Trials@uspto.gov
`Tel: 571-272-7822
`
`
`
`Paper 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 CBM2017-00026
`Patent 7,512,563 B2
`_______________
`
`
`Before JAMESON LEE, KEVIN F. TURNER, and
`MICHAEL R. ZECHER, Administrative Patent Judges.
`
`
`LEE, 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
`
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`

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`CBM2017-00026
`Patent 7,512,563 B2
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`
`I.
`
`INTRODUCTION
`
`A. Background
`On December 23, 2016, Petitioner filed a Petition (Paper 1, “Pet.”)
`under Section 18 of the Leahy-Smith America Invents Act, Pub. L. No. 112-
`29, 125 Stat. 284, 329 (2011) (“AIA”), requesting a covered business
`method patent review of claims 1, 6, and 7 of U.S. Patent No. 7,512,563 B2
`(Ex. 1001, “the ’563 patent”). Pet. 12. Patent Owner did not file a
`preliminary response. We have jurisdiction under 35 U.S.C. § 324(a).
`Section 18(a)(1) of the AIA provides that a covered business method
`patent review “shall be regarded as, and shall employ the standards and
`procedures of, a post-grant review” with certain exceptions not relevant
`here. The standard for instituting a covered business method review is set
`forth in 35 U.S.C. § 324(a), which provides as follows:
`THRESHOLD.—The Director may not authorize a post-grant
`review to be instituted unless the Director determines that the
`information presented in the petition filed under section 321, if
`such information is not rebutted, would demonstrate that it is
`more likely than not that at least 1 of the claims challenged in the
`petition is unpatentable.
`
`Upon consideration of the Petition and its supporting evidence, we
`determine that the ’563 patent is a covered business method patent and that
`Petitioner has established it is more likely than not it would prevail in
`showing the unpatentability of each of claims 1, 6, and 7 of the ’563 patent,
`as being drawn to nonstatutory or patent-ineligible subject matter under
`35 U.S.C. § 101. Thus, pursuant to 35 U.S.C. § 324(a), we institute a
`covered business method patent review of claims 1, 6, and 7 of the ’563
`patent.
`
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`CBM2017-00026
`Patent 7,512,563 B2
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`
`B. Related Proceedings
`Petitioner indicates that the ’563 patent has been asserted by Patent
`Owner against Petitioner in XPRT Ventures, LLC v. eBay Inc., Case No.
`1:10-cv-00595-SLR (D. Del.). Pet. 3. Petitioner indicates that there are five
`other patents in the “same family” of patents (i.e., U.S. Patent Nos.
`7,483,856; 7,567,937; 7,599,881; 7,610,244; and 7,627,528). Id. Petitioner
`further indicates that patent reexamination proceedings were instituted for
`the claims of the ’563 patent and each related patent. Id. Petitioner states
`that the independent claims of the six patents were rejected by an Examiner
`in the reexamination proceedings. Id. Petitioner further indicates that the
`Board affirmed the rejections in five of the six proceedings, including that
`involving the ’563 patent, and that those affirmances by the Board have been
`appealed to the U.S. Court of Appeals for the Federal Circuit. Id. Petitioner
`also indicates that the Examiner’s rejection in the sixth proceeding is still
`pending before the Board on a request for rehearing. Id. Petitioner also has
`filed petitions seeking a covered business method patent review of the
`following five related patents: U.S. Patent No. 7,610,244 (Case CBM2017-
`00024); U.S. Patent No. 7,627,528 (Case CBM2017-00025); U.S. Patent No.
`7,483,856 (Case CBM2017-00027); U.S. Patent No. 7,599,881 (Case
`CBM2017-00028); U.S. Patent No. 7,567,937 (Case CBM2016-00029). Id.
`C. Asserted Ground of Unpatentability
`Petitioner asserts the following ground of unpatentability:
`
`Basis of Unpatentability Claims Challenged
`lack of patent eligibility
`1, 6, and 7
`under 35 U.S.C. § 101
`
`3
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`CBM2017-00026
`Patent 7,512,563 B2
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`
`Petitioner relies on the Declaration of Clifford Neuman, Ph.D.
`Ex. 1005.
`D. The ’563 Patent
`The ’563 patent issued on March 31, 2009, and is titled: “System and
`Method to Automate Payment for a Commerce Transaction.” Ex. 1001, at
`[45], [54]. More specifically, the ’563 patent relates to a method for
`automatically effecting payment for a user of an electronic auction web site
`(claim 1) or a method for automatically effecting payment for a user of an
`electronic commerce web site (claim 7). The ’563 patent states: “With the
`advent of electronic networks, such as the Internet, electronic auctions have
`become tremendously popular.” Ex. 1001, 1:33–34. The ’563 patent
`identifies preexisting electronic auction websites EBAY and YAHOO!
`Auctions. Id. at 1:35–38. The ’563 patent describes three preexisting
`methods for effecting payment at the conclusion of an electronic auction for
`an item. Id. at 2:27–62. The first method is described as follows:
`To effect payment for the item, an email is sent to the seller and
`the winning bidder informing them to contact each other to
`proceed with a payment transaction. Upon the seller notifying
`the winning bidder of where to send payment, e.g., a check or
`money order, the winning bidder sends payment equal to the
`highest bid plus any other costs, such as shipping and handling,
`shipping insurance, and taxes, as indicated by the seller. Soon
`after receiving the payment from the winning bidder, the seller
`ships the item to the winning bidder.
`Id. at 2:29–38. The second method is described as this:
`Another prior art method for effecting payment for the
`item won on the electronic auction entails clicking an icon on the
`electronic auction web site and accessing a payment web site (or
`a payment segment of the electronic auction web site). The
`payment web site typically lists the seller’s user-name and the
`item won. While at the payment web site, the winning bidder
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`CBM2017-00026
`Patent 7,512,563 B2
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`enters credit card information and the amount to be charged to
`his credit card. Subsequently, a management system overseeing
`the payment web site charges the credit card for the entered
`amount to a company or entity affiliated with an operator or
`owner of the payment web site. Upon payment confirmation, an
`email is sent to the seller instructing the seller to ship the item to
`the winning bidder. After two to three business days, the
`payment web site management system pays the seller by direct
`deposit an amount equal to the charged amount minus a
`commission and a transaction fee. The commission typically [is]
`paid to the operator or owner of the electronic auction web site
`and the transaction fee is paid to the operator or owner of the
`payment web site.
`Id. at 2:39–57. The third method is a variation of the second method, where
`the winning bidder directly transfers his credit card information to the seller,
`and the seller then charges the credit card and waits for a confirmation of
`payment prior to shipping the item to the winning bidder. Id. at 2:58–62.
`
`The ’563 patent describes several problems with these three
`preexisting methods for a user to effect payment. It is described that “the
`winning bidder is apt to waiting prior to effecting payment, since the
`winning bidder will need to perform several tasks, such as, for example,
`draft a check made payable to the seller, and mail the check to the seller.”
`Id. at 2:64–3:1. The ’563 patent also describes that “[t]he winning bidder is
`also apt to [wait] when he is bidding on other items, since the winning
`bidder usually prefers to draft checks, obtain money orders, etc. and mail
`them to the various sellers at one time.” Id. at 3:1–4. The ’563 patent
`describes that the seller must wait at least two business days to several
`weeks before being paid, because of the winning bidder’s delay in making
`payment through a two-step process, i.e., draft a check, obtain a money order
`or some other payment document, and then mail to the seller. Id. at 3:5–13.
`
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`Patent 7,512,563 B2
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`The ’563 patent further describes that “a percentage of the population
`
`feels uneasy transferring their credit card information via the electronic
`network, especially to unknown sellers,” and that “the winning bidder is apt
`to waiting until the start of a new credit card billing cycle before transferring
`his credit card information to pay for the item won on the electronic
`auction.” Id. at 3:16–23. The ’563 patent also describes that “the winning
`bidder must enter his credit card information every time he wins an item on
`the electronic auction.” Id. at 3:14–16. Finally, the ’563 patent describes as
`a problem that “the operator of the electronic auction web site must wait
`several days to several weeks before being paid a commission by the seller,”
`usually by sending an email request to the seller for an authorization to
`charge the seller’s credit card. Id. at 3:26–31.
`
`To address the above-noted issues, the ’563 patent provides a
`computerized electronic auction payment system and method for effecting a
`real-time payment for an item won in an electronic auction. Id. at 3:53–56.
`The method sets up and maintains electronic auction payment accounts for
`prospective bidders and sellers, and the prospective bidders provide funds,
`prior to being deemed as winning bidders, to their electronic auction
`payment accounts via direct deposits, credit card, check, money order, or
`other financial document. Id. at 3:64–4:7.
`
`In one embodiment, upon being deemed a winning bidder, the
`winning bidder accesses a payment page, enters the total amount of the
`funds to be transferred to the seller, and authorizes the computerized
`electronic auction payment system to effect a real-time payment by debiting
`the winning bidder’s electronic auction payment account and crediting the
`electronic auction payment account of the seller, and/or another account
`
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`Patent 7,512,563 B2
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`specified by the seller. Id. at 4:7–15. In another embodiment, the winning
`bidder need not access a payment page, but simply authorizes the
`computerized electronic auction payment system to effect a real-time
`payment to the seller upon the bidder being deemed the winning bidder,
`immediately upon the conclusion of the electronic auction. Id. at 4:16–21.
`In still another embodiment, the computerized electronic auction payment
`system enables the operator of the electronic auction web site to be paid its
`commission in real-time at the conclusion of an auction or upon
`authorization by the winning bidder. Id. at 4:35–39.
`
`Figure 1 of the ’563 patent is reproduced below.
`
`
`Figure 1 is an overview of the network computing environment including the
`computerized electronic auction payment system of the ’563 patent. Id. at
`7
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`Patent 7,512,563 B2
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`5:47–49. Computerized electronic auction payment system 110 includes a
`database of electronic auction payment accounts 114 and web server
`computer 116 having processor 118 capable of executing a set of
`instructions stored within memory 119. Id. at 6:35–39. The instructions
`enable computerized electronic auction payment system 110 to maintain the
`database of electronic auction payment accounts. Id. at 6:39–44. They also
`enable the computerized electronic auction payment system to allow the
`winning bidder to effect real-time payment for an item won on the electronic
`auction web site. Id. at 6:46–51.
`
`Illustrated in Figure 1 are users 102 who have access to an electronic
`auction web site via a network, such as Internet 106. Id. at 6:15–18. Web
`server computers 107 and 108 are components within electronic auction
`system 112 and they operate to maintain the electronic auction web site and
`allow each user 102 to browse the electronic auction web site and bid for
`items and/or sell items in an electronic auction. Id. at 6:20–26. 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 6:27–30.
`
`The challenged independent claims are claims 1 and 7, which are
`reproduced below:
`1. A method for automatically effecting payment for a user of an
`electronic auction web site maintained by at least one
`computing device to an operator associated with the
`electronic auction web site, said method comprising the
`steps of:
`executing by at least one processor a sequence of events, the
`sequence of events including the steps of providing the
`user with an option prior to the conclusion of an electronic
`auction provided by the electronic auction web site, the
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`option enabling the user to authorize a payment system to
`execute an automatic payment method after the conclusion
`of the electronic auction, the automatic payment method
`includes automatically deducting funds from a payment
`account storing funds therein and corresponding to the
`user; receiving authorization from the user in response to
`the provided option and prior to the beginning of the
`electronic auction to execute the automatic payment
`method after the conclusion of the electronic auction; and
`determining whether to execute the automatic payment
`method for the user after the conclusion of the electronic
`auction based on whether
`the user has provided
`authorization to execute the automatic payment method in
`response to the provided option; and
`executing by the at least one processor the automatic payment
`method after the conclusion of the electronic auction, if it
`is determined by the at least one processor to execute the
`automatic payment method and the user has provided
`authorization for executing the automatic payment method
`in response to the provided option, the executing step
`comprising the steps of:
`automatically deducting funds from the funds stored in the
`payment account corresponding to the user of the
`electronic auction web site; and
`automatically transferring at least a portion of the
`deducted funds into an account corresponding to the
`operator associated with the electronic auction web
`site.
`Id. at 16:35–17:4.
`7. A method for automatically effecting payment for a user of an
`electronic commerce web site, said method comprising the
`steps of:
`setting up an electronic payment account by at least one
`processor for the user, said payment account storing
`funds therein for use in effecting payment for network
`based commerce transactions;
`
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`Patent 7,512,563 B2
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`
`automatically deducting funds stored within the electronic
`payment account due to at least one network-based
`commerce transaction without receiving a request from
`the user to deduct funds following a termination event
`of
`the at
`least one network-based commerce
`transaction; and
`automatically transferring at least a portion of the
`deducted funds to an account associated with an
`operator of the electronic commerce web site, the
`electronic payment account storing funds therein and
`the electronic commerce web site are maintained by an
`electronic commerce
`and payment
`computing
`architecture, said computing architecture having
`computing devices for maintaining the electronic
`payment account storing funds therein and the
`electronic commerce web site, said computing devices
`being in operative communication with each other via
`at least one non-Internet connection.
`Id. at 17:32–54.
`
`II. ANALYSIS
`A. Grounds for Standing
`Section 18 of the AIA created a transitional program, limited to
`persons or their privies that have been sued or charged with infringement of
`a “covered business method patent,” to seek a covered business method
`patent review. AIA §§ 18(a)(1)(B), 18(d)(1), Pub. L. No. 112-29, 125 Stat.
`284, 329–31 (2011); see 37 C.F.R. § 42.302. Petitioner represents that it has
`been sued for infringement of the ’563 patent in XPRT Ventures, LLC v.
`eBay Inc., Case No. 1:10-cv-00595-SLR (D. Del.). Pet. 3. Petitioner also
`represents that it is not estopped from seeking a covered business method
`patent review of the ’563 patent on the ground it asserts. Id. at 11. Patent
`Owner has not disputed that Petitioner has been sued for infringement of the
`’563 patent. In light of the foregoing, we determine that Petitioner has
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`Patent 7,512,563 B2
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`standing to file the Petition for covered business method patent review of the
`’563 patent.
` Covered Business Method Patent Eligibility
`B.
`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); 37 C.F.R. § 42.301(a). We refer
`to that part of the statutory definition of covered business method patent, up
`to the clause beginning with the word “except,” as the “financial product or
`service requirement,” and the clause commencing with the word “except” as
`the “technological invention exception.”
`A patent need have only one claim directed to a covered business
`method to be eligible for covered business method patent review. See
`Transitional Program for Covered Business Method Patents—Definitions of
`Covered Business Method Patent and Technological Invention, 77 Fed. Reg.
`48,734, 48,736 (Aug. 14, 2012) (Response to Comment 8).
`Financial Product or Service Requirement
`1.
`When assessing whether a patent “claims a method or corresponding
`
`apparatus for performing data processing or other operations used in the
`practice, administration, or management of a financial product or service,”
`the appropriate inquiry is directed to the subject matter that is claimed.
`Secure Axcess, LLC v. PNC Bank National Association, 848 F.3d 1370,
`1377–78 (Fed. Cir. 2017).
`
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`Patent 7,512,563 B2
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`The Federal Circuit has made clear that the statutory definition covers
`
`a wide range of financial-related activities and is not limited in application to
`only financial institutions. For instance, the Federal Circuit has stated:
`Blue Calypso asserts that its patents are not [covered business
`method (“CBM”)] patents because they relate to a method for
`managing and distributing advertising content, which is not “a
`financial product or service” that traditionally originated in the
`financial sector, e.g., banks, brokerages, holding companies and
`insurance firms. These arguments are foreclosed by our recent
`decisions in Versata II[1] and in SightSound Techs., LLC v. Apple
`Inc., 809 F.3d 1307 (Fed. Cir. 2015).
`Blue Calypso, LLC v. Groupon, Inc., 815 F.3d 1331, 1338 (Fed. Cir. 2016).
`The Federal Circuit further stated: “Here, the Board declined to limit the
`application of CBM review to patent claims tied to the financial sector. This
`determination is consistent with our recent case law.” Id.
`The claimed invention in Blue Calypso involves a peer-to-peer
`
`advertising system in which a “subsidy” is recognized for a subscriber after
`an advertising-related token, first sent by an advertiser to the subscriber, is
`forwarded by that subscriber to another device owned by a recipient who has
`a relationship with the subscriber. Id. at 1336–37. The Board construed
`“subsidy” as “financial assistance given by one to another,” and this
`construction was unchallenged. Id. at 1339–40. The Federal Circuit
`determined: “Thus, under this unchallenged interpretation, the claims of the
`Blue Calypso Patents are directed to methods in which advertisers
`financially induce ‘subscribers’ to assist their advertising efforts.” Id.
`at 1340.
`
`
`1 Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1318–23 (Fed.
`Cir. 2015).
`
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`Patent 7,512,563 B2
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`
`For the ’563 patent, we focus on claim 7, which recites: “A method
`for automatically effecting payment for a user of an electronic commerce
`web site.” Ex. 1001, 17:31–32. The method comprises several steps,
`including (1) setting up an electronic payment account storing funds for use
`in effecting payment, (2) automatically deducting funds stored in that
`payment account due to a network-based commerce transaction, and
`(3) automatically transferring at least a portion of the deducted funds to an
`account associated with an operator of the electronic commerce web site. Id.
`at 17:34–37, 17:38–40, 17:43–45. Claim 7 further specifies that the
`electronic payment account and the electronic commerce web site are
`maintained by an electronic commerce and payment architecture. Id. at
`17:45–48. Manifestly, the method performs data processing operations used
`in the practice, administration, or management of a financial service, i.e., a
`payment service for a user of an electronic commerce web site. Maintaining
`a payment account and automatically effecting payment from that payment
`account is a financial service.
`
`For the foregoing reasons, we determine that the financial product or
`service requirement of the definition of a covered business method patent is
`met by claim 7 of the ’563 patent.
`2. Technological Invention Exception
`The definition of “covered business method patent” in § 18(d)(1) of
`the AIA excludes patents for technological inventions. When determining
`whether a patent is for a technological invention, we consider “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). The first prong of the
`
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`inquiry is not about whether the claimed invention is novel or nonobvious.
`Rather, even if the claimed method, as a whole, is novel and unobvious, the
`use of known technology in conventional ways does not render a patent a
`technological invention. See Office Patent Trial Practice Guide, 77 Fed.
`Reg. 48,756, 48,764 (Aug. 14, 2012). Also, for the technological invention
`exception to apply in disqualifying a patent as a covered business method
`patent, both prongs of the inquiry must be met affirmatively, meaning that a
`negative answer under either prong renders inapplicable the technological
`invention exception. 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.”); see also Blue Calypso, 815 F.3d at 1341 (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 prong is sufficient. For reasons discussed below,
`neither prong of the technological invention inquiry is met.
`Technological Feature – Novel and Unobvious
`a.
`The following claim drafting techniques, reciting technology,
`
`typically do not render a patent a technological invention:
`(a) Mere recitation of known technologies, such as
`computer hardware, communication or computer networks,
`software, memory, computer-readable
`storage medium,
`scanners, display devices or databases, or specialized machines,
`such as an ATM or point of sale device.
`
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`(b) Reciting the use of known prior art technology to
`accomplish a process or method, even if that process or method
`is novel and non-obvious.
`
`
`(c) Combining prior art structures to achieve the normal,
`expected, or predictable result of that combination.
`
`Office Patent Trial Practice Guide, 77 Fed. Reg. at 48,763–64.
`Petitioner argues that “each of the challenged claims, when read by its
`individual elements or as a whole, does not recite a technological feature that
`is novel and unobvious over the prior art.” Pet. 8. Focusing on claims 1 and
`7, we are persuaded that Petitioner is correct. Petitioner asserts that there is
`nothing novel or unobvious about using a set of computers to complete a
`financial transaction, and that the claims do not recite any novel technology
`to implement the claimed payment flow, but merely recite the use of
`conventional and non-specialized processors. Id. at 8–9. The assertions are
`supported by the declaration testimony of Dr. Neuman. Ex. 1005 ¶¶ 19–21.
`For purposes of this Decision, we credit the following testimony of Dr.
`Neuman:
`
`19. The ’563 patent claims are directed to financial
`transfers. Financial transactions, electronic or otherwise, are the
`fundamental building blocks of the economy. Ex. 1010, p.4
`(describing the use of deposit accounts in 1910); Ex. 1007, p.4
`(describing fund transfer services). Indeed, this is the type of
`subject matter that is taught in economics or business classes.
`The fact that the ’563 patent’s transfers are occurring
`electronically does not add to the invention. Transactions are
`regularly conducted electronically, and have been for decades.
`Basically, the ’563 patent takes this well-known concept and
`applies it to, for example, the Internet. As discussed above,
`Figure 1 of the ’563 patent shows that these components are
`nothing more than general purpose servers, databases, and
`processors, depicted as nothing more than generic boxes.
`
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`20. Nor is the combination of financial transactions,
`
`pre-funded accounts, and pre-authorized transfers anything other
`than a well-trod, fundamental economic concept. As I discussed
`in the preceding paragraphs, a generic bank account implements,
`collectively, these concepts. Bank accounts are regularly used in
`financial transactions, including electronic transactions, and
`banks offer overdraft protection. Although the recited claim
`elements include generic components such as “computing
`device”, “computing architecture”, and “processor,” which are
`used to perform the steps of the claimed methods for effecting
`payment, there is nothing novel or technologically innovative
`about using generic computers
`to accomplish financial
`transactions. The claims recite the use of conventional, non-
`specialized databases and processors. The claims do not, nor do
`they even claim to, improve the functioning of these generic
`computer components, or to improve any other technology or
`technical field.
`
`21. The conventional nature of the hardware is further
`
`reflected in the specification. Fig. 1 of the ’563 patent “is an
`overview of a network computing environment including the
`computerized electronic auction payment system according to
`the invention.” Ex. 1001, 5:47-49. The figure depicts “users”
`and the “Internet,” who interact with an electronic auction system
`comprising “web servers” and an electronic payment system
`comprising “databases,” a “processor,” and “memory.” These
`are generic hardware components and the specification does not
`suggest that these components add significantly more to the
`claimed inventions.
`
`Ex. 1005 ¶¶ 19–21. Specifically, we find that setting up an electronic
`payment account, obtaining pre-authorization from the account holder for
`money transfer from the account, automatically deducting funds from an
`electronic payment account, and automatically transferring any portion of
`the deducted funds are not novel. We find also that the claimed subject
`matter, as a whole, does not recite a technological feature that is novel or
`
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`unobvious. Even if the claimed method, as a whole, is novel and non-
`obvious, the use of known prior art technology to accomplish that method
`does not render the method a technological invention. Office Patent Trial
`Practice Guide, 77 Fed. Reg. at 48,764.
`
`For the foregoing reasons, we find that neither claim 1 nor claim 7, as
`a whole, recites a technological feature that is novel and unobvious over the
`prior art.
`b. Whether the Claimed Invention Solves a Technical
`
`Problem Using a Technical Solution
`Petitioner contends that the subject matter of claim 7 does not solve a
`technical problem using a technical solution, i.e., “pre-authorizing debits
`from an account (such as a bank account or a deposit account) to effectuate
`automatic payments.” Pet. 10. We agree. None of the problems with
`preexisting payment methods discussed in the ’563 patent (and noted above
`in our overview of the ’563 patent) is technical in nature. All such problems
`pertain to the nature of a fundamental business model, e.g., not requiring
`registration and pre-funding of a payment account by bidders prior to their
`participation in an electronic auction, and to other issues of human behavior,
`e.g., delay and procrastination in making payment.
`The ’563 patent includes no description of technological obstacles for
`achieving payment in real-time at the conclusion of an electronic auction, if
`the auction is conducted with registration and pre-funding of payment
`accounts by bidders prior to their participation in the auction. The
`specification does not describe any kind of technological issues presenting a
`technological problem to be solved. For instance, computerized electronic
`auction payment system 110 includes database 114, web server computer
`116 having processor 118 and memory 119, and database 120. Ex. 1001,
`17
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`CBM2017-00026
`Patent 7,512,563 B2
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`6:35–39, 9:46–56. The ’563 patent does not describe the implementation of
`any special technology in the construction and operation of these known and
`generic components. Although automatically effecting real-time payment
`from a pre-funded payment account at the conclusion of an electronic
`auction involves use of technology, it is not a technological solution that
`solves a “technological” problem.
`
`For the foregoing reasons, we find that the subject matter of claim 7
`does not solve a technical problem using a technical solution.
`Conclusion
`3.
`We conclude that the ’563 patent is a covered business method patent
`under AIA § 18(d)(1) and is eligible for review in the transitional covered
`business method patent program.
`
`Patent-Eligible Subject Matter under Section 101
`C.
`Petitioner asserts that claims 1, 6, and 7 are directed to patent-
`ineligible subject matter under 35 U.S.C. § 101. Pet. 20–55. Upon review
`of Petitioner’s analysis and supporting evidence, we determine that
`Petitioner has shown that it is more likely than not that it would establish the
`unpatentability of claims 1, 6, and 7 as being directed to patent-ineligible
`subject matter.
`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
`provision contains an important implicit exception: laws of nature, natural
`phenomena, and abstract ideas. Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
`134 S. Ct. 2347, 2354 (2014); Mayo Collaborative Servs. v. Prometheus
`Labs., Inc., 132 S. Ct. 1289, 1293 (2012); Gottschalk v. Benson, 409 U.S.
`
`
`
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`Patent 7,512,563 B2
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`63, 67 (1972) (“Phenomena of nature, though just discovered, mental
`processes, and abstract intellectual concepts are not patentable, as they are
`the basic tools of scientific and technological work.”). Notwithstanding that
`a law of nature or an abstract idea by itself is not patentable, a practical
`application of these concepts may be deserving of patent protection. Mayo,
`132 S. Ct. at 1293–94; Bilski v. Kappos, 561 U.S. 593, 610–11 (2010); and
`Diamond v. Diehr, 450 U.S. 175, 187 (1981).
`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
`of those patent-ineligible concepts.” Id. If th