Trials@uspto.gov Paper 40
`
`571-272-7822
`Date Entered: October 16, 2015
`
`
`
`
`UNITED STATES PATENT AND TRADEMARK OFFICE
`____________
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`____________
`
`
`
`THE JEWELRY CHANNEL, INC. USA d/b/a Liquidation Channel,
`Petitioner,
`
`v.
`
` AMERICA’S COLLECTIBLES NETWORK, INC.,
`Patent Owner.
`____________
`
`Case CBM2014-00119
`Patent 8,370,211 B2
`____________
`
`
`
`
`Before LINDA M. GAUDETTE, BRIAN J. McNAMARA, and
`DAVID C. McKONE, Administrative Patent Judges.
`
`McNAMARA, Administrative Patent Judge.
`
`
`
`FINAL WRITTEN DECISION
`
`35 U.S.C. § 328(a) and
`37 C.F.R. § 42.73
`
`
`
`
`
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`
`BACKGROUND
`
` On October 20, 2014, we entered a Decision to Institute a covered
`
`business method patent review of U.S. Patent 8,370,211 B2 (“the ’211
`
`Patent”) on the grounds that claims 1–39 of the ’211 Patent do not recite
`
`patentable subject matter under 35 U.S.C. § 101. Paper 10 (“Dec. to Inst.”).
`
`Patent Owner has also filed a contingent Motion to Amend. Paper 22
`
`(“Mot. to Amend”). In this final written decision, we conclude that claims
`
`1–39 are unpatentable under 35 U.S.C. § 101. We also conclude that the
`
`claims proposed in the Motion to Amend are unpatentable under 35 U.S.C.
`
`§ 101 and deny the Motion to Amend.
`
`THE ’211 PATENT (EXHIBIT 1001)
`
`Although entitled “Computer System,” the ’211 Patent is drawn to a
`
`method of conducting a telephone- or Internet-based (“Web”) reverse
`
`auction, where the reverse auction is transmitted to users on a medium.1 Ex.
`
`1001, Abstract. The ’211 Patent states that the objective of the invention is
`
`to mitigate problems with existing reverse auction systems, including the
`
`length of time it takes a party to complete the registration procedure,
`
`limitations resulting from using dedicated telephone numbers to distinguish
`
`between offered products, potential overselling and underselling of products,
`
`and the associated need to monitor each call throughout its duration to avoid
`
`targeting a purchasing customer with offers for unsold products. Ex. 1001,
`
`col. 1, l. 51–col. 2, l. 21.
`
`The ’211 Patent discloses a computer-based system using a call center
`
`or a website, with a processor and databases, e.g., a call database, a customer
`
`
`1 Claims 1–34 and 36–39 recite a method; claim 35 recites a corresponding
`apparatus, i.e., a computer system for conducting a reverse auction of units.
`
`
`
`2
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`database, an order database, and a game database, as well as a telephone
`
`lookup system, a broadcast graphics computer, and a delivery system. Id. at
`
`col. 6, ll. 16–40. The game database maintains historical records. Id. at
`
`col. 8, ll. 54–56. The reverse auction, or game, is conducted by a TV
`
`producer, which may be a person or may be an automated computer. Id. at
`
`col. 8, ll. 15–27, 39–41. After accessing a product database, the producer
`
`enters a quantity of units for a selected product and begins the reverse
`
`auction. Id. at col. 8, ll. 51–56.
`
`A monitoring process provides the human or automated TV producer
`
`“preliminary indicators” concerning the likelihood of a sale of a unit and
`
`eventual finalized allocation to a user. Id. col. 10, ll. 10–16. The ’211
`
`Patent identifies the following preliminary indicators: the number of calls
`
`received, the number of callers indicating they wish to place an order (e.g.,
`
`indicated by pressing ‘1’ on the telephone), the number of calls that have
`
`been answered, and the calls that have completed the purchase confirmation
`
`process. Id. at col. 10, ll. 10–15. Using the preliminary indicators, the
`
`human or automated producer can determine whether to reduce the unit
`
`price, e.g., when the number of units sold is fewer than desired, or reduce the
`
`quantity of available units. Id. at col. 10, ll. 16–45. Using the preliminary
`
`indicators and historical information about the product or caller, the
`
`producer need not wait for sales confirmation to take action, thereby
`
`reducing the number of callers in the queue with little chance of winning a
`
`unit purchase and improving the efficiency of the auction by reducing the
`
`amount of time spent on a product for which no more units are available.
`
`Id. at col. 10, ll. 46–57. The producer can apply any or all of these
`
`preliminary indicators based on personal experience, personal instinct,
`
`
`
`3
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`stored records, or using automatic algorithms based on past games in the
`
`games database. Id. at col. 10, l. 58–col. 11, l. 18. In the case of a Web
`
`auction, the producer makes use of a site’s “shopping cart” feature as a
`
`preliminary indicator and the check-out process. Id. at col. 11, l. 54–col. 12,
`
`l. 11.
`
`ILLUSTRATIVE CLAIM
`
` 1. A method of conducting a telephone based reverse
`auction for selling units where the reverse auction is
`transmitted to users on a medium by a system, the
`method comprising the steps of:
`providing a number of units for sale and storing a
`preliminary available quantity in an allocation
`database initially indicative of the number provided for
`sale;
`providing a telephone number to which calls from callers
`can be placed to enter the reverse auction;
`recording the time at which one or more calls were
`received on the telephone number in a call record in a
`call database;
`placing each caller into a queue and assigning them to a
`call operator or the system in order to sell a unit;
`conducting a reverse auction in which the system reduces
`the indicated price of a unit over time and reduces the
`preliminary available quantity, wherein the
`preliminary available quantity is reduced based at least
`partly on one or more preliminary indicators
`associated with the caller, and wherein the reducing of
`the preliminary available quantity occurs before a sale
`of a unit is completed;
`concluding the reverse auction at a time the preliminary
`available quantity is reduced to a pre-determined
`number; and
`storing in an auction database the price at the conclusion
`of the auction.
`
`
`
`4
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`
`CLAIM CONSTRUCTION
`
`Petitioner contends that, under the broadest reasonable interpretation
`
`standard, the claim terms should be given their ordinary meaning and that no
`
`terms need be construed. Pet. 23–25. Patent Owner agrees that for purposes
`
`of this proceeding, there are no terms in the claims of the ’211 Patent that
`
`require construction. Thus, we apply the ordinary meaning to the terms used
`
`in the claims.
`
`§ 101 SUBJECT MATTER ELIGIBILITY
`
`The only issue before us in this proceeding is Petitioner’s assertion
`
`that the claims of the ’211 Patent recite subject matter that is not patentable
`
`under 35 U.S.C. § 101. Patent Owner argues that the statute does not permit
`
`patentable subject matter challenges in covered business method patent
`
`review. PO Resp. 62–69. The Federal Circuit resolved this issue in Versata
`
`Development Group, Inc. v. SAP America, Inc., 793 F. 3d 1306,1330 (Fed.
`
`Cir. 2015), stating “[w]e agree with the USPTO and . . . we so hold that,
`
`looking at the entirety of the statutory framework and considering the basic
`
`purpose of CBM reviews, the PTAB acted within the scope of its authority
`
`delineated by Congress in permitting a § 101 challenge under AIA § 18.”
`
` To determine whether a patent claims ineligible subject matter, we
`
`engage in a two-step process: first, we determine whether the claims at issue
`
`are directed to a patent ineligible concept, i.e., laws of nature, natural
`
`phenomena, or abstract ideas; at step two, we examine the elements of the
`
`claim to determine whether it contains an inventive concept sufficient to
`
`transform the claimed abstract idea into a patent-eligible application. Alice
`
`Corp. v. CLS Bank Int’l., 134 S. Ct. 2347, 2355–56 (2014).
`
`
`
`5
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`Petitioner contends that the patent ineligible abstract idea claimed in
`
`the ’211 Patent is “reducing a price and reducing a quantity in a reverse
`
`auction, based on preliminary indicators.” Pet. 28. Patent Owner argues
`
`that “[t]he underlying idea of the ’211 Patent is that of a reverse auction,”
`
`PO Resp. 21, 38–40, and that the “primary inventive concept of the ’211
`
`Patent is the use of preliminary indicators to reduce a preliminary available
`
`quantity of products before a sale of a unit is completed,” id. at 23. Thus,
`
`Patent Owner argues that the use of preliminary indicators to reduce the
`
`quantity of product available before a sale of a unit is completed is not part
`
`of the abstract idea, but instead represents an inventive concept that adds
`
`significantly more to the underlying abstract idea of a reverse auction,
`
`thereby transforming the claimed abstract idea into a patent eligible
`
`application. Id. at 44–51.
`
`In support of its argument, Patent Owner cites the testimony of
`
`Dr. David C. Wyld (Ex. 2012 “Wyld Decl. 2”) stating that the additional
`
`features disclosed and claimed in the ’211 Patent, such as the identification
`
`and use of preliminary indicators in any manner, and particularly to reduce
`
`an available quantity before the sale of an item is completed, are not part of
`
`the underlying idea. Id. at 40–41, 45–46 (citing Wyld Decl. 2 ¶¶ 43–47).
`
`Patent Owner also cites the deposition testimony of Petitioner’s witness,
`
`Andrew Glasspool, arguing that nowhere does Mr. Glasspool add the
`
`additional element of “using preliminary indicators” to define the abstract
`
`idea of the ’211 Patent. Id. at 42–45.
`
`Petitioner responds that the claimed inventive use of preliminary
`
`indicators is itself an abstract idea. Pet. Reply 12. Although not conceding
`
`that the claimed use of preliminary indicators is inventive, Petitioner argues
`
`
`
`6
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`that even the addition of novel or non-routine components to the claimed
`
`idea does not necessarily turn an abstraction into something concrete.
`
`Pet. Reply 12 (citing Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715
`
`(Fed. Cir. 2014); Dell Inc. v. Disposition Servs. LLC, Case No. CBM2013-
`
`00040, slip op. at 12 (PTAB Jan. 9, 2015) (Paper 15) (“Even assuming that
`
`the methods and systems are not taught in the prior art, that is not dispositive
`
`because even a novel and nonobvious claim directed to a purely abstract idea
`
`is patent ineligible.”)). At the trial hearing, Petitioner argued that whether
`
`the claims are considered to constitute a single abstract idea, or a
`
`combination of two abstract ideas, i.e., a reverse auction and the use of
`
`preliminary indicators to reduce available quantity, they do not recite patent
`
`eligible subject matter. Tr. 54–55, 62.
`
`Independent method claim 1 is drawn to a telephone-based reverse
`
`auction. Independent system claim 35 is drawn to a computer system for
`
`conducting a reverse auction. Independent method claim 36 is drawn to
`
`selling units on television by a system using a reverse auction. Independent
`
`method claim 39 is drawn to an Internet-based reverse auction. The auction
`
`is conducted by a producer. Ex. 1001, col. 8, ll. 23–26. The producer can be
`
`a person, who makes adjustments based on the producer’s recollection of the
`
`caller’s history, or automatic algorithms may be employed. Id. at col. 8, ll.
`
`24–26, col. 11, ll. 4–18. All of the independent claims recite the use of
`
`preliminary indicators, but are not limited to specific preliminary indicators.
`
`The preliminary indicators identified in the specification include the number
`
`of calls received by the auction, indications of the willingness of a customer
`
`calling in to the auction to place an order, e.g. by pressing “1,” and the
`
`presence of a customer’s information, e.g., credit card information, in a
`
`
`
`7
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`database of corresponding telephone numbers. Id. at col. 9, ll. 13–col. 10, l.
`
`22. In practice, pressing “1” is the most commonly used preliminary
`
`indicator that the customer is willing to pay the price being offered at that
`
`point in the auction, causing the producer to reduce the available quantity by
`
`the number of units the customer is willing to purchase at that price. Id. at
`
`col. 10, ll. 65–67.
`
`The transaction with the customer is not completed at that point,
`
`however, because the producer may lower the price further based on the
`
`preliminary indicators, e.g., an insufficient number of calls or products sold,
`
`to encourage other customers to make a purchase. Id. at col. 10, ll. 15–26,
`
`38–40, 65–67; Tr. 45–48. Thus, completion of the transaction is deferred
`
`until a predetermined number of remaining units is reached, e.g., there are
`
`no units left, or the producer is unwilling to reduce the price further to entice
`
`more buyers to purchase the remaining units. Id. at col. 11, ll. 32–43. When
`
`a final price is reached and stored, the customer transactions are completed.
`
`Id. at col. 11, ll. 38–42; Tr. 47–48. The producer is prevented from
`
`reducing the quantity below the start quantity less total calls received less
`
`orders in the game on the website. Ex. 1001, col. 11, ll. 24–28. Thus,
`
`during the reverse auction, the producer, whether a human or a machine,
`
`tests customer response to various price offers and adjusts the price
`
`accordingly, in order to sell the available units of product.
`
`
`
`8
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`In OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359 (Fed. Cir.
`
`2015)2, claims drawn to testing a plurality of prices, gathering statistics
`
`generated about how customers reacted to the offers testing the price, using
`
`the data to map the demand curve for a given product, and automatically
`
`selecting and offering new prices based on the estimated outcome, were
`
`found to recite ineligible subject matter. Id. The court noted that the
`
`concept of “offer based pricing” is similar to other fundamental economic
`
`concepts found to be abstract ideas by the Supreme Court. OIP Techs., 788
`
`F.3d at 1362. Patent Owner argues that in OIP the Federal Circuit found the
`
`claims unpatentable, because the claim limitations did not provide a
`
`meaningful limitation on the abstract idea. Paper 39 (“PO Suppl. Brief”) 1–
`
`2. Patent Owner argues that in the ’211 Patent, the limitations of: 1) using
`
`preliminary indicators; 2) reducing the preliminary available quantity based
`
`at least partly on one or more preliminary indicators; and 3) reducing the
`
`preliminary available quantity before a sale of a unit is completed are all
`
`meaningful limitations that add “significantly more” to the abstract idea of a
`
`reverse auction. Id. We disagree.
`
`In the ’211 Patent, the producer tests a plurality of prices throughout
`
`the auction. Preliminary indicators, e.g., the number of customers who press
`
`“1” to place an order at a particular price, provide statistics about how
`
`customers reacted to the offers at various test prices. In the ’211 Patent, the
`
`producer adjusts the demand curve by reducing the quantity available based
`
`
`2 OIP was decided on June 15, 2015, shortly after Patent Owner filed its
`Reply to Petitioner’s Opposition to the Motion to Amend (Paper 28, “Opp.
`to Mot. to Amend”), and a month before the oral hearing in this proceeding.
`At our request, the parties filed post-hearing briefs on October 1, 2015, to
`address the implications of OIP. Paper 37 (“Petitioner’s Suppl. Brief”) and
`Paper 39 (“PO Suppl. Brief”).
`
`
`
`9
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`on customers’ reactions to the various price offers, and selects new prices
`
`based on the estimated outcome, i.e., expectations that additional customers
`
`will purchase units as the price is lowered. The ’211 Patent claims recite
`
`that these steps occur before the actual sale of an item being auctioned.
`
`Further evidence that the ’211 Patent adjusts the demand curve is
`
`provided by Patent Owner’s witness Dr. Wyld, who states that in an MSIRA
`
`system, such as that in the ’211 Patent, the critical task of managing
`
`aggregate demand involves determining the true interest of potential buyers
`
`completing purchases at the clearing price and allowing enough items to
`
`remain for sale to all winning bidders. PO Resp. 13–14 (citing Wyld Decl. 2
`
`¶¶ 34, 40, 41). Thus, a preliminary indicator, such a customer pressing “1,”
`
`provides statistics that inform the auction producer about how to adjust the
`
`offering price presented to potential customers. In OIP the court discussed
`
`“the claims’ recitation of ‘present[ing] [offers] to potential customers’ and
`
`‘gathering . . . statistics generated during said testing about how the potential
`
`customers responded to the offers,’” concluding that “[t]hese processes are
`
`well-understood, routine, conventional data-gathering activities that do not
`
`make the claims patent eligible. . . . [T]he addition of steps to test prices and
`
`collect data based on customer reactions does not add any meaningful
`
`limitations to the abstract idea.” OIP Techs., 788 F.3d at 1363–64 (citations
`
`omitted). The claims of the ’211 Patent recite a patent ineligible abstract
`
`idea, similar to the offer-based pricing claims the Federal Circuit found
`
`ineligible in OIP.
`
`In OIP, the court further noted that, beyond the abstract idea of offer-
`
`based pricing, the claims merely recited well-understood, routine,
`
`conventional activities either by requiring computer activities or routine data
`
`
`
`10
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`gathering steps, stating “[a]t best, the claims describe the automation of the
`
`fundamental economic concept of offer-based price optimization through the
`
`use of generic-computer functions.” Id. Thus, considered individually or as
`
`an ordered combination, the claim elements in OIP did not transform the
`
`claimed abstract idea into a patent eligible process. Id. Similarly, in the
`
`’211 Patent, the remaining claim elements involve a conventional system
`
`interface, e.g., providing a website or a call-in telephone number and placing
`
`callers into a queue, routine data gathering, e.g., recording the time an
`
`inquiry enters the queue and storing the preliminary quantity of units in a
`
`database, and routine calculations, e.g., subtracting from the stored
`
`preliminary quantity of available units based on the number of customers
`
`who indicate they are prepared to make a purchase.
`
`“To impart patent-eligibility to an otherwise unpatentable process
`
`under the theory that the process is linked to a machine, the use of the
`
`machine ‘must impose meaningful limits on the claim’s scope.’”
`
`Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed Cir.
`
`2011) (quoting in re Bilski, 545 F.3d 943, 961 (Fed. Cir. 2008)). As
`
`discussed above, the remaining limitations of the independent claims of the
`
`’211 Patent recite data gathering or other elements that do not impose such
`
`meaningful limits on the claims’ scope.
`
`OIP also demonstrates that the claimed “inventive concept” argued by
`
`Patent Owner is simply the application of the well-known offer-based
`
`pricing principles. Thus, even applying Patent Owner’s separate concept
`
`analysis, the claims do not recite an inventive concept that would transform
`
`a reverse auction into patent eligible subject matter. Therefore, applying
`
`either Petitioner’s or Patent Owner’s approach to identifying the claimed
`
`
`
`11
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`abstract concept and inventive subject matter, we reach the same conclusion,
`
`i.e., that the claimed subject matter is ineligible under 35 U.S.C. § 101.
`
`Petitioner also argues that the claims recite ineligible subject matter
`
`because the ’211 Patent Specification states that the producer conducting the
`
`auction can carry out the purported inventive concept mentally and notes
`
`that Patent Owner’s witness, Dr. Wyld, in his deposition testimony
`
`acknowledges the inventive concept can be carried in a person’s mind.
`
`Pet. 13–17, 23–31; Pet. Reply 6–11 (citing Ex. 1001, col. 8, ll. 24–36, 39–
`
`41; col. 10, 16–20, ll. 38–45; col. 11, ll. 10–17; Ex. 1008, 149, 151–53, 198,
`
`200–01, 244–47). In response to questioning by Patent Owner’s counsel,
`
`Dr. Wyld testified that all of the claims of the ’211 Patent require a system,
`
`as opposed to a human, to carry out at least some of the steps, and that the
`
`steps of claim 1 cannot be performed entirely within the human mind or
`
`using pen and paper. Ex. 1008, 198, 245–46. However, the ’211 Patent
`
`Specification makes clear that “[t]he TV producer 24 can either
`
`automatically [make] use of these preliminary indicators of sale (or in the
`
`case of a confirmed purchase confirmed indicator of sale), or a human TV
`
`producer 24 can do so manually.” Ex. 1001, col. 10, ll. 16–20. See
`
`Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d at 1370, 1373 (“In
`
`finding that the process in Benson was not patent-eligible the Supreme Court
`
`appeared to endorse the view that methods which can be performed
`
`mentally, or which are the equivalent of human mental work, are
`
`unpatentable abstract ideas – the basic tools of scientific and technological
`
`work that are open to all.”) (holding that “a method for verifying the validity
`
`of a credit card transaction over the Internet” was directed to an abstract idea
`
`or unpatentable mental process).
`
`
`
`12
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`Petitioner cites Cyberfone Systems LLC v. CNN Interactive Group,
`
`Inc., 2014 WL 718153 at *2 (Fed. Cir. Feb. 26, 2014) (nonprecedential) for
`
`the proposition that human mental work and well-established fundamental
`
`ideas have been found to abstract concepts, not eligible for patent protection.
`
`Pet. 26, 37 Patent Owner, in response, notes that all Cyberfone says is that if
`
`a method can be performed by the human mind alone, the method is not
`
`patentable. PO Resp. 56 (citing Cyberfone, 2014 U.S. App. LEXIS 3599, at
`
`*7). Patent Owner contends that none of the 39 claims in the ’211 Patent
`
`can be performed by the human mind alone. Id. In context, Cyberfone
`
`reads:
`
`Although methods that can be performed in the human mind
`alone are not eligible for patent protection, Cybersource, 654
`F.3d at 1373, the category of patent-ineligible abstract ideas is
`not limited to methods that can be performed in the human
`mind. See Bilski, 130 S. Ct. at 3230 (“[T]he prohibition against
`patenting abstract ideas ‘cannot be circumvented by attempting
`to limit the use of the formula to a particular technological
`environment’ . . . .” (quoting Diamond v. Diehr, 450 U.S. 175,
`191–92 (1981))).
`
`Cyberfone at *8. Thus, Cyberfone makes clear that methods that cannot be
`
`performed in the human mind alone nevertheless may be ineligible for patent
`
`protection. In Cyberfone the court found that, like the telephone in the
`
`claims of the ’211 Patent, “the ‘telephone’ recited in claim 1 is not a specific
`
`machine, and adds nothing of significance to the claimed abstract idea.”
`
`Cyberfone at *9. Patent Owner’s position is that the inventive concept in the
`
`’211 Patent is the use of preliminary indicators to reduce the quantity of
`
`products available before completing a sale. PO Resp. 23. As discussed
`
`above, the ’211 Patent discloses that a human producer can perform this
`
`process mentally and the remaining claim elements do not provide
`
`
`
`13
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`meaningful limitations on the scope of the claim. Thus, regardless of
`
`whether a human producer can carry out the method in his mind alone or
`
`requires ancillary equipment to carry out the method, claims 1–39 of the
`
`’211 Patent do not recite patent-eligible subject matter.
`
`Patent Owner argues that if the patent claim does not preempt in all
`
`fields where the underlying idea would be used, the claims should be patent
`
`eligible. PO. Resp. 35 (citing Alice, 134 S. Ct. at 2354 (quoting Bilski v.
`
`Kappos, 561 U.S. 593, 561 (2010))). Patent Owner contends that the claims
`
`do not preempt all methods and systems for conducting a reverse auction,
`
`but relate only to a “single practical application,” i.e., the MSIRA type of
`
`auction, “conducted using very specific things in a very specific way,
`
`namely preliminary indicators used to reduce a preliminary available
`
`quantity and reducing that quantity before a sale of a unit is completed.” PO
`
`Resp. 61. The claims of the ’211 Patent preempt an MSIRA auctioneer from
`
`removing a product from the available product pool when a prospective
`
`buyer meets criteria that give the producer confidence the customer will
`
`complete a purchase. Patent Owner argues that this approach is an
`
`improvement over conventional MSIRA auctions in which the seller waits to
`
`complete the sale of each item before offering another item for sale. Id. at
`
`14–15.
`
`As discussed above, in OIP the Federal Circuit determined that claims
`
`drawn to automated, offer-based pricing do not recite patentable subject
`
`matter. In Bilski, the Court found unpatentable subject matter in claims that
`
`“attempt to patent the abstract idea of hedging risk in the energy market and
`
`then instruct the use of well-known random analysis to help establish some
`
`of the inputs into the equation.” Bilski, 561 U.S. at 612. In the context of
`
`
`
`14
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`an automated reverse auction of more than one unit of a product, claims
`
`drawn to removing a unit from those available for purchase after the seller
`
`becomes confident the customer will buy that unit at the offered price, or a
`
`more favorable price, are drawn to an abstract idea that preempts setting
`
`aside product units for customers as the auction progresses. In addition, as
`
`Petitioner notes, in the case of an abstract idea, the absence of preemption
`
`does not necessitate a finding of patentable subject matter. Pet. 14 (citing
`
`Bank of Am., N.A. v. Intellectual Ventures I LLC, Case No. CBM2014-
`
`00028, slip op. at 20 (PTAB May 18, 2015) (Paper 52).
`
`Petitioner argues claims 2–34, which depend directly or indirectly
`
`from claim 1 and claims 37 and 38, which depend from claim 36, do not
`
`recite meaningful limitations that would provide patent-eligible subject
`
`matter under 35 U.S.C. § 101. Pet. 37–41, 43–44. Patent Owner does not
`
`direct its arguments to the dependent claims. We conclude that Petitioner
`
`has demonstrated that dependent claims 2–34, 37, and 38 also do not recite
`
`patent-eligible subject matter for the reasons discussed above.
`
`In consideration of the above, we conclude that Petitioner has
`
`demonstrated by a preponderance of the evidence that claims 1–39 of the
`
`’211 Patent do not recite subject matter that is patent eligible under
`
`35 U.S.C. § 101.
`
`
`
`
`
`
`
`15
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`
`MOTION TO AMEND
`
`In its Motion to Amend, Patent Owner proposes claims 40–42, which
`
`“require the use of a system/computer system, an allocation database, a call
`
`database, an auction database, a call receiver, call monitoring component, an
`
`electronic call record, and an automated message.” Mot. to Amend 12–13.
`
`According to Patent Owner, a human cannot perform method steps like
`
`those of proposed claims 40–42 that require the use of such components. Id.
`
`at 13. Patent Owner repeats its arguments from the Patent Owner Response,
`
`that the underlying idea of the ’211 Patent is a reverse auction and that, even
`
`if this underlying idea is considered to be an abstract idea under Alice, the
`
`inventive concept, i.e., the use of preliminary indicators to reduce the
`
`preliminary available quantity based before the sale of a unit is completed,
`
`transforms the idea into a patent-eligible invention. Id. Patent Owner cites
`
`the testimony of Dr. Wyld in support of this position and notes that the ’211
`
`Patent covers only a single practical application of a reverse auction. Id.
`
`In opposing the Motion to Amend, Petitioner notes that Patent Owner
`
`already has asserted that original claims 36–38 require the use of a system.
`
`Opp. to Mot. to Amend 11. Petitioner also contends that Patent Owner has
`
`not argued that the newly added elements provide “significantly more” to the
`
`abstract idea of the ’211 Patent, but only that they are required in carrying
`
`out the claimed method. Id. Thus, according to Petitioner, Patent Owner’s
`
`proposed amendments do not address the § 101 problem of the original
`
`claims. Id.
`
`We addressed Patent Owner’s contentions concerning the abstract
`
`ideas and purported inventive subject matter in our discussion of claims 1–
`
`39. Additional elements such as a computer and ancillary conventional
`
`
`
`16
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`apparatus such as various databases storing information accessed by the
`
`computer, a call monitoring component that places a call into a queue and
`
`assigns the call to operator, an electronic call record that records the time the
`
`call was made, and an automated message, do not impose meaningful limits
`
`on the abstract idea of reducing the available quantity and the price during
`
`the auction based on the indicators that provide the auction producer
`
`confidence the customer will complete a purchase at that price (or a more
`
`favorable price) at the close of the auction. “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 Techs., Inc. v. Int’l Trade Comm., 601 F.3d
`
`1319, 1333 (Fed. Cir. 2010) (determining that a GPS receiver was a
`
`meaningful limit on the scope of the claims because, without the recited GPS
`
`receiver, it would be impossible to generate pseudo ranges that estimate the
`
`distance from a GPS receiver to a plurality of GPS satellites). In contrast,
`
`the limitations in the proposed amended claims recite elements of a general
`
`purpose computer that facilitate conducting a reverse auction more
`
`efficiently. Even limited to the context of an MSIRA, these added features
`
`do not limit the scope of the claim in a meaningful way because the
`
`reservation of units does not require a specific machine.
`
`Patent Owner repeats its arguments that the inventive concept test is
`
`met by the novel use of well-known customer characteristics and/or actions,
`
`employed in this narrow setting, as preliminary indicators of purchase
`
`
`
`17
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`intention. Mot. to Amend 14. We also addressed this argument in our
`
`discussion of Federal Circuit precedent in OIP in the context of claims 1–39.
`
`Finally, Patent Owner contends that no monopoly over the use of a
`
`reverse auction is granted by the ’211 Patent, because there are a multitude
`
`of activities and ways of conducting a reverse auction that remain free for all
`
`to use. Id. at 15. However, as discussed above, the claims proposed in the
`
`Motion to Amend recite additional elements that do not change the abstract
`
`nature of the claimed subject matter, i.e., setting aside units from a pool of
`
`available units when the auction producer expects the buyer will complete a
`
`sale transaction.
`
`In consideration of the above, we conclude that the proposed claims
`
`40–42 do not recite patent-eligible subject matter and the motion to amend is
`
`denied.
`
`SUMMARY
`
`In consideration of the above, we conclude that claims 1–39 recite
`
`subject matter that is not patent eligible under 35 U.S.C. § 101. We also
`
`conclude that the claims proposed in Patent Owner’s Motion to Amend
`
`recite subject matter that is not patent eligible under 35 U.S.C. § 101 and,
`
`therefore, we deny the Motion to Amend.
`
`ORDER
`
`In consideration of the foregoing, it is hereby:
`
`ORDERED that claims 1–39 are unpatentable;
`
`FURTHER ORDERED that Patent Owner’s Motion to Amend is
`
`DENIED; and
`
`
`
`18
`
`

`
`CBM2014-0119
`Patent 8,370,211 B2
`
`
`FURTHER ORDERED that, because this is a Final Written Decision,
`
`parties to this proceeding seekin