2002 from an application filed in 1999, and was not
published prior to issuance. Ex. 1011. Thus, Rackson is prior art to the ’000
patent under pre-AIA 35 U.S.C. § 102(e), as Petitioner acknowledges. Pet.
iii. Accordingly, Rackson is not prior art upon which a covered business
method patent review may be instituted.
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Because each of Petitioner’s obviousness grounds relies upon one of
Friedland, Lin-Hendel, or Rackson—references that are only prior art
pursuant to pre-AIA 35 U.S.C. § 102(e)—we deny review on each of those
grounds.

III. CONCLUSION
For the foregoing reasons, we conclude that Petitioner has not
demonstrated a reasonable likelihood that at least one of the challenged
claims of the ’000 patent is unpatentable based on the asserted grounds.

IV. ORDER
In consideration of the foregoing, it is hereby:
ORDERED that the Petition is denied as to all challenged claims of
the ’000 patent; and
FURTHER ORDERED that no covered business method patent
review is instituted.
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PETITIONER:
Scott McKeown
Greg Gardella
OBLON SPIVAK
cpdocketmckeown@oblon.com
cpdocketgardella@oblon.com
PATENT OWNER:
Abraham Hershkovitz
Eugene C. Rzucidlo
HERSHKOVITZ & ASSOCIATES, PLLC
ahershkovitz@hershkovitz.net
grzucidlo@hershkovitz.net