Trials@uspto.gov
`571-272-7822
`
` Paper No. 8
`Entered: July 26, 2017
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`
`EBAY INC. and PAYPAL, INC.,
`Petitioner,
`
`v.
`
`XPRT VENTURES, LLC,
`Patent Owner.
`____________
`
`Case CBM2017-00025
`Patent 7,627,528 B2
`____________
`
`
`
`Before JAMESON LEE, KEVIN F. TURNER, and
`MICHAEL R. ZECHER, Administrative Patent Judges.
`
`TURNER, Administrative Patent Judge.
`
`
`DECISION
`Granting Institution of Covered Business Method Patent Review
`35 U.S.C. § 324(a) and 37 C.F.R. § 42.208
`
`
`
`
`
`571-272-7822
`
` Paper No. 8
`Entered: July 26, 2017
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`
`EBAY INC. and PAYPAL, INC.,
`Petitioner,
`
`v.
`
`XPRT VENTURES, LLC,
`Patent Owner.
`____________
`
`Case CBM2017-00025
`Patent 7,627,528 B2
`____________
`
`
`
`Before JAMESON LEE, KEVIN F. TURNER, and
`MICHAEL R. ZECHER, Administrative Patent Judges.
`
`TURNER, Administrative Patent Judge.
`
`
`DECISION
`Granting Institution of Covered Business Method Patent Review
`35 U.S.C. § 324(a) and 37 C.F.R. § 42.208
`
`
`
`
`
`
`CBM2017-00025
`Patent 7,627,528 B2
`
`I.
`
`INTRODUCTION
`A. Background
`eBay Inc. and PayPal, Inc. (collectively, “Petitioner”), filed a Petition
`requesting a review under the transitional program for covered business
`method patents of claims 13, 14, and 15 (“challenged claims”) of U.S. Patent
`No. 7,627,528 B2 (Ex. 1001, “’528 Patent”). Paper 1 (“Pet.”). Patent
`Owner, XPRT Ventures, LLC (“Patent Owner”), did not file a Preliminary
`Response.
`We have jurisdiction under 35 U.S.C. § 324,1 which provides that a
`covered business method patent review may not be instituted unless the
`information presented in the Petition demonstrates “that it is more likely
`than not that at least 1 of the claims challenged in the petition is
`unpatentable.” We determine that the information presented in the Petition
`establishes that the ’528 Patent qualifies as a covered business method patent
`that is eligible for review, and that it is more likely than not that the
`challenged claims are unpatentable under 35 U.S.C. § 101. Pursuant to 35
`U.S.C. § 324 and § 18(a) of the AIA, we institute a covered business method
`patent review as to all the challenged claims.
`
`B. Related Matters
`The parties indicate that Patent Owner asserted the ’528 Patent against
`
`Petitioner in a U.S. district court case captioned XPRT Ventures, LLC v.
`
`
`1 See Section 18(a)(1) of the Leahy-Smith America Invents Act, Pub. L. No.
`112-29, 125 Stat. 284, 329–30 (2011) (“AIA”), which provides that the
`transitional program for covered business method patents will be regarded as
`a post-grant review under chapter 32 of title 35 of the U.S. Code, and will
`employ the standards and procedures of a post-grant review, subject to
`certain exceptions.
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`2
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`Patent 7,627,528 B2
`eBay Inc., No. 1:10-cv-00595-SLR (D. Del.) (“U.S. district court case”).
`Pet. 2–3; Paper 4, 2. Petitioner further indicates that in the U.S. district court
`case, Patent Owner also asserted five other patents against Petitioner,
`specifically U.S. Patent Nos. 7,483,856 (“’856 patent”), 7,610,244 (“’244
`patent”), 7,567,937 (“’937 patent”), 7,599,881 (“’881 patent”), and
`7,512,563 (“’563 patent”). Pet. 2–3.
`The parties also indicate that one Petitioner entity, eBay Inc.,
`requested inter partes reexaminations of the ’937 patent, ’563 patent, ’528
`Patent, ’856 patent, ’881 patent, and ’244 patent, which were instituted in
`Reexamination Control Nos. 95/001,588, 95/001,589, 95/001,590,
`95/001,594 (“’594 Reexamination”), 95/001,596, and 95/001,597,
`respectively. Pet. 3; Paper 4, 2. With the exception of the ’594
`Reexamination, decisions in each of those reexamination proceedings are
`currently on appeal to the U.S. Court of Appeals for the Federal Circuit.
`Pet. 3; Paper 4, 2. Meanwhile, in the ’594 Reexamination, a decision on a
`request for rehearing is pending. Pet. 3.
`The parties further indicate that Petitioner has requested covered
`business method patent reviews for the ’244 patent, ’563 patent, ’856 patent,
`’881 patent, and ’937 patent, in Cases CBM2017-00024, CBM2017-00026,
`CBM2017-00027, CBM2017-00028, and CBM2017-00029, respectively.
`Pet. 3; Paper 4, 2. Also, Patent Owner identifies U.S. Patent Application
`Nos. 12/547,201 and 12/603,063 as related matters. Paper 4, 2.
`
`C. Standing
`Section 18 of the AIA governs the transitional program for covered
`business method patent reviews. Section 18(a)(1)(B) of the AIA limits such
`reviews to persons, or their privies, that have been sued or charged with
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`infringement of a covered business method patent. In asserting that it has
`standing to file the Petition, Petitioner states that it has been charged with
`infringement of the ’528 Patent in the U.S. district court case. Pet. 10.
`Petitioner further states that it is not estopped from challenging the claims on
`the ground identified in the Petition and demonstrates that the ’528 Patent is
`a covered business method patent. Id. at 5–10; infra § I.F.
`
`D. The ’528 Patent
`The ’528 Patent generally relates to a computerized electronic auction
`payment system and method for effecting a real-time payment for an item
`won in an electronic auction. Ex. 1001, 1:17–23. The ’528 Patent describes
`electronic auctions as typically involving a website, such as EBAYTM or
`YAHOO!TM Auctions, where a prospective seller lists an item for sale and
`specifies the date and time for the auction to end. Id. at 1:33–47.
`Prospective bidders using a remote terminal access the electronic auction
`website via an electronic network, such as the Internet, and may submit a bid
`on the item for sale. Id. at 1:58–63. At the conclusion of the auction, the
`bidder who has the highest bid is deemed the winning bidder, and to effect
`payment for the item, an e-mail is sent to the seller and winning bidder
`informing them to contact each other to proceed with a payment transaction.
`Id. at 2:27–32.
`The ’528 Patent describes several drawbacks of the known methods
`for effecting payment. Ex. 1001, 2:63–3:34. According to the ’528 Patent,
`one drawback is that a winning bidder is apt to wait prior to effecting
`payment as the winning bidder must perform several tasks, including
`drafting a check and mailing the check to the seller. Id. at 2:63–3:4. Also,
`the seller must wait at least two business days to several weeks before being
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`Patent 7,627,528 B2
`paid. Id. at 3:5–6. Additionally, the ’528 Patent states that it is cumbersome
`for the winning bidder to enter credit card information every time an item is
`won, and the winning bidder may feel uneasy transferring credit card
`information or may wait until the start of a new credit card billing cycle
`before transferring the credit card information. Id. at 3:14–25. There is a
`further delay until the operator of the electronic auction website gets paid a
`commission by the seller, which usually involves the operator e-mailing the
`seller and receiving the seller’s authorization. Id. at 3:26–34.
`The ’528 Patent seeks to address these drawbacks by setting up and
`maintaining electronic auction payment accounts––which the ’528 Patent
`describes as similar to bank accounts––for prospective bidders and sellers.
`Id. at 3:64–4:1, 7:55–59. The prospective bidders provide funds to their
`electronic auction payment accounts maintained by the electronic auction
`payment system, before being deemed as winning bidders, by direct deposit,
`using a credit card, or sending a check, money order, or other financial
`document to an operator of the electronic auction payment system. Id. at
`4:1–7. In one embodiment, the bidder can authorize the system to
`automatically pay the seller upon winning the auction. Id. at 9:56–67. After
`the winning bidder wins an auction item, the winning bidder can pay in real-
`time, e.g., by clicking an icon on the electronic auction web site or by
`clicking a hyperlink provided on an email transmitted by the electronic
`auction system to the winning bidder and seller for accessing a payment
`segment. Id. at 15:58–64.
`Figure 1 of the ’528 Patent is reproduced below.
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`Patent 7,627,528 B2
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`
`Figure 1 is an overview of a network computing environment that includes
`the electronic auction payment system of the ’528 Patent. Id. at 6:14–16.
`As shown in Figure 1, users 102 access an electronic auction website
`via a network, such as Internet 106. Ex. 1001, 6:48–51. Web server
`computers 107 and 108 are components within electronic auction system
`112 that operate to maintain the electronic auction website and allow each
`user 102 to browse the electronic auction website and bid for or sell items.
`Id. at 6:53–59. The web server computers 107 and 108 also allow each user
`to access computerized electronic auction payment system 110 for effecting
`a real-time payment at the conclusion of an electronic auction. Id. at 6:60–
`67.
`
`Computerized electronic auction payment system 110 includes a
`database of electronic auction payment accounts 114 and web server
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`Patent 7,627,528 B2
`computer 116 having processor 118 capable of executing a set of
`instructions stored within memory 119. Id. at 7:1–5. The instructions
`enable computerized electronic auction payment system 110 to allow the
`winning bidder to effect a real-time payment for an item won on the
`electronic auction website. Id. at 7:12–17.
`Computerized electronic auction payment system 110 also provides
`the users a payment registration page, which is illustrated in Figure 4A of
`the ’528 Patent, and is reproduced below. Id. at 8:35–37.
`
`
`Figure 4A illustrates payment registration page 400 that allows each user to
`enter payment information. Id. at 8:42–43.
`As shown in Figure 4A, the payment registration page includes
`several fields 402 for entering a user’s bank account information to allow the
`computerized electronic payment system to transfer funds into the user’s
`electronic auction payment account. Ex. 1001, 8:42–48. Likewise, the
`payment registration page includes several fields 404 for entering credit card
`information to allow the user’s credit card to be charged so that funds are
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`Patent 7,627,528 B2
`deposited into the user’s electronic auction payment account, prior to the
`user becoming a winning bidder. Id. at 8:42–56. Automatic payment field
`416 is provided for the user to authorize computerized electronic auction
`payment system 110 to debit the user’s electronic auction payment account
`in real-time every time the user is deemed a winning bidder. Id. at 9:56–
`10:3. If the user checks this field, then at the conclusion of an electronic
`auction, if the user is deemed the winning bidder, the system debits the
`user’s electronic auction payment account and credits the seller’s account in
`real-time. Id. at 9:60–67.
`
`E. Illustrative Claim
`Of the claims challenged in this proceeding, claim 13 is the only
`independent claim. Independent claim 13 is directed to a method for
`effecting at least one payment for a user of an electronic auction website.
`Independent claim 13 is illustrative of the challenged claims and is
`reproduced below:
`13. A method for effecting at least one payment for a user
`of an electronic auction web site, said method comprising the
`steps of:
`providing the user with an option to enable loaning of
`funds if a payment source corresponding to the user has
`insufficient funds for effecting payment for at least one
`transaction conducted via the electronic auction web site;
`receiving authorization from the user, in response to the
`option, to use the payment source corresponding to the user for
`effecting the at least one payment and to loan funds to the user if
`the payment source has insufficient funds;
`determining if the payment source corresponding to the
`user has sufficient funds for effecting the at least one payment;
`and
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`CBM2017-00025
`Patent 7,627,528 B2
`loaning funds for effecting the at least one payment if the
`payment source corresponding to the user has insufficient funds
`for effecting the at least one payment and authorization from the
`user has been received, wherein the payment system is in
`operative communication with the electronic auction system, and
`wherein the payment source corresponding to the user is a
`payment account maintained by the payment system and
`accessible by the user via at least one web page of the electronic
`auction web site.
`Ex. 1001, 20:13–37.
`
`F. Covered Business Method Patent
`Under § 18(a)(1)(E) of the AIA, we may institute a transitional review
`proceeding only for a covered business method patent. 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 also 37 C.F.R. § 42.301 (defining “[c]overed business
`method patent” and “[t]echnological invention”).
`1. Financial Product or Service
`The Federal Circuit has recognized that “as a matter of statutory
`construction, the definition of ‘covered business method patent’ is not
`limited to products and services of only the financial industry, or to patents
`owned by or directly affecting activities of financial institutions.” Versata
`Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1325 (Fed. Cir. 2015). At
`the same time, “[n]ecessarily, the statutory definition of a [covered business
`method] patent requires that the patent have a claim that contains, however
`phrased, a financial activity element.” Secure Axcess, LLC v. PNC Bank
`Nat’l Ass’n, 848 F.3d 1370, 1381 (Fed. Cir. 2017).
`
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`Patent 7,627,528 B2
`Petitioner contends that the independent claim 13 recites a method for
`“effecting at least one payment for a user of an electronic auction web site.”
`Pet. 6. Petitioner also points to the method steps of “providing the user with
`an option to enable loaning of funds,” “receiving authorization from the user
`. . . to use the payment source corresponding to the user for effecting the at
`least one payment and to loan funds to the user if the payment source has
`insufficient funds,” “determining if the payment source … has sufficient
`funds,” and “loaning funds for effecting the at least one payment if the
`payment source corresponding to the user has insufficient funds.” Id.
`Petitioner identifies all of these steps as activities that are financial in nature,
`and “compels a finding that the ’528 patent is eligible for [covered business
`method patent] review.” Id. at 6–7. Also in support of this contention,
`Petitioner refers to the classification of the ’528 Patent—namely class 705.
`Id. at 5–6.
`We agree with Petitioner that independent claim 13 contains
`limitations for performing data processing or other operations that include a
`financial activity element. Specifically, these claims recite “providing the
`user with an option to enable loaning of funds;” “receiving authorization
`from the user;” “determining if the payment source corresponding to the user
`has sufficient funds;” and “loaning funds for effecting the at least one
`payment.” Ex. 1001, 20:13–37. Loaning of funds based on authorizations
`to effect payment is a financial activity. Accomplishing this task while in
`operative communication with the electronic auction system, and the
`payment accounts thereof, falls within the scope of data processing or other
`operations. Accordingly, we determine that this claim satisfies the
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`“financial product or service” component of the definition for a covered
`business method patent set forth in § 18(d)(1) of the AIA.
`2. Technological Invention
`The definition of a “covered business method patent” in § 18(d)(1) of
`the AIA does not include patents for “technological inventions.” When
`determining whether a patent is for a technological invention, we consider
`the following: “whether the claimed subject matter as a whole [(1)] recites a
`technological feature that is novel and unobvious over the prior art; and [(2)]
`solves a technical problem using a technical solution.” 37 C.F.R.
`§ 42.301(b).
`For the technological invention exception to apply, both prongs (1)
`and (2) of the inquiry must be met affirmatively, meaning that a negative
`answer under either prong renders inapplicable the technological invention
`exception. See Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229, 1240 (Fed. Cir.
`2016) (“We need not address this argument regarding whether the first prong
`of 37 C.F.R. § 42.301(b) was met, as we affirm the Board’s determination
`on the second prong of the regulation—that the claimed subject matter as a
`whole does not solve a technical problem using a technical solution.”); Blue
`Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1341 (Fed. Cir. 2016)
`(addressing only whether the claimed invention solves a technical problem
`using a technical solution). In this case, we discuss both prongs of the
`inquiry, even though the discussion of only one is sufficient. For the reasons
`discussed below, neither prong of the technological invention inquiry is met.
`Petitioner argues that the challenged claims are not directed to a
`technological invention, but instead are directed to business processes, i.e.,
`activities that are financial in nature, using only known technology. Pet. 7.
`
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`Patent 7,627,528 B2
`Petitioner asserts that the challenged claims merely recite the use of
`conventional, nonspecialized processors, and that there is nothing novel or
`unobvious about using a computer processor to complete a financial
`transaction. Id. at 7–8. Petitioner further asserts that authorizing deductions
`from an account, such as a bank account or a deposit account, and loaning
`funds to effect payments, are not technical solutions. Id. at 9–10.
`We agree with Petitioner that the challenged claims do not recite a
`novel and unobvious technological feature. Here, the challenged claims
`only generically recite an “electronic auction web site,” which is not specific
`or unconventional. Merely reciting known technologies and their use to
`accomplish the otherwise non-technological method does not render the
`challenged claims a technological invention.
`We also agree with Petitioner that the challenged claims do not
`involve a technical solution to a technical problem. The challenged claims
`seek to solve the problems of delays in effecting payment for an item
`purchased in an electronic auction and identify alternatives to providing
`credit card information for paying for the item. Ex. 1001, 2:63–3:34. The
`’528 Patent, however, does not describe specifically any technical issues
`presenting a technical problem to be solved. Meanwhile, the claimed
`solution–– loaning funds to effect payments and using specific accounts to
`accomplish the same––is more akin to maintaining and effecting payments
`from a bank account, than a technical solution. Indeed, the ’528 Patent itself
`analogizes its electronic auction payment accounts to effect payment as
`being similar to bank accounts. See id. at 7:55–62. At most, the solution is
`implemented through the use of a processor or web site, but this is not
`sufficient to constitute a technological invention. See Versata, 793 F.3d at
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`1327 (“[E]ven if the invention required the use of a computer, the claim did
`not constitute a technological invention.”).
`3. Summary
`Independent claim 13 satisfies the definition for a covered business
`method as set forth in § 18(d)(1) of the AIA, and it is not for a technological
`invention. Accordingly, the ’528 Patent is eligible for review under the
`transitional program for covered business method patents.
`
`G. Asserted Ground of Unpatentability
`Petitioner asserts that the challenged claims are unpatentable under
`35 U.S.C. § 101. Pet. 10–11, 20–45.
`
`II. ANALYSIS
`A. Claim Construction
`In a covered business method patent review, we interpret claim terms
`in an unexpired patent according to the broadest reasonable interpretation in
`light of the specification of the patent in which it appears. 37 C.F.R.
`§ 42.300(b). Only those terms that are in controversy, however, need be
`construed, and only to the extent necessary to resolve the controversy. Vivid
`Techs., Inc. v. Am. Sci. & Eng’g, Inc., 200 F.3d 795, 803 (Fed. Cir. 1999).
`Petitioner proposes a construction for the claim term “web site.”
`Pet. 20. We, however, need not address the construction of any claim term
`to resolve the issues currently before us for purposes of determining whether
`to institute a covered business method patent review.
`
`B. § 101 Ground
`Petitioner contends that the challenged claims are directed to patent-
`ineligible subject matter under § 101. Pet. 20–45. Petitioner argues that the
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`challenged claims are directed to an abstract idea, and when considering the
`elements of each claim both individually and as an ordered combination,
`there are no additional elements that transform the abstract idea into a
`patent-eligible application. Id. at 27–44. At this stage of the proceeding, we
`are persuaded that Petitioner has demonstrated sufficiently that all the
`challenged claims are directed to patent-ineligible subject matter under
`§ 101.
`We begin our analysis with the principles of law that generally apply
`to a ground based on § 101, and then we turn to the arguments presented by
`Petitioner.
`
`1. Principles of Law
`A patent may be obtained for “any new and useful process, machine,
`manufacture, or composition of matter, or any new and useful improvement
`thereof.” 35 U.S.C. § 101. The U.S. Supreme Court has held that this
`statutory provision contains an important implicit exception: laws of nature,
`natural phenomena, and abstract ideas are not patentable. E.g., Alice Corp.
`v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014). Notwithstanding that a law
`of nature or an abstract idea, by itself, is not patentable, the practical
`application of these concepts may be deserving of patent protection. Mayo
`Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293–94
`(2012).
`In Alice, the Supreme Court reaffirmed the framework set forth
`previously in Mayo “for distinguishing patents that claim laws of nature,
`natural phenomena, and abstract ideas from those that claim patent-eligible
`applications of those concepts.” Alice, 134 S. Ct. at 2355. The first step in
`the analysis is to “determine whether the claims at issue are directed to one
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`of those patent-ineligible concepts.” Id. If the claims are directed to a
`patent-ineligible concept, the second step in the analysis is to consider the
`elements of the claims “individually and ‘as an ordered combination’” to
`determine whether there are additional elements that “‘transform the nature
`of the claim’ into a patent-eligible application.” Id. (quoting Mayo, 132 S.
`Ct. at 1298, 1297). In other words, the second step is to “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. (alteration in original)
`(quoting Mayo, 132 S. Ct. at 1294).
`2. Independent Claim 13
`We first address independent claim 13, which recites “[a] method for
`
`effecting at least one payment for a user of an electronic auction web site”
`comprising the steps of “providing the user with an option to enable loaning
`of funds if a payment source corresponding to the user has insufficient funds
`for effecting payment for at least one transaction conducted via the
`electronic auction web site;” “receiving authorization from the user, in
`response to the option, to use the payment source corresponding to the user
`. . . and to loan funds to the user if the payment source has insufficient
`funds;” and “determining if the payment source . . . has sufficient funds;”
`and “loaning funds . . . if the payment source . . . has insufficient funds . . .
`and authorization from the user has been received.” Claim 13 also indicates
`that “the payment system is in operative communication with the electronic
`auction system, and wherein the payment source corresponding to the user is
`a payment account maintained by the payment system and accessible by the
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`user via at least one web page of the electronic auction web site.” Ex. 1001,
`20:13–37.
`
`a. Abstract Idea
`In the first step of our analysis, we determine whether independent
`claim 13 is directed to a patent-ineligible concept (i.e., an abstract idea). See
`Alice, 134 S. Ct. at 2355. This claim of the ’528 Patent recites a “method”
`(i.e., a process), that is by definition statutory subject matter under § 101.
`The issue, therefore, is whether this claim falls under the abstract idea
`exception.
`Petitioner contends that this claim “[is] directed to the abstract idea of
`using a loan to effect a financial transaction when a buyer has insufficient
`funds in his or her payment account.” Pet. 1. Petitioner asserts that using a
`bank account and borrowing money to make payments have both been
`common business practices for decades. Id. at 28–29. Petitioner argues that
`loaning money to make payments is an age old way of conducting business,
`and cites to various types of lending activity, such as lines of credit, credit
`cards, mortgages, educational loans, and overdraft protection. Id. at 1 (citing
`Exs. 1005, 1006, 1007, 1009, Ex.1005 ¶ 18). Petitioner also argues that the
`types of financial activity recited in independent claim 13 are fundamental
`economic practices that have been common business practices for decades.
`Id. at 28–29.
`Petitioner further asserts that this claim is directed to an abstract idea
`because it is purely functional, it is directed to the use of generic computer
`components, rather than to an improvement of those computer elements, and
`it is unlike the claims found not to be directed to abstract ideas under Federal
`Circuit precedent. Id. at 29–32.
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`We agree with Petitioner that independent claim 13 is directed to an
`abstract idea, and at this stage in the proceeding, we accept Petitioner’s
`description of the abstract idea as using a loan to effect a financial
`transaction when a buyer has insufficient funds in his or her payment
`account. This independent claim recites an intent of effecting payment by a
`process that includes the steps of providing the user with the option to enable
`the loaning of funds, through receipt of a user’s authorization, and loaning
`funds to effect the payment if insufficient funds are determined for a
`payment source. Ex. 1001, 20:13–37. This purchaser-seller arrangement is
`not meaningfully distinct from the financial arrangements found to be
`abstract ideas in Alice, 134 S. Ct. at 2356 (“method of exchanging financial
`obligations between two parties using a third-party intermediary to mitigate
`settlement risk”) and Bilski v. Kappos, 561 U.S. 593, 599 (2010)
`(arrangement between buyers and sellers to purchase commodities in the
`energy market at a fixed rate as a way of protecting, or “hedging,” against
`risks of price changes).
`The Supreme Court has explained that concepts like intermediate
`settlement and risk hedging are abstract ideas beyond the scope of § 101 as
`they are “a fundamental economic practice long prevalent in our system of
`commerce.” Alice, 134 S. Ct. at 2356 (quoting Bilski, 561 U.S. at 611). The
`current record in this case likewise shows that the concept of using a loan to
`effect a financial transaction when a buyer has insufficient funds in his or
`her payment account is a fundamental economic practice. We concur with
`Petitioner that limiting the above-discussed financial practices to the context
`of an electronic auction does not render the claims non-abstract, as an
`auction itself is a fundamental economic practice that has been held to be an
`
`17
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`CBM2017-00025
`Patent 7,627,528 B2
`abstract idea. Pet. 28–29 (citing Advanced Auctions LLC v. eBay Inc., 2015
`WL 1415265, at *4 (S.D. Cal. Mar. 26, 2015)).
`Moreover, the ’528 Patent itself references its electronic auction
`payment account configured to store funds, which can be used to effect
`payment, as being “similar to a bank account.” Ex. 1001, 7:55–59. The fact
`that the claimed process occurs in the context of an electronic auction over
`the Internet or in connection with a web site does not make the abstract idea
`any less abstract. See Priceplay.com, Inc. v. AOL Advertising, Inc., 83 F.
`Supp. 3d 577, 581 (D. Del. 2015) (“Performing a sales transaction over the
`Internet, or in conjunction with an auction and a competitive activity, does
`not make the concept any more ‘concrete.’”), aff’d, 627 F. App’x 925 (Fed.
`Cir. 2016) (mem.).
`Furthermore, we find it unlikely that the claimed method offers any
`improvement in computer functionality as in McRO, Inc. v. Bandai Namco
`Games Am. Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016) and Enfish, LLC v.
`Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016). Instead, independent
`claim 13 only generally recites the use of a computer (i.e., a web site) as a
`tool and focuses on implementing a financial transaction using a loan to
`cover for insufficient funds. See Enfish, 822 F.3d at 1336 (distinguishing
`claims where the plain focus is to improve computer functionality from
`economic or other tasks in which computers are invoked merely as a tool
`and in an ordinary capacity); cf. McRO, 837 F.3d at 1315–16 (claim not
`directed to ineligible subject matter where “the automation goes beyond . . .
`carrying out a fundamental economic practice”). The improvement that the
`’528 Patent seeks to provide is over manual payment processes such as
`drafting and mailing a check (Ex. 1001, 2:66–3:1), typing and transferring
`
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`CBM2017-00025
`Patent 7,627,528 B2
`credit card information (id. at 3:14–20), or exchanging e-mails to authorize a
`commission payment (id. at 3:26–31). These types of improvements,
`however, do not represent patentable improvements in computer technology.
`See Credit Acceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1055 (Fed.
`Cir. 2017) (precedential) (finding that claims do not improve the
`functionality of a general purpose computer where they only permit
`automation of previously manual processing of loan applications because
`“prior cases have made clear that mere automation of manual processes
`using generic computers does not constitute a patentable improvement in
`computer technology”).
`
`b. Inventive Concept
`The second step in our analysis requires us to look for additional
`elements that may “transform the nature of the claim[s]” into a patent-
`eligible application of an abstract idea. Mayo, 132 S. Ct. at 1297. In other
`words, the second step is to “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.’” Alice, 134 S. Ct. at 2355 (alteration in original)
`(quoting Mayo, 132 S. Ct. at 1294).
`Petitioner states that independent claim 13 merely recites generic
`computer components, which are arranged in a conventional way. Pet. 32–
`33. Petitioner provides a detailed analysis of each individual claim element
`in asserting that the claim limitations, taken individually, do not contain an
`inventive concept. Id. at 34–41. Considered as an ordered combination,
`Petitioner asserts that this claim simply recites the well-known, conventional
`process of buyers paying for auction purchases using funds loaned to the
`
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`CBM2017-00025
`Patent 7,627,528 B2
`buyer, and amounts to nothing significantly more than an instruction to
`apply this abstract idea using a generic computer. Id. at 32–33. Petitioner
`further argues that the ’528 Patent preempts all effective uses of paying for
`items in an electronic auction using loaned funds. Id. at 44–45.
`Considering the claim elements individually, the independent claim at
`issue requires the following steps: (1) “providing” the user with an option to
`enable loaning of funds if a payment source corresponding to the user has
`insufficient funds for effecting payment for at least one transaction
`conducted via the electronic auction web site; (2) “receiving” authorization
`from the user and “determining” the sufficiency of a payment source; and
`(3) “loaning” funds for effecting the
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