eBay Inc.v.Paid, Inc.

Patent Trial and Appeal Board

Sep 16, 2015

11755659 (P.T.A.B. Sep. 16, 2015)

Trials@uspto.gov Paper No. 37
571-272-7822 Entered: September 16, 2015

UNITED STATES PATENT AND TRADEMARK OFFICE
_____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

EBAY, INC.,
Petitioner,

v.

PAID, INC.,
Patent Owner.
____________

Case CBM2014-00127
Patent 7,930,237
____________

Before JAMES P. CALVE, THOMAS L. GIANNETTI, and
KRISTINA M. KALAN, Administrative Patent Judges.

CALVE, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 328(a) and 37 C.F.R. § 42.73

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I. INTRODUCTION
A. Background
eBay, Inc. (“Petitioner” or “eBay”) filed an Amended Petition (Paper
4) seeking institution of a covered business method patent review of claims
1–19 (all claims) of U.S. Patent No. 7,930,237 B1 (Ex. 1001; “the ’237
Patent”) pursuant to 35 U.S.C. § 321. Paid, Inc. (“Patent Owner”) filed a
Preliminary Response. Paper 12 (“Prelim. Resp.”). Based on these papers,
we instituted trial as to claims 1–19. Paper 15 (“Institution Decision”).
After institution, Patent Owner filed a Response (Paper 22, “PO
Resp.”) and Petitioner filed a Reply (Paper 25, “Pet. Reply”). The parties
also rely on fact and expert testimony. Petitioner proffered the Declaration
of Philip Greenspun, Ph.D. (Ex. 1003, “Greenspun Decl.”) with the Petition.
Patent Owner proffered the Declaration of Alfred Weaver, Ph.D. (Ex. 2003,
“Weaver Decl.”) with its Response. A transcript of Dr. Weaver’s deposition
(Ex. 1023, Weaver Dep.”) was submitted by Petitioner. Patent Owner relies
also on a declaration of co-inventor Richard Rotman (Ex. 2004, “Rotman
Decl.”) and a supplemental declaration of Mr. Rotman (Ex. 2086, “Rotman
Suppl. Decl.”). The Rotman Supplemental Declaration includes Exhibits
2035–2085, which are subject to a motion to exclude (Paper 27). See infra.
This case is related to three other Board proceedings involving related
patents. These proceedings and the patents involved are CBM2014-00125
(U.S. Patent No. 8,352,357), CBM2014-00126 (U.S. Patent No. 8,521,642),
and CBM2014-00128 (U.S. Patent No. 8,635,150). These cases were
consolidated for argument but are decided separately. Oral Hearing for all
four cases was held on June 9, 2015. A transcript of the argument is entered
in the record as Paper 36 (“Hearing Tr.”).
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We have jurisdiction under 35 U.S.C. § 6(c). This Final Written
Decision is entered pursuant to 35 U.S.C. § 328(a). For reasons that follow,
we conclude that Petitioner has demonstrated by a preponderance of the
evidence that claims 1–19 of the ʼ237 patent are unpatentable because they
are directed to patent-ineligible subject matter under 35 U.S.C. § 101. We
also conclude that Petitioner has demonstrated by a preponderance of the
evidence that claims 1–19 are unpatentable under 35 U.S.C. § 103(a).
B. Related Matters
Petitioner states that it was sued for infringement of the’237 patent in
PAID, Inc. v. eBay Inc., No. 4:13-cv-40151-TSH (D. Mass.). Pet. 4 (citing
Ex. 1004). The complaint in that action included U.S. Patent Nos. 8,352,357
(“the ’357 patent”) and 8,521,642 (“the ’642 patent”), and was amended to
include U.S. Patent No. 8,635,150 (“the ’150 patent”). Exs. 1004, 1005.
In addition, as noted above, Petitioner has filed Petitions for covered
business method patent review of the ’357 patent (CBM2014-00125), the
’642 patent (CBM2014-00126), and the ’150 patent (CBM2014-00128).
Decisions on those proceedings are being issued with this decision.
C. The ’237 Patent (Ex. 1001)
The ʼ237 patent relates to improvements in on-line auctions.
1
The
’237 patent discloses that conventional online auctions do not offer the buyer
complete information about the real cost of the auction. Ex. 1001, 4:4–6.
This is because they do not specify exact shipping cost information. Id. at

1
The ’237 patent discloses that the term “auction” includes situations where
a seller offers goods online via a bidding process as well as reverse auctions
and direct online product offerings. Ex. 1001, 1:61–66; Weaver Decl. ¶ 25.
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4:6–7. According to the ʼ237 patent, the improved auction method and
system include a shipping calculator. The shipping calculator can prompt a
potential buyer to enter information necessary to determine shipping cost.
Id. at 4:7–13. That information may include entry of the ZIP code of the
buyer on a screen display. When the buyer enters ZIP code information, the
buyer may initiate the shipping calculator by clicking a display button. Id. at
4:16–19. Figure 14, reproduced below, illustrates the calculator operations.

Figure 14 is a flow chart of a process for generating shipping rates.
At step 1402, the system initiates a rate engine in response to a buyer input,
such as clicking on the calculator button appearing on the computer screen.
See Ex. 1001, Fig. 5. Next, at step 1403, the system retrieves the seller
shipping preferences from a data storage facility. If multiple items are
purchased, the system recognizes this at step 1404. Id. at 10:53–11:5.
At step 1407, the system queries the seller’s preferences to determine
whether the shipping rate is a fee-based rate. If so, the fee-based rate is
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calculated at step 1409. If not, at step 1408, an algorithm is applied to
determine the packaging for the items to be shipped. Id. at 11:13–32.
At step 1410, the system determines the location of the seller and the
buyer based on data entered in interaction with the servers of the system. At
step 1412, the system calculates and stores a rate factor based on the location
of the buyer and seller. Id. at 11:35–39.
At step 1414, the system queries whether weight is a factor in the
calculation, and if so, the system at step 1418 calculates and stores a weight
factor for the item. At step 1420, the system queries whether taxes apply
and at step 1422, calculates and stores a tax factor. Id. at 11:39–45.
At step 1424, the system queries whether insurance charges apply, and
if so calculates and stores an insurance factor at step 1428. At step 1430, the
system queries whether a handling charge by the seller and, at step 1432, the
system calculates and stores a handling factor. Once all of these factors are
determined, the system calculates a rate at step 1434. Id. at 11:45–59.
D. Illustrative Claim
Claim 1, the sole independent claim, is reproduced below.
1. A method for calculating shipping rates for an online
open-bidding auction, comprising:
receiving a seller’s shipping preferences via a computer
network, the seller’s shipping preferences to be stored at
least one first storage facility, wherein the seller’s
shipping preferences comprise a preference to ship one or
more auction items, a preference to ship from one or
more seller shipping locations, and a preference to ship
via one or more shipping methods, wherein the seller’s
shipping preferences are electronically selected by the
seller to be utilized in one or more online open-bidding
auctions initiated by the seller;
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receiving shipping characteristics of at least one auction
item, the shipping characteristics to be stored at least one
second storage facility, wherein the shipping
characteristics comprise at least one physical
characteristic of the at least one auction item;
receiving auction listing characteristics of the at least one
auction item, the auction listing characteristics to be
stored at least one third storage facility, wherein the
auction listing characteristics comprise a description of
the at least one auction item;
providing an online auction listing for the at least one
auction item in an online open-bidding auction initiated
by the seller, wherein the online auction listing comprises
the auction listing characteristics of the at least one
auction item, at least one entry option to allow a buyer to
enter of an indicator of a buyer’s shipping location, and
at least one request option to allow a buyer to request a
shipping rate calculation;
receiving a buyer’s request via the online auction listing to
calculate at least one shipping rate for the at least one
auction item in the online open-bidding auction;
electronically calculating the at least one shipping rate based
at least in part upon at least one selected shipping
method, at least one selected seller shipping location, the
buyer’s shipping location, the shipping characteristics of
the at least one auction item, and an amount of at least
one auction bid associated with the at least one auction
item, wherein the amount of the at least one auction bid
is based upon at least one bid amount provided by one or
more of the buyer, the seller, and a third party; and
electronically presenting the at least one calculated shipping
rate to the buyer;
wherein the at least one shipping rate may be calculated at
any time during the online open-bidding auction for
electronic presentation to the buyer.

E. The Asserted Grounds
The following prior art is relied upon by Petitioner:
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1. PCT Pub. WO 01/55931 A1, published August 2, 2001 (Ex. 1010,
“Van Zandt”).
2. Screenshots of the iShip.com Web site, www.iShip.com, obtained
through the Wayback machine (Exs. 1011–1014, “iShip.com”).
3. Screenshots of the PriceGrabber.com Web site,
www.pricegrabber.com, obtained through the Wayback machine (Ex. 1015,
“PriceGrabber.com”).
4. U.S. Patent No. 5,960,411, issued September 28, 1999 (Ex. 1016,
“Hartman”).
5. PCT Pub. No. WO 00/70519, published November 23, 2000 (Ex.
1017, “Falic”).
6. Applicant’s Admitted Prior Art (“AAPA”).
Trial was instituted on the following grounds:
1. Whether claims 1–19 are directed to patent-ineligible subject
matter under 35 U.S.C. § 101.
2. Whether claims 1–9 and 16–19 are unpatentable over Van Zandt
and iShip.com under 35 U.S.C. § 103(a).
3. Whether claims 12 and 13 are unpatentable over Van Zandt,
iShip.com, and Hartman under 35 U.S.C. § 103(a).
4. Whether claims 1–9 and 16–19 are unpatentable over Van Zandt,
iShip.com, and PriceGrabber.com under 35 U.S.C. § 103(a).
5. Whether claims 12 and 13 are obvious over Van Zandt, iShip.com,
PriceGrabber.com, and Hartman under 35 U.S.C. § 103(a).
6. Whether claims 10, 11, and 14–16 are unpatentable over Van
Zandt, iShip.com, and Falic under 35 U.S.C. § 103(a).
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7. Whether claims 1–9 and 16–18 are unpatentable over AAPA and
iShip.com under 35 U.S.C. § 103(a).
8. Whether claims 10–15 and 19 are unpatentable over the AAPA,
iShip.com, and Falic under 35 U.S.C. § 103(a).
9. Whether claims 1–9 and 16–18 are unpatentable over the AAPA,
iShip.com, and PriceGrabber.com under 35 U.S.C. § 103(a).
10. Whether claims 10–15 and 19 are unpatentable over the AAPA,
iShip.com, Falic, and PriceGrabber.com under 35 U.S.C. § 103(a).
II. ANALYSIS
A. Claim Construction
The Board interprets claims using the broadest reasonable
construction. Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756,
48,766 (Aug. 14, 2012); 37 C.F.R. § 42.300(b). There is a “heavy
presumption” that a claim term carries its ordinary and customary meaning.
CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002).
In instituting trial, we interpreted three claim terms. Institution
Decision 9–11. Patent Owner argues that Petitioner’s “proposed claim
constructions . . . attempt to read distinctly claimed elements out of the
claims” and should be rejected. PO Resp. 10. These arguments are not
persuasive for the reasons set forth in the Institution Decision, and we thus
adopt the interpretations provided therein. Based upon the submissions of
the parties and their respective positions regarding Van Zandt, discussed
infra, we determine that it is necessary to construe an additional claim term.
“at least one shipping rate” (claim 1)
Patent Owner asserts that the “shipping rate” “is the rate that the user
is charged to ship—i.e., transport—the item.” PO Resp. 34. Patent Owner
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contrasts this rate with the total cost to a buyer, which includes, for example,
item price, shipping, handling, taxes, and insurance. Id. at 34–36. Patent
Owner, relying on Figure 13 of the ’237 patent and the testimony of its
expert, Dr. Weaver, further defines shipping rate as “what it costs to move a
package from place to place,” in contrast with “shipping cost” or “total
cost,” which encompass other preferences of the buyer or seller. Hearing Tr.
80:22–81:24; Weaver Dep. 67:14–22, 107:19-109:5.
Relying on Figures 10 and 14 of the ’237 patent, Petitioner asserts that
“shipping rate” refers to more than transportation cost and also may include
tax, insurance, and handling. Pet. Reply 7–8; see Hearing Tr. 9:15–25.
Under the broadest reasonable interpretation standard, the “claims
should always be read in light of the specification and the teachings of the
underlying patent.” Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292,
1297–98 (Fed. Cir. 2015). We interpret the term “shipping rate” to mean
“the overall or total cost of sending an auction item to a buyer.” This
interpretation is consistent with the ’237 patent specification’s disclosure of
shipping calculator system 1000 and its rate engine 1024 for calculating
shipping rates as shown in Figure 10, reproduced below. Ex. 1001, 6:29–33.

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Figure 10 shows a computer-based system with a shipping calculator.
The ’237 patent discloses that rate engine 1024 includes modules that
calculate factors contributing to the “overall shipping rate” like shipping rate
engine 1028, tax rate engine 1030, insurance rate engine 1032, packaging
algorithm engine 1033, and fee-based rate engine 1034. Id. at 7:36–41.
Shipping rate engine 1028 calculates a basic shipping rate for an item based
on the distance between seller and buyer locations, the weight of the item,
the weight of any packaging, and method of shipment. Id. at 8:25–33. Tax
rate engine 1030 determines applicable taxes. Id. at 8:34–35. Insurance rate
engine 1032 calculates a cost of insurance that is added to the shipping rate
based on buyer and seller preferences. Id. at 8:42–46. Because packaging is
an important factor in shipping cost, packaging algorithm engine 1033
determines the packaging based on seller preferences and the size, weight, or
shape of the item and applies a factor to the shipping rate. Id. at 7:55–8:5.
Fee-based engine 1034 calculates rates based on seller inputs such as rates
charged for shipping and handling above the rates from common carriers and
may include a flat rate for shipping, or per item shipped. Id. at 8:6–20.
Rate engine 1024 integrates inputs from the calculations of these other
modules and engines, and applies whatever discounts or other factors are
required if the components are not simply added, “to obtain a shipping rate
based on the various inputs.” Id. at 8:47–51 (emphasis added). The ’237
patent also discloses that the shipping rate may be a flat rate from fee-based
engine 1034, a rate calculated from the other engines, or a rate from a
combination of different types of calculations. Id. at 8:51–54. Thus, the
’237 patent discloses rate engine 1000 calculating a “shipping rate” that
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includes not only a basic transportation cost but also many other costs that
contribute to the total cost to send an item to a buyer.
Figure 14, which is reproduced above, illustrates this process. Figure
14 is described as “a flow diagram showing a server process for generating
shipping rates for an online auction.” Id. at 2:43–44 (emphasis added).
The ’237 patent discloses that system 1000 determines the locations of
seller 102 and buyer 104 and calculates and stores a rate factor based on the
locations. Id. at 11:35–39. System 1000 also determines if weight, taxes,
insurance charges, or handling charges apply and, if so, calculates and stores
factors for those charges. Id. at 11:39–51. Once all factors are determined,
system 1000 calculates a “rate” at step 1434 by addition, or by combining
factors according to any algorithm to determine the “cost of shipping.” Id. at
11:51–55. Shipping may be “free” if the buyer is within a given distance of
the seller, if the order is over $100, or if the order is within a given time
frame and system 1000 can apply this to the overall rate. Id. at 11:55–59.
Finally, system 1000 serves a rate to buyer via rate calculator 500. Id. at
11:60–61. Thus, the ’237 patent discloses a system and process that
calculate a shipping rate based on transportation costs, packaging, weight,
taxes, insurance, packaging, and other factors. Id. at 8:47–51.
Patent Owner’s position and its expert testimony are inconsistent with
the patent specification. The basic shipping rate calculated by shipping rate
engine 1028 is only one part of the shipping rate that is calculated and
provided to buyers. Id. at 11:52–61, 10:42–57. After an auction ends,
system 1000 determines the winner and makes appropriate calculation of
“the cost of shipping based on the winning bid, locations of seller 102 . . .
and buyer 104 . . . the weight of the items, packaging factors, taxes, and the
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like.” Id. at 9:28–36, Fig. 11; see Ex. 2017, 4–5; Ex. 2018; see Rotman
Decl. ¶ 47.
Interpreting “shipping rate” to mean the total cost of shipping an item
including packaging, tax, insurance, and handling also is consistent with the
problem to which the ’237 patent states that it is directed: providing online
buyers with advance information about the “real shipping costs” for items
that they purchased at auction. Id. at 1:42–45; see Weaver Decl. ¶¶ 26–27.
Interpreting this term to include only a transportation cost to ship an item(s)
and exclude other factors like packaging, tax, and insurance that contribute
to the total shipping rate that is presented to the buyer, would undermine the
problem to be solved and would not provide an accurate estimate of the
actual or total cost to ship an item(s).
Our interpretation is consistent with the language of claim 1, which
recites a shipping rate based on at least one shipping method, at least one
seller shipping location, a buyer’s shipping location, shipping characteristics
of the at least one auction item, and an amount of the at least one auction bid
associated with the at least one auction bid. The bid amount is not used to
determine the basic cost to transport an item. The ’237 patent discloses that
shipping rate engine 1028 calculates a “basic shipping rate” for an item
based on the distance between the seller and buyer locations, the weight of
the item and packaging, and method of shipment. Id. at 8:25–33. Shipping
rate engine 1028 does not use the item value or bid amount to calculate a
basic shipping rate. Instead, the bid amount is used to calculate insurance
rates and sales tax. Rotman Decl. ¶¶ 33–34 (insurance and sales taxes are
calculated based on the item price); Ex. 1024 (“Rotman Dep.”), 217:5–9.
Read in light of the specification, the claims support Petitioner’s position
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that “shipping rate” refers to more than just transportation cost, but instead
reflects other costs to the buyer, including packaging, taxes, and insurance.
We are not persuaded by Patent Owner’s argument based on Figure
13. This analysis ignores the disclosures of Figures 10 and 14, which show
the shipping rate as including taxes and other costs. Figure 13 is related to
system 1000, depicted in Figure 10.
2
Ex. 1001, 10:29–30. Patent Owner
points to nothing in the specification limiting the shipping rate calculation to
just transportation costs and excluding the other costs to ship an item that
system 1000 calculates and includes in the shipping rate that is presented to
a buyer. Absent such a limitation, we interpret “shipping rate” to mean “the
overall or total cost of sending an auction item to a buyer,” as disclosed in
Figures 10 and 14. See Broadcom Corp. v. Emulex Corp., 732 F.3d 1325,
1333 (Fed. Cir. 2013) (“[A]n interpretation which ‘excludes a [disclosed]
embodiment from the scope of the claim is rarely, if ever, correct.’”). Thus,
we interpret the term “shipping rate” to mean “the overall or total cost of
sending an auction item to a buyer.”
B. Unpatentability of Claims 1–19 Under 35 U.S.C. § 101
1. Overview
Section 101 of the Patent Statute (35 U.S.C. § 101) defines the subject
matter eligible for patenting. Recently, in Versata Development Group v.
SAP America, Inc., 793 F.3d 1306, 1330 (Fed. Cir. 2015), the Federal

2
Patent Owner describes Figure 10 as a shipping rate calculator system that
“includes a rate engine for calculating shipping rates based on various
inputs” and Figures 12–21 as embodiments of the online shipping calculator
including “how the rate engine determines the shipping rate based on all the
various inputs.” Prelim. Resp. 15, 17 (emphasis added).
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Circuit confirmed that the Board is permitted to consider challenges to
patentability under § 101 in covered business method patent reviews.
2. Patentability Under 35 U.S.C. § 101
Section 101 of the Patent Statute defines the subject matter eligible for
patenting: “Whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor, subject to the conditions
and requirements of this title.” 35 U.S.C. § 101. The Supreme Court,
however, has “long held that this provision contains an important implicit
exception: Laws of nature, natural phenomena, and abstract ideas are not
patentable.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354
(2014) (quoting Assoc. for Molecular Pathology v. Myriad Genetics, Inc.,
133 S. Ct. 2107, 2116 (2013) (internal quotation marks omitted)). “The
‘abstract ideas’ category embodies the longstanding rule that ‘[a]n idea of
itself is not patentable.’” Alice Corp., 134 S. Ct. at 2355 (quoting
Gottschalk v. Benson, 409 U.S. 63, 67 (1972) (quotations omitted)).
In Alice Corp., the Supreme Court emphasized the importance of the
so-called “Mayo framework” that provides “a framework for distinguishing
patents that claim laws of nature, natural phenomena, and abstract ideas
from those that claim patent-eligible applications of those concepts.” Id.
(citing Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132
S. Ct. 1289, 1298 (2012)). Under the Mayo framework, “[w]e must first
determine whether the claims at issue are directed to a patent-ineligible
concept.” Id. Next, “we consider the elements of each claim both
individually and ‘as an ordered combination’ to determine whether the
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additional elements ‘transform the nature of the claim’ into a patent-eligible
application.” Id. (citing Mayo, 132 S. Ct. at 1297).
Under Mayo, to be patentable, a claim must do more than simply state
the law of nature or abstract idea and add the words “apply it.” Mayo, 132
S. Ct. at 1294; Benson, 409 U.S. at 67. Furthermore, “the mere recitation of
a generic computer cannot transform a patent-ineligible abstract idea into a
patent-eligible invention.” Alice Corp., 134 S. Ct. at 2358. “Thus, if a
patent’s recitation of a computer amounts to a mere instruction to
‘implemen[t]’ an abstract idea ‘on . . . a computer,’ that addition cannot
impart patent eligibility.” Id. (internal citation omitted).
Thus, we first analyze the claims of the ʼ237 patent to determine if the
claims embody an abstract idea. If they do, then we proceed to determine
whether the claims are meaningfully limited to a patent-eligible application
of an abstract idea or cover nothing more than the abstract idea itself.
3. Claims 1–19 Are Directed to an Abstract Idea
Petitioner contends that the abstract idea claimed in the ʼ237 patent is
“providing a shipping rate estimate to a buyer in an online auction.” Pet.
16–17; Pet. Reply 1; see PO Resp. 22–23. In our Institution Decision, we
observed that this description is consistent with the ʼ237 patent specification,
which explains that “a need exists for the parties to online auctions to have
access to better information in advance about the real shipping costs for their
items.” Ex. 1001, 1:42–45; Institution Decision 18.
Patent Owner responds that the ʼ237 patent claims “embody, use,
reflect, rest upon, or apply the abstract idea of determining shipping rates.”
PO Resp. 23 (internal quotation marks omitted). Patent Owner argues that
the claims are “not directed to the idea itself.” Id. Patent Owner contends:
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[the claims] are directed to a specific application of the idea,
one that takes place in a specific context (an online auction)
between specific entities (a seller and a buyer) for a specific
purpose (to rapidly and accurately calculate shipping rates
based on a variety of ever-changing inputs) using a specific
series of steps involving both computer and human action
(including inputting data, receiving and storing data, making
calculations, and transmitting information online to buyers over
a computer network).

Id. (emphases omitted).
We are not persuaded by Patent Owner’s argument that the ʼ237
patent does not claim an abstract idea merely because it is directed to online
auctions. PO Resp. 23; Hearing Tr. 56:10–12. As the Federal Circuit
recently reminded us, “[a]n abstract idea does not become nonabstract by
limiting the invention to a particular field of use or technological
environment such as the Internet.” Intellectual Ventures I LLC v. Capital
One Bank (US), 792 F.3d 1363, 1366 (Fed. Cir. 2015) (citations omitted).
We are, therefore, not convinced by Patent Owner’s argument that the
claims are not abstract because they are limited to a specific application.
Patent Owner further contends that, unlike the claims in Bilski
3
and
Alice, the ʼ237 patent’s claims “had never before been achieved.” PO Resp.
23–24. As evidence of this, Patent Owner points to the fact that Petitioner’s
prior art challenge relies on obviousness and not anticipation. Id. at 24, n.2
(“eBay has not been able to find or assert against the claims a single
anticipatory reference.”). This argument is unavailing. As the Supreme
Court observed in Diamond v. Diehr, 450 U.S. 175, 190 (1981), “[t]he

3
Bilski v. Kappos, 561 U.S. 593 (2010).
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question therefore of whether a particular invention is novel is wholly apart
from whether the invention falls into a category of statutory subject matter.”
Despite Patent Owner’s arguments to the contrary, we see little
difference between determining shipping rates and tax rates for auctioned
items and the type of fundamental economic practices considered to be
abstract ideas in Alice Corp. and Bilski.
4
As established by the record, both
conventional auctions and shipping rate calculations existed long before the
Internet. See, e.g., Rotman Decl. ¶¶ 4–8; Greenspun Decl. ¶¶ 31–40; Hearing
Tr. 56:17–21. We conclude, therefore, that Petitioner has demonstrated that
the ʼ237 patent claims, like the claims in Bilski and Alice, are directed to an
abstract idea, namely, determining shipping rates for online auction sales.
4. Claims 1–19 are Not Meaningfully Limited Under 35 U.S.C. § 101
The second step of the Supreme Court’s “Mayo framework” requires
that we consider the elements of the claim and determine whether there is an
“element or combination of elements that is ‘sufficient to ensure that the
patent in practice amounts to significantly more than a patent upon the

4
In Alice Corp., the Supreme Court determined that the claims at issue were
“drawn to the concept of intermediated settlement,” i.e., the use of a third
party to mitigate settlement risk. Id. at 2356. Furthermore, the Supreme
Court determined that “[l]ike the risk hedging in Bilski, the concept of
intermediated settlement is ‘a fundamental economic practice long prevalent
in our system of commerce.’” Id. (citations omitted). With respect to the
first step of the “Mayo framework,” the Supreme Court concluded in Alice
Corp. that “there is no meaningful distinction between the concept of risk
hedging in Bilski and the concept of intermediated settlement” in Alice
Corp., and that “[b]oth are squarely within the realm of ‘abstract ideas’ as
we have used that term.” Alice Corp., 134 S. Ct. at 2357.
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[ineligible concept] itself.’” Alice Corp., 134 S. Ct. at 2355 (quoting Mayo,
132 S. Ct. at 1294).
A challenged patent claim, properly construed, must incorporate
enough meaningful limitations to ensure that it claims more than just an
abstract idea and not just a mere “‘drafting effort designed to monopolize the
[abstract idea].’” Alice Corp., 134 S. Ct. at 2357 (quoting Mayo, 132 S. Ct.
at 1297). “Simply appending conventional steps, specified at a high level of
generality,” is not “enough” for patent eligibility. Id. (quoting Mayo, 132
S. Ct. at 1297, 1300).
Step two of the “Mayo framework” analysis, therefore, may be
described as a search for an “inventive concept”—i.e., an element or
combination of elements that is sufficient to ensure that the patent in practice
amounts to significantly more than a patent upon the ineligible concept
itself. Id. (citing Mayo, 132 S. Ct. at 1294).
At the final hearing, Patent Owner acknowledged that the holdings in
Bilski and Alice could not be avoided simply by showing that a computer
was involved in the patented invention. Hearing Tr. 62:12–17; 68:6–7
(“Without being on the Internet, the claims might not be patentable.”).
Instead, Patent Owner focused its argument on the speed necessary for
processing the high volume of transactions in Internet auctions:
[THE BOARD]: What is unique to the Internet about an
auction?

[PATENT OWNER’S COUNSEL]: Your Honor, the auction
had previously been done not on the Internet. It had been done
manually, just like the Rotmans did, through mail order, maybe
in person live. Once it got moved to the Internet, once it had
been implemented on the Internet, it greatly increased the
scope, the connectability and frankly the number of transactions
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that could be processed. It rendered traditional calculations
impossible. They could no longer be done.

Hearing Tr. 56:17–57:2. Patent Owner contends that when auctions moved
to the Internet, a “new problem” was created due to the need to calculate
shipping costs “in realtime.” Hearing Tr. 67:23–68:2. But that which Patent
Owner identifies as a “new problem” was recognized in conventional
auctions, and could have in fact been handled by doing the same calculations
manually, albeit at a slower speed, before automation of the auction process.
Rotman Dep. 127:19–128:5.
We are not persuaded by Patent Owner’s argument for patentability
under § 101. First, the claims of the ʼ237 patent do not reflect the asserted
“inventive concept” identified by Patent Owner, namely, the ability to
calculate shipping rates and tax rates in real time. Patent Owner asserts that
the reference in the claims to an “online auction” accomplishes this.
Hearing Tr. 62:18–20. But, as Petitioner points out, the claims do not recite
any form of real-time calculations. The claims simply recite steps that were
done manually before the filing date of the patent. Hearing Tr. 7:16–22;
Rotman Dep. 127:19–128:5; Rotman Decl. ¶¶ 21–25, 46.
The claims of the ʼ237 patent specify that a shipping rate be calculated
“at any time.” Patent Owner relies on this as evidence that the claims
embody the asserted inventive concept of providing speedy shipping rate
calculations. Hearing Tr. 69:9–22. We are not convinced by this argument.
As Patent Owner’s counsel agreed, the language does not indicate how long
the calculation takes, only when it may occur. Id. at 70:20–71:5.
More fundamentally, however, simply adding a computer limitation to
claims covering an abstract concept, without more, is insufficient to render
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the claim patentable under § 101, even if the use of a computer enables
faster operation. Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada,
687 F.3d 1266, 1278 (Fed. Cir. 2012).
In order for the addition of a machine to impose a meaningful limit on
the scope of a claim, it must play a significant part in permitting the
claimed method to be performed, rather than function solely as an
obvious mechanism for permitting a solution to be achieved more
quickly, i.e., through the utilization of a computer for performing
calculations.

SiRF Tech., Inc. v. Int’l Trade Comm’n, 601 F.3d 1319, 1333 (Fed. Cir.
2010). Likewise, “the use of the Internet is not sufficient to save otherwise
abstract claims from ineligibility under § 101.” Ultramercial, Inc. v. Hulu,
LLC, 772 F.3d 709, 716 (Fed. Cir. 2014). For these reasons, Patent Owner’s
argument based on meeting the asserted speed and other requirements of
online auctions fails.
We are not convinced by the other arguments of Patent Owner. For
example, Patent Owner’s policy-based arguments (PO Resp. 11–22) ignore
the Supreme Court’s holdings in Bilski and Alice and the Federal Circuit’s
recent decisions in cases such as Ultramercial and Intellectual Ventures.
Likewise, Patent Owner’s alternative argument that the claims are
meaningfully limited because they recite steps such as receiving and storing
information is unavailing. PO Resp. 25–26; Hearing Tr. 66:4–18. We are
not convinced that reciting these standard computer operations imposes
meaningful limitations on the abstract idea. As the Supreme Court held in
Gottschalk v. Benson, 409 U.S. 63 (1972), claims do not become patent-
eligible under § 101 simply for reciting a known, general purpose computer.
See id. at 67 (invalidating as patent-ineligible claimed processes that “can be
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carried out in existing computers long in use, no new machinery being
necessary,” or “can also be performed without a computer.”). And in Alice
Corp., the Supreme Court rejected a similar argument, determining that “the
claims at issue amount to ‘nothing significantly more’ than an instruction to
apply the abstract idea of intermediated settlement using some unspecified,
generic computer.” Alice Corp., 134 S. Ct. at 2360 (quoting Mayo, 132 S.
Ct. at 1298). More recent, and to the same effect, is Ultramercial, 772 F.3d
at 716: “Adding routine additional steps . . . does not transform an otherwise
abstract idea into patentable-eligible subject matter.”
Nor are we persuaded by Patent Owner’s cited authorities that the
requirements of § 101 are met here. For example, Patent Owner’s reliance
on the outcome in Diamond v. Diehr, 450 U.S. 175 (1981), is misplaced.
PO Resp. 28–29. As recently explained by the Federal Circuit in Versata,
793 F.3d at 1332–33, Diehr involved the use of a well-known mathematical
equation to solve a technological problem (curing rubber) in conventional
industry practice. Here, in contrast, the problem purportedly addressed by
the ʼ237 patent, the need for faster transaction times in Internet auctions, is a
business need, not a technological problem.
Likewise, the Federal Circuit’s decision in DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), is not apposite. Hearing
Tr 66:19–32. As explained by the Federal Circuit in Versata, DDR Holdings
“drew a distinction between the patent-eligible claims at issue and patent-
ineligible claims in the past that had merely recited commonplace business
methods aimed at processing business information, applying known business
processes to particular technological environments.” 793 F.3d at 1333.
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In relying on DDR Holdings, Patent Owner asserts that moving
conventional auctions (which they acknowledge is “something that been
done previously”) to the Internet created “an Internet-centric solution.”
Hearing Tr. 72:10–13. This argument fails, for it ignores the distinction
made in DDR Holdings between technical solutions and claims reciting
“commonplace business methods,” such as auctions. Unlike the claims in
DDR Holdings, there is nothing in Patent Owner’s claims that makes them
“Internet-centric.” As discussed supra, a mere reference in the claims to
online auctions does not suffice. The claims “are not rooted in computer
technology to solve a problem specifically arising in some aspect of
computer technology.” Versata, 793 F.3d at 1334.
Finally, we address Patent Owner’s argument that the claims should
stand under § 101 because there is no preemption. PO Resp. 16; Hearing Tr.
64:14–17. We are not convinced that this argument has merit. As the
Federal Circuit recently explained in Ariosa Diagnostics, Inc. v. Sequenom,
Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015) “questions on preemption are
inherent in and resolved by the § 101 analysis.” Thus, “[w]hile preemption
may signal patent ineligible subject matter, the absence of complete
preemption does not demonstrate patent eligibility.” Id. Thus, the issue of
preemption is “resolved” by our analysis and resolution of the § 101 issues,
and Patent Owner’s separate argument based on the asserted absence of
preemption is unavailing.
In summary, Petitioner has demonstrated by a preponderance of the
evidence that the claims of the ʼ237 patent are not patentable because they
are directed to ineligible subject matter under 35 U.S.C. § 101.

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C. Asserted Grounds of Unpatentability Under 35 U.S.C. § 103
1. Overview
Under 35 U.S.C. § 103(a), an invention is not patentable if the
differences between the claimed subject matter and the prior art are such that
the subject matter, as a whole, would have been obvious at the time the
invention was made to a person of ordinary skill in the art to which said
subject matter pertains. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
(2007). The question of obviousness is resolved based on underlying factual
determinations including: (1) the scope and content of the prior art; (2) any
differences between the claimed subject matter and the prior art; (3) the level
of skill in the art; and, (4) where in evidence, secondary considerations such
as commercial success, long-felt but unsolved needs, failure of others, and
unexpected results. Graham v. John Deere Co., 383 U.S. 1, 1718 (1966).
2. Asserted Obviousness of claims 1–9 and 16–19 over
Van Zandt and iShip.com
a. Van Zandt (Ex. 1010)
Van Zandt discloses a comprehensive logistics support service that
manages a global shipment from door-to-door for any number of vendors
and can provide buyers of products with a guaranteed, upfront cost quote
that takes all shipping-related costs, international duties, and taxes into
account for the shipment. Ex. 1010, 1.
5
Van Zandt discloses this service for
merchant-type business format 40 and for auction-type format 50 where a
web site sponsor acts as an exchange for matching participating sellers 54
with interested buyers 42. Id. at 14, Fig. 1.

5
For the purposes of this Decision, we refer to the original page numbers of
the relevant documents rather than Petitioner’s inserted page numbers.
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Van Zandt discloses a system that uses the following three automated
service components: (1) landed cost shipment quote generation engine 62;
(2) shipment booking engine 64; and (3) shipment tracking engine 66. Id.
Quoting engine 62 provides a landed cost shipment quote based on item
information provided by sellers 54 for items to be sold, buyer information,
seller information, shipment costs, shipping mode, additional shipping
services, and pickup and delivery locations. Id. at 15–16, Fig. 2A. Quoting
engine 62 also determines insurance costs, duties, and taxes for the shipment
based on shipment origin and destination information, Harmonized Tariff
System (HTS) code, product size, weight, and value. Id. at 16–21; Figs. 2F,
2G, 3. Quoting engine 62 sends the final quote to host server 30, which uses
the shipment quote to determine a total price (i.e., product price + shipping
price) to display to buyer 42. Id. at 34:23–35:10.
b. iShip.com (Exs. 1011–1014)
iShip.com helps sellers provide bidders with actual shipping charges
up front. Ex. 1011. Sellers enter shipping information to include package
weight, seller zip code, and preferred carriers. Id. The iShip.com website
automatically creates a unique URL that sellers can paste into their auction
descriptions. Id. During the auction, bidders can click on the iShip.com link
for a free shipping estimate. Id. To complete the estimate, a bidder enters a
delivery zip code and selects delivery options, and iShip.com presents a grid
with accurate shipping rates from a seller’s zip code to a buyer’s zip code for
all carriers chosen by the seller. Id.; Ex. 1013. Sellers can enter shipment
and packaging weight and carrier information, packaging dimensions, and
whether to provide insurance against carrier loss or damage. Ex. 1012.

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c. Analysis
Petitioner asserts that claims 1–9 and 16–19 are obvious over Van
Zandt and iShip.com. Pet. 27–43. Petitioner supports its contentions with
detailed claim charts and expert testimony presented through the Declaration
of Philip Greenspun, Ph.D. Greenspun Decl. ¶¶ 46–56.
Patent Owner argues that it would not have been obvious to combine
iShip.com and Van Zandt to facilitate international sales, because iShip.com
is only for shipments in the United States. PO Resp. 30–31. Patent Owner
also argues that iShip.com’s domestic shipping teaches away from its use on
an international platform. Id. at 31. Patent Owner further argues that using
iShip.com for international shipping would be unpredictable and render Van
Zandt unsuitable for its intended use in international shipping. Id. at 31–32.
Finally, Patent Owner argues that the only reason to combine Van Zandt and
iShip.com is hindsight, because both references use item price to determine
duties or shipping and handling charges, not a shipping rate. Id. at 32–33.
First, we are persuaded by Petitioner’s arguments, as supported by
Dr. Greenspun’s
6
testimony, that it would have been obvious to modify Van
Zandt according to techniques of iShip.com because both references address
the provision of a shipping rate calculator for online auctions so buyers can
obtain a shipping estimate at any point during an online auction. Pet. 29–31.
We are persuaded by Petitioner’s arguments and Dr. Greenspun’s testimony
that a skilled artisan would have been motivated to embed a link to shipping

6
Dr. Greenspun holds a Ph.D. in Electrical Engineering and Computer
Science from MIT. He has authored five computer science textbooks. He
has taught at MIT and has over 20 years of experience in computer software
engineering. Greenspun Decl. ¶¶ 3–16. We determine that Dr. Greenspun is
an expert in the field relevant to this patent and credit his testimony.
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information in Van Zandt’s interfaces, as taught by iShip.com’s unique URL
that a seller pastes into item descriptions, to increase Van Zandt’s flexibility
and provide multiple shipping options. Pet. 29–31; Pet. Reply 5; Greenspun
Decl. ¶ 56 (iShip.com allows seller to add a form to another’s web site);
Ex. 1020 ¶ 10c (user interfaces are freely borrowed from different websites).
We also do not credit Patent Owner’s argument limiting Van Zandt’s
teachings to international shipping. PO Resp. 30–32. Van Zandt provides a
comprehensive logistics services system and method, including providing
landing cost quoting (62), to integrate logistics vendors “across any industry,
at any time, no matter what vendor carrier . . . or mode of transportation is to
be used and no matter what country the shipment is being handled in or
delivered to.” Ex. 1010, Abstract (emphasis added). Van Zandt’s system
can calculate “any shipment duties and taxes.” Id. at 22 (emphasis added);
see also id. at 32:11–17. Nothing in Van Zandt discredits or disallows the
calculation of domestic taxes as a component of its calculation of “any
shipment duties and taxes.”
iShip.com does not criticize, discredit, or discourage the use of its
shipping calculator hyperlink with online auction systems for international
shipping. See In re Fulton, 391 F.3d 1195, 1201 (Fed. Cir. 2004) (prior art
that did not criticize, discredit, or discourage the claimed solution did not
teach away). Van Zandt and iShip.com allow buyers to obtain a shipping
estimate at any time during an online auction. Ex. 1010, Abstract; Ex, 1011.
Petitioner proposes to embed iShip.com’s request URL in Van Zandt’s user
interfaces to provide a menu of shipping options. Pet. 31–32; Pet. Reply 5;
Greenspun Decl. ¶ 56; Ex. 1020 ¶¶ 10c, 18, 19. iShip.com discloses that it
“supports packages shipped from the U.S.” Ex. 1012.
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We thus do not credit Patent Owner’s arguments that the combination
of iShip.com’s shipping estimator URL with Van Zandt would have been
unpredictable or would have rendered Van Zandt unsuitable for its intended
purpose. PO Resp. 31–32. We credit the testimony of Dr. Greenspun, who
states that iShip.com allows an auction seller to add a form to a website even
without any cooperation of the auction site operator and it would have been
a straightforward modification for a skilled artisan to add an HTML form of
iShip.com to Van Zandt’s web site. Greenspun Decl. ¶ 56. Dr. Greenspun
states that user interfaces are borrowed freely from web site to web site even
when the functions and internals of sites differ. Ex. 1020 ¶ 10c.
In addition, Dr. Weaver states that “iShip is a simple, low-overhead
tool for generating HTML code that can then be embedded in a seller’s web
page.” Weaver Decl. ¶ 46. Petitioner proposes to embed such a code/link in
Van Zandt’s user interface with Van Zandt’s other features to increase Van
Zandt’s flexibility. Pet. 30–31; Greenspun Decl. ¶ 56; Pet. Reply 5–6. Such
changes were common at the time of the invention. Ex. 1020 ¶¶ 10c, 16, 18,
19. We determine that Petitioner has presented sufficiently articulated and
persuasive reasoning supported by rational underpinnings for combining the
teachings of Van Zandt and iShip.com to render the claims obvious.
Patent Owner contends that Van Zandt and iShip.com do not disclose
calculating at least one shipping rate based on an amount of an auction bid.
PO Resp. 33–34. In particular, Patent Owner argues that the “shipping rate”
is a rate a user is charged to “transport” an item, and neither Van Zandt nor
iShip.com discloses this element. Id. at 34. Patent Owner argues that Van
Zandt uses a “product’s value” to search for the lowest insurance premium
and determine duties and taxes for a shipment, but Van Zandt does not use a
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product’s value to determine a shipping rate for an item. Id.; Weaver Decl.
¶ 37. Patent Owner argues that iShip.com discloses a “handling charge” that
may be a fixed cost or percentage of the item cost, and carrier loss protection
based on the value of an item, which is not an auction bid amount or item
price used to determine shipping rates. PO Resp. 35–38.
These arguments are not persuasive in view of our interpretation of
“shipping rate” to mean the total cost of sending an item to a buyer. Patent
Owner acknowledges that Van Zandt uses a product’s value to determine a
total shipping cost based on insurance premiums, duties, and taxes. Id. at
34–35; Weaver Decl. ¶ 37. Van Zandt calculates this total shipping cost as
follows. If a buyer requests a shipping quote, web site 34 gathers purchase
price information from a merchant or an auction database and information
from buyer 42. Ex. 1010, 15:3–16:13. Web page 36 (Online Quoting) is
presented to buyer 42 to obtain this information including shipment value
246. Id. at 16:14–21:17, Fig. 3. Buyer 42 clicks “Quote” button 248 to
obtain a shipment quote. Id. at 21:18–20. Quoting engine 62 uses shipment
origin and information, HTS code, product size, weight, and product value
to search look up tables of insurance vendors to determine the lowest cost
insurance premium. Id. at 32:4–9, Fig. 2F (step 166). Quoting engine 62
uses product size, weight, and product value to determine duties and taxes
for the shipment. Id. at 32:10–17, Fig. 2G (step 170). Quoting engine 62
adds pre-shipment charges (e.g., packaging costs), a calculated door-to-door
freight charge, a determined insurance premium, and duties and taxes, and
sends this quote to host server 30. Id. at 32:18–33:3, Fig. 2G (steps 172,
174). Host server 30 uses the shipment quote to determine a total price—
product price + shipment price—to display to buyer 42. Id. at 33:7–10. Van
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Zandt thus calculates and displays a total cost to ship an item based, in part,
on the item’s value. Greenspun Decl. ¶¶ 47–50; Ex. 1020 ¶ 10b, 20–22.
Dr. Weaver’s testimony that Van Zandt does not determine a shipping rate
based on an item’s value is not persuasive in view of our interpretation of
shipping rate to mean the total cost of shipping. See Weaver Decl. ¶¶ 36–38.
For similar reasons, Patent Owner’s arguments regarding iShip.com
are not persuasive. iShip.com calculates auction item shipping charges that
can include protection for carrier loss and damage based on the value of an
auction item. Ex. 1012, 1; Ex. 1013, 1; Pet. 29. Sellers can add a “handling
charge” to the shipping cost, as a fixed rate, a percentage, or both. Ex. 1018,
135. We credit Dr. Greenspun’s testimony that a skilled artisan would
understand “as a percentage” to be a percentage of an item price from a
current high bid or other user input. Greenspun Decl. ¶ 54. Dr. Greenspun
also states that a skilled artisan would understand that an auction seller could
use a reserve bid or an anticipated winning bid as the item value to calculate
insurance costs. Id. ¶ 55. Dr. Weaver’s statement that iShip.com’s “value”
field is used to calculate insurance costs and handling charges rather than the
claimed shipping rate (Weaver Decl. ¶¶ 39–42) is not persuasive in view of
our interpretation of “shipping rate” to include such costs. Therefore, the
combination of Van Zandt and iShip.com discloses a “shipping rate” as we
have construed the term.
Patent Owner’s argument that claims 2–9 and 16–19 are nonobvious
because they depend from claim 1 (PO Resp. 39) is not persuasive in view of
the foregoing and Petitioner’s evidence and contentions that Van Zandt and
iShip.com render obvious claims 2–9 and 16–19. See Pet. 27–43.

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3. Other Asserted Grounds Presented under 35 U.S.C. § 103
Patent Owner argues that neither Van Zandt nor iShip.com calculates
a shipping rate based on item price, and AAPA, Falic, Pricegrabber.com,
and Hartman do not disclose this feature. PO Resp. 38–39. Patent Owner’s
arguments as to Van Zandt and iShip.com are not persuasive for the reasons
discussed above. Patent Owner’s arguments as to the other references are
not persuasive as detailed below.
Petitioner relies on Hartman to disclose calculation of shipping costs
for combined shipments as recited in claims 12 and 13 where Van Zandt
allows shipping cost requests at any time. Pet. 31, 39, 44–47. Falic is relied
upon to disclose features of claims 10, 11, and 14–16. Pet. 50, 52–54. Thus,
Dr. Weaver’s assertion that Hartman and Falic do not display a calculated
shipping rate (Weaver Decl. ¶¶ 54, 57–59) is not persuasive as Hartman and
Falic are not relied on by Petitioner to disclose this feature. We credit Dr.
Greenspun’s testimony that skilled artisans would have combined features
disclosed in Hartman and Falic with Van Zandt’s website and its shipping
calculator. Greenspun Decl. ¶¶ 61–64; Ex. 1020 ¶¶ 13–16.
Petitioner relies on the AAPA to teach conventional online auction
features, including sellers setting a minimum price for goods and showing a
current bid 402. Pet. 54, 59–60. Petitioner provides detailed claim charts to
supports its contentions that AAPA and iShip.com render obvious claims 1–
9 and 16–18. Pet. 54–64. Petitioner explains these teachings are modified
by teachings of Falic to render obvious claims 10–15 and 19. Id. at 64–69.
Dr. Weaver’s testimony that AAPA and iShip do not calculate a shipping
rate based on a bid amount is not persuasive in view of our interpretation of
shipping rate to mean a total cost to ship an item. Weaver Decl. ¶ 53.
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Petitioner relies on PriceGrabber.com to disclose a shipping calculator
as part of a product listing page that permits a potential buyer to enter a zip
code and request a shipping estimate directly from a product listing page.
Pet. 48. Dr. Weaver asserts that PriceGrabber.com is not combinable with
Van Zandt because it does not calculate a shipping rate based on an auction
bid. Weaver Decl. ¶¶ 43, 44. This argument is not persuasive as Petitioner
relies on PriceGrabber.com to show how to embed a shipping cost request
field on a single page with an item description. See Pet. 48–50; Greenspun
Decl. ¶ 59; Ex. 1015; Ex. 1020 ¶ 17. Thus, Pricegrabber.com is relied on to
teach the embedding of shipping cost codes so that a buyer can request an
itemized quote with sales tax, shipping, and item price directly from a
product page. Dr. Greenspun testifies that it would have been obvious to
combine this feature with Van Zandt’s e-commerce system, which already
provides shipping costs based on auction bid amount. Greenspun Decl. ¶ 59.
4. Secondary Evidence of Non-Obviousness
Patent Owner argues that evidence of long-felt need, failure of others,
extensive copying, industry praise, and commercial success establishes the
nonobviousness of the claimed invention. PO Resp. 40–42. We consider
this evidence (sometimes referred to as objective evidence or indicia) with
the foregoing evidence and contentions of the parties in reaching our final
determination as to the obviousness of claims 1–19.
Secondary considerations may include any of the following: long-felt
but unsolved needs, failure of others, unexpected results, commercial
success, copying, licensing, and praise. Graham, 383 U.S. at 17. Patent
Owner argues that several objective indicia relating to the development of its
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own online shipping calculator demonstrate the non-obviousness of its
claimed invention.
It is not sufficient that a product or its use merely be within the scope
of a claim in order for secondary evidence of non-obviousness tied to that
product to be given substantial weight. There must be a causal relationship,
termed a “nexus,” between the evidence and claimed invention. Merck &
Co., Inc. v. Teva Pharms. USA, Inc., 395 F.3d 1364, 1376 (Fed. Cir. 2005).
A nexus is required to establish that the evidence relied upon traces its basis
to a novel element in the claim, not to something in the prior art. Institut
Pasteur & Universite Pierre et Marie Curie v. Focarino, 738 F.3d 1337,
1347 (Fed. Cir. 2013). Objective evidence that results from something that
is not “both claimed and novel in the claim,” lacks a nexus to the merits of
the invention. In re Kao, 639 F.3d 1057, 1068 (Fed. Cir. 2011). All types of
objective evidence of non-obviousness must be shown to have such a nexus.
In re GPAC Inc., 57 F.3d 1573, 1580 (Fed. Cir. 1995) (nexus generally); see
also Rambus Inc. v. Rea, 731 F.3d 1248, 1256 (Fed. Cir. 2013) (long-felt
need); Wm. Wrigley Jr. Co. v. Cadbury Adams USA LLC, 683 F.3d 1356,
1364 (Fed. Cir. 2012) (copying); In re Huang, 100 F.3d 135, 140 (Fed. Cir.
1996) (commercial success). The stronger the showing of nexus, the greater
weight is accorded objective evidence of non-obviousness. See Ashland Oil,
Inc. v. Delta Resins & Refractories, Inc., 776 F.2d 281, 306 (Fed. Cir. 1985).
a. Long-Felt Need and Failure of Others
Patent Owner argues that the invention of the ’237 patent met the
needs of merchants and customers to determine shipping and handling costs
accurately and in a timely fashion for online sales. PO Resp. 42–43. Patent
Owner also argues that industry leaders such as eBay and Amazon lacked
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solutions for calculating shipping costs and had to charge flat shipping rates,
which were inherently unfair. Id. at 43–44. Patent Owner further argues
that other merchants tried to charge actual shipping costs but incurred higher
transaction costs to do so and faced the possibility of losing sales by
disclosing actual shipping costs too late in the transaction. Id. at 43–46.
Patent Owner also contends that merchants who offered free shipping had
problems with sales margins. Id. at 46. Patent Owner asserts that its own
automated shipping calculator addressed these problems. Id.
These arguments are not persuasive for several reasons. To establish
evidence of a long-felt but unresolved need, a patent owner must show that
there was a persistent problem that was recognized by those of ordinary skill
in the art. In re Gershon, 372 F.2d 535, 538 (CCPA 1967). The problem
must not have been solved previously by another, and the claimed invention
must, in fact, satisfy the long-felt need. See Newell Cos., Inc. v. Kenney
Mfg. Co., 864 F.2d 757, 768 (Fed. Cir. 1988). Furthermore, the evidence of
secondary considerations must be commensurate in scope with what is
claimed. See In re Kao, 639 F.3d at 1068 (citing In re Tiffin, 448 F.2d 791,
792 (CCPA 1971)).
As noted by Petitioner, the claimed shipping calculator does not
require accurate, efficient, timely, or fair shipping rates. Pet. Reply 9–10.
Claim 1, for example, calculates a shipping rate based on seller and buyer
shipping locations, shipping characteristics of an item, and an amount of an
auction bid for the item. Claim 1 recites that the shipping rate is calculated
“at any time during the online open-bidding auction for . . . presentation to
the buyer” but does not address how quickly the calculation is performed or
presented to a buyer when a quote is requested by a buyer. Thus, Patent
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Owner has not established a nexus between the claimed shipping calculator
and alleged need for accurate, efficient, timely, or fair shipping rates.
Providing a shipping rate quote at any time, as claimed, means that a
shipping rate calculation presented to a bidder before an auction ends may
not be accurate if the final purchase price differs from the bid amount used
to calculate that shipping rate, as the ’237 patent acknowledges. Ex. 1001,
Fig. 7 (shipping rate based on “Anticipated Winning Bid” so “Please note
that final winning bid price may affect shipping total.”), Fig. 8 (same). The
’237 patent discloses that “the shipping calculator provides buyer 104 with
an accurate estimate of shipping cost, based on the location of the buyer, the
cost of the item, and the manner of shipment.” Ex. 1001, 4:56–58 (emphasis
added), Abstract (same), 7:8–12 (shipping rate server presents buyer 104
with “estimates of shipping costs for the auction in question”), Fig. 5 (“For a
shipping estimate, please use the above shipping calculator form”), Fig. 6
(“To receive a shipping charge estimate” using the “Anticipated Winning
Bid”), Fig. 7 (same), Fig. 8 (same); Pet. Reply 10.
Second, Van Zandt, Pricegrabber.com, and iShip.com disclose prior
art shipping calculators that provided shipping cost estimates for online
shoppers. Exs. 1010–1015. iShip.com provided shipping estimates based
on item(s) weight, dimensions, packaging, locations (zip codes) of buyers
and sellers, preferred carriers, handling charges, and carrier loss or damage
protection based on an item’s value. Exs. 1011–1014. Van Zandt calculated
shipping charges for auctions 50 or merchant 40 transactions based on these
factors, and on insurance, duties, and taxes that were calculated based on an
item’s value. Ex. 1010, 15:4–33:10, Figs. 1–3. Pricegrabber.com’s shipping
calculator calculates shipping, taxes, and total item price. Ex. 1015. Patent
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Owner has not shown a nexus between any need for a shipping calculator
and novel or nonobvious features of the claimed shipping rate calculator.
Third, the evidence indicates that merely calculating shipping costs, as
the claimed shipping calculator does, does not meet the most pressing needs
of online merchants or consumers. For merchants, order fulfillment—taking
orders, managing inventory, timely shipping of items, and returns—was the
biggest impediment to online shopping. The Rotman Declaration discusses
“articles [that] do not necessarily deal with calculating shipping costs, [but]
show that delivery of goods was a key concern for merchants – including
merchants selling in online auctions – as ecommerce expanded.” Rotman
Decl. ¶ 50 (discussing Exs. 2035–44) (emphasis added). These articles
discuss the need of online retailers for inventory, shipping, and fulfillment
solutions and the trend to outsource such operations to Federal Express
(FedEx) and United Parcel Service (UPS). See Exs. 2036–2044.
Other evidence presented by Patent Owner also indicates that online
shoppers wanted lower shipping costs, as acknowledged by the Rotman
Declaration. Rotman Decl. ¶ 57 (“one of the primary reasons – if not the
primary reason – that consumers would discontinue an online purchase . . .
was shock at the cost of shopping”).
7
The claimed shipping calculator of the
’237 patent does not solve this problem, either.
The claimed shipping calculator calculates “at least one shipping rate”
but does not claim to identify the lowest or best shipping rate, or to compare

7
The Rotman Declaration discusses articles about shoppers abandoning
online purchases due to high shipping costs. Ex. 2004 ¶ 51; see Exs. 2045–
53, 2072–82. Other articles discuss the need to choose shipping costs that
do not lose customers or undermine profits of businesses. See Exs. 2054–56.
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rates to find the best rate. Presenting a plurality of shipping rates, as recited
in claims 12, 13, and 16, does not indicate that any of the rates is the least
expensive rate. iShip.com presents a grid or table of shipping alternatives to
a buyer with a plurality of accurate shipping rates. See Ex. 1011; Ex. 1014.
Patent Owner’s long-felt need argument relies heavily on a failed
attempt to convince eBay to adopt its online shipping calculator. PO Resp.
46–51. We are not persuaded by this evidence. Patent Owner argues that
eBay’s acknowledged need for a shipping solution was “still unresolved” in
2001 when eBay and Patent Owner discussed Patent Owner’s shipping
calculator. PO Resp. 46–47. But the evidence of record shows that the need
(to the extent it existed) was met by others, including iShip.com and UPS
and therefore does not support this assertion.
As early as 1999, eBay offered shipping solutions that allowed sellers
to insert a link to iShip.com in an auction listing so bidders could get a free
shipping estimate. Ex. 1018, 135. By 2000, eBay had partnered with FedEx
and UPS to lower shipping costs for its customers. Rotman Decl. ¶ 54f
(discussing Ex. 2062). By December 2001, Patent Owner was aware of
iShip.com’s shipping calculator. Rotman Dep. 252:6–257:7. In 2003, eBay
chose UPS to provide a comprehensive shipping solution that integrated a
shipping calculator into eBay’s site. Exs. 2068–2071; PO Resp. 47–48.
The evidence indicates that eBay’s shipping needs changed rapidly in
a few years.
8
When iShip.com’s shipping calculator did not meet eBay’s
need for integrated shipping solutions, other solutions were available. Thus,

8
Initially, eBay took a hands-off approach and allowed buyers and sellers to
work out payment and shipping issues. See Rotman Decl. ¶¶ 28, 52, 54c,
54g, 54h, 54i; PO Resp. 43.
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eBay chose UPS’s shipping solutions with an integrated shipping calculator
at Petitioner’s website. Rotman Decl. ¶ 67. Later, eBay required its
customers to use its standard tools that were integrated into eBay’s web site
and blocked users from using third party shipping calculators. PO Resp. 55;
Rotman Decl. ¶ 68. In light of this history, we are not persuaded that there
was a long-felt need by eBay or others for the claimed shipping calculator
that others failed to meet. Nor do we perceive any failure by eBay to
“develop technology.” PO Resp. 48. eBay simply chose to use solutions
developed by others.
b. Copying
Patent Owner asserts that eBay copied Patent Owner’s invention. PO
Resp. 51–52. Copying, as objective evidence of non-obviousness, requires
evidence of effort to replicate a specific product. Wyers v. Master Lock Co.,
616 F.3d 1231, 1246 (Fed. Cir. 2010); Iron Grip Barbell Co., Inc. v. USA
Sports, Inc., 392 F.3d 1317, 1325 (Fed. Cir. 2004).
Patent Owner argues that eBay wanted to view Patent Owner’s
technology because eBay “struggled” to implement a shipping solution to
improve its user’s ability to determine actual shipping costs for transactions.
PO Resp. 51. Patent Owner argues that once eBay accessed Patent Owner’s
technology, eBay cut off communications with Patent Owner and developed
its own version of Patent Owner’s calculator. Id. at 51–52. Patent Owner
argues that the shipping calculator debuted by eBay in June 2004 bore a
“striking resemblance” to the version that Patent Owner had demonstrated to
eBay but lacked advanced features that Patent Owner had developed in the
intervening year. Id. at 52. From this, Patent Owner concluded that eBay
copied Patent Owner’s invention. Id.
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Patent Owner relies on the Rotman Declaration (Ex. 2004) as the
factual support for its copying claim. Mr. Rotman testifies that eBay was
interested in integrating a shipping calculator into its platform and arranged
for Patent Owner to demonstrate Patent Owner’s calculator. Rotman Decl.
¶¶ 60–62. Patent Owner’s demonstration to eBay involved cutting-and-
pasting printouts of Patent Owner’s AuctionInc website into printouts of
eBay’s website to create the “look and feel” of how Patent Owner’s
calculator would appear if it was integrated into eBay’s website. Id. ¶ 63.
Mr. Rotman testifies that Patent Owner presented a live demonstration
of its non-integrated shipping calculator to eBay. Id. ¶ 64. Later, in the
spring of 2002, Patent Owner made the demonstration available online to
eBay. Id. ¶ 65. Ultimately, however, eBay did not show any further interest
in Patent Owner’s shipping rate calculator. Id. A year and a half later, eBay
announced introduction of its own shipping calculator. Id. ¶ 67.
Patent Owner’s contention that eBay’s shipping calculator “bore a
striking resemblance to the earlier version Paid demonstrated to eBay” by
itself does not establish a nexus to the claimed invention. PO Resp. 52.
Patent Owner’s proofs do not include any direct evidence of copying or
otherwise establish that eBay copied the patented shipping calculator or a
commercial product that used the patented technology. Record evidence
indicates that eBay’s access to Patent Owner’s calculator was very limited: a
mock-up and online demonstration. See supra; Exs. 2032, 2033. Patent
Owner has not provided sufficient evidence that Petitioner had access to any
details or copied the patented technology.
Moreover, at the final hearing, counsel for Patent Owner confirmed
that the shipping calculator for eBay’s site was provided by UPS. Hearing
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Tr. 51:14–52:8. This effectively rebuts any assertion of copying of Patent
Owner’s product by eBay, and, in fact, demonstrates that suitable alternative
calculators were available. See supra. We are not persuaded by Patent
Owner’s assertions that eBay copied the patented shipping calculator.
c. Commercial Success
Evidence of commercial success “is only significant if there is a nexus
between the claimed invention and the commercial success.” Ormco Corp. v.
Align Tech., Inc., 463 F.3d 1299, 1311–12 (Fed. Cir. 2006). To establish a
nexus between a claimed invention and the commercial success of a product,
a patent owner must offer “proof that the sales [of the allegedly successful
product] were a direct result of the unique characteristics of the claimed
invention—as opposed to other economic and commercial factors unrelated
to the quality of the patented subject matter.” In re Huang, 100 F.3d at 140.
Patent Owner argues that its shipping calculator was a commercial
success that led to the growth of Rotman Auction as one of the largest sports
memorabilia vendors and a Top 200 seller on eBay. PO Resp. 53. Patent
Owner argues that its AuctionInc technology includes a shipping calculator
and is used by a core of customers. Id. Patent Owner argues that its use of
the automated shipping calculator allowed Patent Owner to grow sales and
revenues by eliminating customer inquiries about shipping and post-auction
bottlenecks of calculating shipping costs. Id. at 54. Patent Owner asserts
that its technology was used by other online merchants and eBay users until
eBay blocked the use of such third-party shipping calculators. Id. at 55.
We are not persuaded by Patent Owner’s evidence because Patent
Owner has not established a nexus between its commercial product and the
novel and non-obvious features of its claimed calculator. Patent Owner’s
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AuctionInc technology includes many features besides a shipping calculator.
Patent Owner has not shown that the shipping calculator in the AuctionInc
technology embodies the claimed invention or that sales of AuctionInc
resulted from novel, non-obvious features of the claimed shipping calculator
rather than other features. See Ormco Corp., 463 F.3d at 1312–13 (evidence
did not show commercial success was due to claimed and novel features).
Mr. Rotman testified that he did not attribute success in selling products on
eBay to the shipping calculator. Rotman Dep. 59:22–60:8, 236:15–237:12.
Even if Patent Owner had established a nexus between its AuctionInc
technology and the claimed shipping calculator, however, its commercial
success argument would not be persuasive. Patent Owner has not provided
evidence of the market share held by its AuctionInc technology or shipping
calculator. See PO Resp. 53. Assertions that Patent Owner cultivated 1,050
customers and a stable core of customers for AuctionInc technology does not
address whether this represents a substantial share of the relevant market.
See PO Resp. 53, 55; Rotman Decl. ¶¶ 68–69; In re Huang, 100 F.3d at 140
(“evidence related solely to the number of units sold provides a very weak
showing of commercial success, if any”).
d. Conclusion
Having considered all of the evidence and contentions of the parties
regarding the unpatentability of claims 1–19 under grounds 2–10, including
secondary evidence of non-obviousness presented by Patent Owner, we
determine that Petitioner has established by a preponderance of evidence
that claims 1–19 are unpatentable under the asserted grounds. The relatively
weak evidence of non-obviousness including weak nexus is not sufficient to
overcome the relatively strong evidence of obviousness. See Ohio Willow
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Wood Co. v. Alps South, LLC, 735 F.3d 1333, 1344 (Fed. Cir. 2013)
(requisite nexus between secondary indicia and invention must be shown for
evidence to be accorded substantial weight, and where a claimed invention
represents no more than the predictable use of prior art elements according
to established functions, evidence of secondary indicia is often inadequate to
establish non-obviousness) (citations omitted); Rothman v. Target Corp.,
556 F.3d 1310, 1322 (Fed. Cir. 2009) (strong prima facie obviousness
showing may stand even with considerable evidence of secondary factors).
D. Petitioner’s Motion to Exclude
Petitioner contends that Exhibits 2035–2085 should be excluded as
inadmissible hearsay under Federal Rule of Evidence 802 and for lack of
authentication under Federal Rule of Evidence 901. Paper 27 (“Motion”).
Petitioner also seeks to exclude testimony in the Rotman Declaration (Ex.
2004) that relies on Exhibits 2035–2085. Motion 1. Petitioner argues that
the exhibits are printouts of websites, articles, and press releases of third-
parties relied upon to establish the truth of the matters asserted therein in
support of Patent Owner’s allegations of secondary evidence of non-
obviousness. Id. at 2.
Patent Owner opposes, arguing that the challenged exhibits are not
offered to prove the truth of the matters asserted therein. Patent Owner
contends they are authentic reproductions of publicly-available sources.
Opposition 1–2 (Paper 31); see Rotman Supp. Decl. ¶ 12.
In reaching our decision on patentability, we reviewed the challenged
evidence and determined that it was insufficient on the issue of obviousness.
See supra. In view of our disposition of this case, we do not find it
necessary to address the motion to exclude and therefore dismiss it as moot.
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III. ORDER
In consideration of the foregoing, it is hereby
ORDERED that claims 1–19 of U.S. Patent No. 7,930,237 are
unpatentable; and
FURTHER ORDERED that this is a Final Decision. Parties to the
proceeding seeking judicial review of the decision must comply with the
notice and service requirements of 37 C.F.R. § 90.2.
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PETITIONER:
Timothy Riffe
riffe@fr.com
Leland Gardner
CBM25357-0024CP1@fr.com
PATENT OWNER:
Robert King
rking@hunton.com
Yisun Song
ysong@hunton.com
David Kelly
dkelly@hunton.com
Michael O’Shea
moshea@hunton.com