IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`In re U.S. Patent No. 8,266,000
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`Filed: September 12, 2010
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`Issued:
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`Sep. 11, 2012
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`Inventors: Harris
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`Assignee: Advanced Auctions LLC
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`Title:
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`Real Time Auction with End Game
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`Mail Stop PATENT BOARD, PTAB
`Patent Trial and Appeal Board
`U.S.P.T.O.
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
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`DECLARATION OF SKY KRUSE
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`I, Sky Kruse, make this declaration in connection with the petition for post-
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`grant review submitted by Petitioner for U.S. Patent No. 8,266,000 (“the ‘000
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`patent”). All statements herein made of my own knowledge are true, and all
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`statements herein made based on information and belief are believed to be true. I am
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`over age 21 and otherwise competent to make this declaration. Although I am being
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`compensated for my time in preparing this declaration, the positions articulated herein
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`eBay Ex. 1002, Page 1
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`In re U.S. Patent No. 8,266,000
`
`
`
`
`
`
`
`Filed: September 12, 2010
`
`Issued:
`
`Sep. 11, 2012
`
`Inventors: Harris
`
`Assignee: Advanced Auctions LLC
`
`Title:
`
`Real Time Auction with End Game
`
`
`Mail Stop PATENT BOARD, PTAB
`Patent Trial and Appeal Board
`U.S.P.T.O.
`P.O. Box 1450
`Alexandria, VA 22313-1450
`
`
`DECLARATION OF SKY KRUSE
`
`I, Sky Kruse, make this declaration in connection with the petition for post-
`
`grant review submitted by Petitioner for U.S. Patent No. 8,266,000 (“the ‘000
`
`patent”). All statements herein made of my own knowledge are true, and all
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`statements herein made based on information and belief are believed to be true. I am
`
`over age 21 and otherwise competent to make this declaration. Although I am being
`
`compensated for my time in preparing this declaration, the positions articulated herein
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`eBay Ex. 1002, Page 1
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`are my own, and I have no stake in the outcome of this proceeding or any related
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`litigation or administrative proceedings.
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`I.
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`Background and Qualifications
`1. Appendix A to this declaration is my curriculum vitae. As shown in my curriculum
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`vitae, I have devoted my career to the field of software development and research with
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`more than a decade focused on distributed enterprise applications. I earned my
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`Bachelor of Science degree in Computer Science and Mathematics from the
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`University of Puget Sound in 1995.
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`2. I am one of the named inventors on three patents that relate to distributed live
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`auctions and bid filtering on technology developed for LiveBid.com: U.S. Patent Nos.
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`6,449,601; 7,216,103; and 8,010,415. These patents each claim priority to a patent
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`application filed on December 30, 1998.
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`3. I worked extensively in the field of online auctions in the mid to late 1990s.
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`As shown in my curriculum vitae, I co-founded LiveBid.com in 1996 and served as
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`Chief Technical Officer until its acquisition by Amazon.com in 1999. (See App. A.)
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`LiveBid.com pioneered live, event-based auctions on the Internet.
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`4. LiveBid facilitated the use of computers and the Internet as a means of
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`broadening the reach of an auctioneer and enabling auction attendees to bid at events
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`not otherwise available to them. LiveBid did not change the fundamental business
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`model of auctions. Instead, LiveBid used a new technology (the Internet) as an
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`extension or new channel of old and well known auction methods.
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`5. The auctions broadcasted from and electronically facilitated through
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`LiveBid.com operated in two modes. This process mirrored how auctions have been
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`performed for hundreds of years, and was done in order to best match the auction
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`houses’ existing business models. In a first mode, LiveBid.com’s software enabled
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`bidders to review auction catalogues and place proxy bids prior to the live-bid portion
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`of the auction. This was known as the pre-bid period. Information about the
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`auction, including pre-bids from other people, needed to be manually retrieved by the
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`participants. At some predetermined time, auctions made available through
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`LiveBid.com would enter a second mode in which the auction would be broadcast by
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`an auction house over the Internet so that online bidders could participate in live
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`auctions as if they were physically present at the venue, similarly to how remote
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`attendees could historically bid via telephone. Because the auction information was
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`being broadcast much like a live newscast, the information was provided to Internet
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`participants automatically in real time just as if the audience were present in the room.
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`6. LiveBid was an enormous success. Our first auction included the sale of the
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`Batmobile from Batman Returns for $201,000. LiveBid operated with the slogan “we
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`bring the auction to you.” We saw ourselves as being a way to watch, listen, and
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`participate in auctions from wherever you might happen to be. Other high profile
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`events included the 1998 Johnsonville sale of an entire New England town and the
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`1999 auction of the OJ Simpson estate including his Heisman trophy. The OJ
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`Simpson auction was seen by roughly 165,000 people in partnership with auctioneer
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`Butterfield and Butterfield and internet giant Yahoo! (See Ex. 1011 & Ex. 1012.)
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`A.
`Status as an Independent Expert Witness
`7. I have been retained in this matter by Oblon, Spivak, McClelland, Maier, &
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`Neustadt, L.LP. ("Oblon Spivak") to provide various observations regarding the ‘000
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`patent. I am being compensated at the rate of $530 per hour for my work. My fee is
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`not contingent on the outcome of this matter or on any of the positions I have taken,
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`as discussed below.
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`8. I have been advised that Oblon Spivak represents the Petitioner in this matter.
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`I have no direct financial interest in the Petitioner.
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`9. I have been advised that Advanced Auctions, LLC (hereinafter referred to as
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`“Advanced Auctions”) owns the ‘000 patent. I have no financial interest in Advanced
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`Auctions or the ‘000 patent. I have not ever had any contact with Advanced Auctions
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`or Scott C. Harris, the inventor of the ‘000 patent.
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`II. Materials Considered
`10. I have reviewed the ‘000 patent and its prosecution history. I have also
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`reviewed U.S. Patent No. 6,449,601 to Friedland et al. (“Friedland”; Exhibit 1003 to
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`the petition); U.S. Patent No. 5,835,896 to Fisher et al. (“Fisher”; Exhibit 1004 to the
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`petition); U.S. Patent No. 7,162,446 to Handler (“Handler”; Exhibit 1005 to the
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`petition); Kumar et al., “Internet Auctions,” Third USENIX Workshop on Electronic
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`Commerce Proceedings, Aug. 31-Sep. 3, 1998 (“Kumar”; Exhibit 1006 to the
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`petition); U.S. Patent No. 7,542,920 to Lin-Hendel (“Lin-Hendel”; Exhibit 1007 to
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`the petition); and U.S. Patent No. 6,415,270 to Rackson et al. (“Rackson”; Exhibit
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`1008 to the petition). Additionally, I have reviewed each of the following documents
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`included as exhibits to the petition:
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`Yahoo! Auctions, Butterfield & Butterfield, And Livebid.com Present
`Simultaneous Online And Live Auction Event (February 1, 1999);
`currently available online at:
`http://yhoo.client.shareholder.com/common/mobile/iphone/rel
`easedetail.cfm?releaseid=1
`O.J. Simpson Property Scores at Live Internet Auction Butterfield &
`Butterfield Sale Fetches $430,000 as Heisman Trophy Sells to East Coast
`Private Collector (February 16, 1999); currently available online at:
`http://web.archive.org/web/19990427173019/http:/auctions.yah
`oo.com/html/live/live.html
`Ralph Cassady, Jr. Auctions and Auctioneering, chs.3, 5, 7, 10, and 14
`(1967)
`LiveBid Auction Event Catalog - Colonnade Hotel (Available
`online at least as early as November 28, 1999); currently available
`online at:
`http://web.archive.org/web/19991128131709/http:/livebid.ama
`zon.com/event.php3?MID=317&auctionid=317&cbid=1
`LiveBid – Frequently Asked Questions (Available online at least
`as early as October 8, 1999); currently available online at:
`http://web.archive.org/web/19991008013628/http://www.livebi
`d.com/Help/help_faq.html
`LiveBid – Help (Available online at least as early as November 28,
`1999); currently available online at:
`web.archive.org/web/19991128171626/http:/livebid.amazon.co
`m/help.php3?cbid=1&Qid=66&Tid=18&Questi
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`Exhibit 1011
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`Exhibit 1012
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`Exhibit 1013
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`Exhibit 1014
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`Exhibit 1015
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`Exhibit 1016
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`eBay Ex. 1002, Page 5
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`Exhibit 1017
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`Exhibit 1018
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`Exhibit 1019
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`LiveBid – How LiveBid Works (Available online at least as early
`as November 28, 1999); currently available online at:
`web.archive.org/web/19991128204947/http:/livebid.amazon.co
`m/howlivebidworks.php3
`LiveBid – What makes LiveBid.com special (Available online at
`least as early as October 9, 1999); currently available online at:
`web.archive.org/web/19991009174943/http:/www.livebid.com/
`corp/whatspecial2.html
`LiveBid – Fast Facts (Available online at least as early as October
`9, 1999); currently available online at:
`web.archive.org/web/19991009102059/http:/www.livebid.com/
`corp/fastfacts.html
`LiveBid – How Absentee Budding Works (Available online at
`least as early as November 28, 1999); currently available online at:
`http://web.archive.org/web/19991128185340/http:/livebid.ama
`zon.com/howabsworks.php3?
`LiveBid Auction Event Catalog - HP Digital Art Exhibit &
`Celebrity Art (Available online at least as early as November 28,
`1999); currently available online at:
`http://web.archive.org/web/19991128101044/http:/livebid.ama
`zon.com/event.php3?MID=301&auctionid=301&cbid=1
`LiveBid Auction Lot – John F. Kennedy (Available online at least
`as early as November 28, 1999); currently available online at:
`web.archive.org/web/19991128071826/http:/livebid.amazon.co
`m/lot.php3?MID=317&auctionid=317&productid=132067&cbid
`=1
`III. The Person of Ordinary Skill in the Relevant Field in the Relevant
`Timeframe
`11. I have been informed that “a person of ordinary skill in the relevant field” is a
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`Exhibit 1020
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`Exhibit 1021
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`Exhibit 1022
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`hypothetical person to whom an expert in the relevant field could assign a routine task
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`with reasonable confidence that the task would be successfully carried out. I have
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`been informed that the level of skill in the art is evidenced by the prior art references.
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`The prior art discussed herein demonstrates that a person of ordinary skill in the art,
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`at the time the ‘000 patent was filed, was aware of various aspects of Internet-enabled
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`auctioning. Based on my experience, I have a good understanding of the capabilities
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`of a person of ordinary skill in the relevant field. I have interviewed, hired, trained,
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`supervised, directed and advised many such persons over the course of my career.
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`Background of the Art
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`IV.
`A.
`Auctions
`12. Historically, auctions have been used as an efficient means of price discovery
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`for products, goods, or services whose value are not tightly defined or which may be
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`at variance for some reason. Products that bear a specific market value may be sold
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`for less at auction during a liquidation and corresponding glut of product or discount
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`for used goods, or products particularly in demand (“water in the desert”) may bear a
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`higher price than normal.
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`13. The use of auctions as a means of efficient price discovery dates back to the
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`dawn of civilization. Early examples include marriage auctions in ancient Babylon and
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`commercial auctions in ancient Rome. ((See Ex.1013, Ralph Cassady, Jr. Auctions and
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`Auctioneering, chs.3, 5, 7, 10, and 14 (1967)). The process and utility of auctions have
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`evolved since these early times. Nevertheless, the concept of matching buyers and
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`sellers in a fashion where an optimal price point is reached competitively rather than
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`through collusion or regulatory action remains a definitive part of trade and a core
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`principle of auctioneering.
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`14. A wide variety of auction formats exist. There are a number of types of
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`auctions that were old and well known in the mid to late 1990s, but the primary
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`formats of sale were the English or “Yankee” ascending-bid auction where the
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`auctioneer raises the bid until only one bidder remains, versus the obverse Dutch
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`descending-price auction where the auctioneer opens bidding with a high price and
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`gradually decreases the asking bid until all goods are sold. (See Ex.1013, at 56-66.)
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`15. Inasmuch as auctions are a means of price discovery, the willingness for a
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`bidder to pay what a product is worth is dependent on their knowledge of the product
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`and market in question, as well as the status/condition, location, and availability of the
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`item being auctioned. Accordingly, one of the fundamental strategic devices for
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`increasing bidder participation and price efficiencies in auctions is the provision of a
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`preview period. (See Ex.1013, at 83-84.) Previews typically take the form of a catalog
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`that provides information on the product and often also an inspection period where
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`the product can be physically evaluated. (See Ex.1013 at 130.)
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`16. It was well known in 1999 for auctioneers to accept bids during the preview
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`period before a live auction commences. These early bids are known as “prebids.”
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`B. Auctions and Technology
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`17. Prior to the dawn of the Internet, auctioneers took advantage of technology
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`where it proved to be useful to them. (See Ex.1013 at 193-208.) This ranged from
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`public address systems and large screens to display lots up for bid, to remote bidding
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`facilitated by closed circuit television and telephone or teletype bidders. (See Ex.1013
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`at 193-208.) There are numerous examples from the middle of the previous century
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`of bidders remotely placing bids by teletype and phone so as to purchase a product
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`without physically attending an event. (See Ex.1013 at 193-208.) Technology was also
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`used to leave a bid with an auctioneer, or have a trusted broker or other third party
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`buy it on their behalf. (See Ex.1013 at 193-208.) In each example, auction houses
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`adopted the teletype, the telephone, and the television as broadcast and bidding
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`platforms that broaden the reach of an auctioneer without fundamentally changing
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`the operation of or business model of auctions.
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`C.
`Auctions and the Internet
`18. LiveBid was a pioneer in Internet based auctions, facilitating the use of
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`computers and the Internet as a means of allowing an auctioneer to reach a larger
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`audience and enabling auction attendees to bid at events not otherwise available to
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`them. As was the case with other technological advances, LiveBid did not change the
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`fundamental business model of auctions, but instead used a new technology (the
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`Internet) as an extension or new channel of old and well known auction methods.
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`19. As one example of how LiveBid acted as technological extension of known
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`auction methods, Exhibit 1014 is an auction catalog from 1999 that lists LiveBid
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`along with telephone, fax, and e-mail as one of several ways to participate in a live
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`auction:
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`20. The Internet Archive Wayback Machine demonstrates that the auction catalog
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`in Exhibit 1014 was available to the public at least as early as November 28, 1999.
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`However, the auction catalog was likely available in advance of the November 20,
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`1999 auction date. As such the catalog in Exhibit 1014 would have been available
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`online during a preview period, during which updated information would have been
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`provided within the web browser only upon a manual request to refresh the catalog
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`webpages. Then, at a predetermined time, bidders would have gotten access to the
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`live auction through LiveBid “as if they were with us in the hall.”
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`21. One of the initial concepts for the LiveBid service was to use streaming media
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`to broadcast auctions for mass market or entertainment purposes. The premise was
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`to provide to the auctioneer broadcast and remote observer services as a “private TV
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`channel” or “cheaper than running a phone bank to support remote bidders.”
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`However, auctioneers were largely uninterested in the broadcast or publicity end of
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`this, but were definitively interested in increasing the number of bidders that had
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`access to their auctions. Auctioneers were also unwilling to change the auction
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`process speculatively. This meant that auctioneers were primarily interested in the
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`Internet as a tool to enable access for real time bidding, as a larger pool of bidders
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`usually resulted in higher and more consistent price points.
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`22. At LiveBid.com we were focused on the traditional auction space, working with
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`the NAA (National Auctioneers Association) and looking to support a wide variety of
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`sale formats. These ranged from livestock auctions to property rights/real estate to
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`heirlooms and estates to art and décor to charity events.
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`23. In order to support auction houses and enable them to extend the reach of
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`traditional auctions, we built functionality allowing for bidders to perform the same
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`activities that they would be able to perform were they able to attend an auction in
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`person: register, preview a catalog, place and view absentee bids before an auction
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`started (or before a lot came up for bid during an auction), manage their wallet and
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`purchase history and reconcile with the auction house’s clerks, and of course the
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`ability to watch, listen, and participate during a live auction.
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`24. Exhibit 1015 is a copy of the Frequently Asked Questions section of LiveBid
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`from 1999 that describes several aspects of LiveBid. Exhibit 1015 refers to the ability
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`to preview online catalogues of auctions, register prebids, and receive notification
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`regarding the prebids. Exhibit 1015 further refers to automatically providing
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`information through an Auction Viewer on a portion (right side) of a screen that is
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`powered by Java and providing audio of the live auction streamed through a
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`RealAudio player. The Internet Archive Wayback Machine demonstrates that Exhibit
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`1015 was available to the public at least as early as October 8, 1999.
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`25. Exhibit 1016 is a portion of the LiveBid website in 1999 that discloses the live
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`broadcast aspect of LiveBid:
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`The Internet Archive Wayback Machine demonstrates that Exhibit 1016 was available
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`to the public at least as early as November 28, 1999.
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`26. Exhibit 1017 is a portion of the LiveBid website in 1999 that discloses that
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`LiveBid allowed bidders to (1) start by previewing an online catalog for upcoming
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`auctions, (2) place an absentee bid and let LiveBid manage the bidding, and (3)
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`monitor a live event. The Internet Archive Wayback Machine demonstrates that
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`Exhibit 1017 was available to the public at least as early as November 28, 1999.
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`27. Exhibit 1018 is a portion of the LiveBid website in 1999 that includes further
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`explanation of the pre-bid, live bidding, and broadcast aspects of LiveBid:
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`The Internet Archive Wayback Machine demonstrates that Exhibit 1018 was available
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`to the public at least as early as October 9, 1999.
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`28. Exhibit 1019 is a portion of the LiveBid website in 1999 that provides some
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`fast facts regarding LiveBid, including the ability to preview inventory, review auction
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`catalogues, place proxy bids prior to an event, participate in live auctions, and receive
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`information automatically via audio streaming during a live auction:
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`The Internet Archive Wayback Machine demonstrates that Exhibit 1019 was available
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`to the public at least as early as October 9, 1999.
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`29. One of the biggest draws for LiveBid users was the ability to attend auctions
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`and bid on products they would not otherwise have been able to attend. This
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`included the ability to place bids ahead of time against a preview catalog with the
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`LiveBid system. These bids would be managed by the LiveBid software, which would
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`provide response to auctioneer ask during the auction. The LiveBid server would
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`maintain awareness of absentee bids and treat them as either absolute bid amounts or
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`proxy bid maxima. This system allows a LiveBid bidder to place bids on catalog items
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`and never attend the auction either in person or virtually. Nevertheless, the bidder
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`would still be able to discover that they had not only won the products in question
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`but had done so for amounts less than the maximum they would be willing to pay.
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`30. Exhibit 1020 is a copy of the “How Absentee Bidding Works” section of
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`LiveBid from 1999 that describes some aspects of the bidding options available to
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`LiveBid users. The Internet Archive Wayback Machine demonstrates that Exhibit
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`1020 was available to the public at least as early as November 28, 1999. Some of the
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`questions and answers in Exhibit 1020 demonstrate the functionality of LiveBid,
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`including the ability to preview, submit pre-bids, and view pre-bids placed by others
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`before the live auction started, as well as later participate in a live auction:
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`31. Exhibit 1021 is a catalog of a LiveBid auction that was scheduled for October
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`26, 1999:
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`This auction includes both the ability to submit prebids or to later submit live bids.
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`The Internet Archive Wayback Machine demonstrates that Exhibit 1021 was available
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`to the public at least as early as November 28, 1999.
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`32. Exhibit 1022 is a description of a lot from of another LiveBid auction that
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`includes the ability to submit prebids as well as live bids. The Internet Archive
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`Wayback Machine demonstrates that Exhibit 1022 was available to the public at least
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`as early as November 28, 1999.
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`33. LiveBid had thus taken the traditional auction model and brought it online,
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`with the ability to both place absentee bids before an auction starts or before a lot
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`came up for sale, and the ability to participate against the crowd in real time. Given
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`that real time bidding required real time notification of the bidders, it was critical to
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`provide information as quickly as possible to that group as mentioned in above
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`optimizations for end-user speed. For absentee bids against a catalog of items, the
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`user cannot be expected to have the entire web catalog open nor to be present at
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`keyboard, so asynchronous notification was decided to be the superior choice; usually,
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`this consisted of an email notification saying “you no longer have the winning bid.”
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`This email would generally include a link to the product or lot that was bid upon, and
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`solicit the bidder to return and refresh the page so that the current bid and ask prices
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`would be refreshed, along with any further detail provided about the product in the
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`meantime.
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`D. Limits of the Internet in the 1990s
`34. Many of the initial design choices for LiveBid were based on the limitations of
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`Internet capabilities in the 1990s. These limitations included low bandwidth
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`(particularly for consumers), limited computing capability for both servers and end
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`users, and relatively restricted browser capabilities. Customers/end users were mostly
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`on dialup, with modem connections being exceedingly limited in bandwidth
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`(14.4/28.8/56.6 modems), and broadband connectivity limited to nonexistent for
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`most consumers. Real time broadcast of information was done as audio streaming,
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`audio plus pictures and text, audio plus frames of video, or for those with superior
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`bandwidth, full video.
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`35. In order to minimize the data burden on the users, LiveBid implemented a
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`separate stream of information for bids and bid responses so as to avoid having to
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`refresh the entire page unnecessarily.
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`V. The ‘000 Patent
`36. The ‘000 patent describes an automated auction process that operates in two
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`modes: a first mode in which a bidder must manually request bid information about
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`the auction; and a second mode in which the bid information is updated automatically
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`for the bidder. Ex. 1001 at Abstract; 10:1-50. The ‘000 patent claimed this dual-
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`mode automated auction as an “improvement” over pre-existing computerized
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`auction systems, like those implemented by eBay, because such auctions allegedly
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`require manual requests for bid information from a bidder, even when the end of the
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`auction is approaching. The ‘000 patent calls pre-existing Internet auctions “flawed,”
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`although its purported contribution to the state of the art is the recognition that pre-
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`eBay Ex. 1002, Page 18
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`
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`existing Internet auctions “should be carried out more like a real live auction.”
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`Id. at 1:44-49 (emphasis added).
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`37. The ‘000 patent describes its main processing feature with respect to the flow
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`chart shown below in Figure 2.
`
`
`38. Server 100 performs the steps of Fig. 2. The first step, step 200, “runs the
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`beginning part of the auction as a conventional Internet auction.” Id. at 2:29-30. In
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`this step, the auctioned item is displayed. Id. at 2:28-34. The ‘000 patent describes
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`this step as being the same as that occurring in a conventional “real” auction. Id. at
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`2:32-34.
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`
`
`
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`19
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`eBay Ex. 1002, Page 19
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`
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`39. At this time, just like in conventional systems, the ‘000 patent’s system can
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`receive bids. Id. at 2:48-49. This first mode continues until, in step 205, the system
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`detects a predetermined time, for example, one hour, prior to auction closing. Id. at
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`2:51-54. Then, in step 210, the auction mode changes to the “end game.” Id. at 2:54-
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`59. During the end game, the auction operates in “real time” and the bidders receive
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`up-to-date information automatically. Id. at 5:6-11.
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`40. For example, if a new bid beats the current bid, the system sends out a global
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`update to inform all users. Id. at 7:3-6. Also, when the auction is about to expire, the
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`system sends out a global warning message (i.e., “going . . .”). The patent explains:
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`“[t]his is like a real auction, where the auctioneer warns the audience with this key
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`word.” Id. at 7:38-47.
`
`VI.
`Claim Interpretation
`41. In the present proceeding, I have been advised that the claims are to be given
`
`their broadest reasonable interpretation in view of the specification (“BRI”) and that
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`this standard differs from the one used in district court patent litigation. I therefore
`
`understand that I am not bound by the findings of the district court. I note that my
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`conclusions below may vary if I were to apply the district court's claim construction
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`standard.
`
`
`
`
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`20
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`eBay Ex. 1002, Page 20
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`
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`VII.
`Unpatentability Based on Prior Art in the Present Proceedings
`42. I have been informed that the ’000 patent is a division of U.S. Patent
`
`Application No. 12/464,706, filed on May 12, 2009, now U.S. Patent No. 8,423,416,
`
`which is a continuation of U.S. Patent Application No. 09/780,248, filed on February
`
`9, 2001, now abandoned, which is a continuation-in-part of U.S. Patent Application
`
`No. 09/669,805, filed on September 26, 2000, now U.S. Patent No. 8,170,924, which
`
`claims the benefit of U.S. Provisional Patent Application No. 60/169,728, filed on
`
`December 8, 1999. I am further informed that this means that the ‘000 patent is
`
`considered to have been filed on December 8, 1999 for purposes of determining
`
`whether a reference constitutes prior art. Thus, a reference will qualify as prior art if it
`
`disclosed or suggested the claimed invention of the ‘000 patent prior to December 8,
`
`1999.
`
`43. I have been informed that a patent claim can be found unpatentable as obvious
`
`where the differences between the subject matter sought to be patented and the prior
`
`art are such that the subject matter as a whole would have been obvious at the time
`
`the invention was made to a person having ordinary skill in the relevant field. I
`
`understand that an obviousness analysis involves a consideration of (l) the scope and
`
`content of the prior art; (2) the differences between the claimed inventions and the
`
`prior art; (3) the level of ordinary skill in the pertinent art; and (4) secondary
`
`considerations of non-obviousness.
`
`
`
`
`
`21
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`eBay Ex. 1002, Page 21
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`
`
`A.
`Claims 1-7, 10-15, 17-21, and 23-26 are Obvious Over Friedland in
`View of Fisher
`44. It is my opinion that claims 1-7, 10-15, 17-21, and 23-26 would have been
`
`obvious to one of ordinary skill in the art over Friedland in view of Fisher. My
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`analysis of the scope and content of the prior art references follows. Additionally, I
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`have compared the prior art references with claims 1-7, 10-15, 17-21, and 23-26 of the
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`‘000 patent, noting differences, or lack thereof.
`
`45. As discussed above, our goal at LiveBid was to create a system that uses a new
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`technology (the Internet) as an extension or new channel of old and well known
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`auction methods. Based on my review of the disclosure and claims of the ‘000 patent,
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`there is nothing disclosed or claimed in the ‘000 patent that goes beyond what we did
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`at LiveBid years before Advanced Auctions filed their first patent application on
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`December 8, 1999. Advance Auction did not invent the Internet, streaming video, or
`
`develop a new way to incorporate a Java applet into a web browser. Instead, the ’000
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`patent merely incorporates Internet technology that was well known in the mid-1990s
`
`into existing auction methods.
`
`46. Friedland relates to the distributed live auction that we developed at LiveBid in
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`the mid-1990s. The auction disclosed in Friedland operates in the same two phases
`
`(or modes) that were commonplace in auctioneering at the time. In a first phase (or
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`mode), bidders, using a web browser, can review auction catalogues and place and
`
`
`
`
`
`22
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`eBay Ex. 1002, Page 22
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`
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`monitor “absentee” proxy bids prior to the live-bid portion of the auction. Users
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`could view updated absentee bidding information on the webpage only by manually
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`refreshing their browsers. At some predetermined time the auction enters a second
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`phase (or mode) in which the auction is broadcast over the Internet in real time. Put
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`differently, in the second phase, online bidders can participate in live auctions as if
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`they were physically present at the venue, similar to how remote attendees could
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`historically bid via telephone. Such a real time mode provided for viewers to watch,
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`listen, and participate in the event competitively with physical attendees. Though
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`there was usually a physical auction being broadcast in addition to the online auction
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`made available through LiveBid, that was not universally required. (c.f. Exhibit 1021.)
`
`47. The auction disclosed in Friedland and the auction methods recited in the ‘000
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`patent claims are nearly identical. Most notably, both relate to two old and well-
`
`known phases (or modes) of an auction – the prebid / preview phase (or mode)
`
`followed by the live auction phase (or mode). The only difference between the
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`particular auction disclosed as an example in Friedland and the auction methods
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`claimed in ‘000 patent is that the auction in the ‘000 patent ends at a predetermined
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`time, whereas the example auction disclosed in Friedland ends at a variable time based
`
`on bidder activity. However, swapping one type of closing event for an auction for
`
`another was not a new idea in the online auction world of the late 1990s. For
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`example, as discussed below, Fisher demonstrates that a closing event triggered by
`
`23
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`
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`eBay Ex. 1002, Page 23
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`
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`bidder inactivity was interchangeable with a closing event triggered by the expiration
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`of a fixed time. Nor was swapping one type of closing event for an auction for
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`another novel or unexpected given the historical background. Auctioneers would
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`generally have an expectation of how long their event would run and might manage
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`lot pacing to accommodate. For example, even if an event is scheduled to run for six
`
`hours, if all the lots are sold in four hours then the event de facto ends there.
`
`1.a. A method of hosting a computer-based auction over the internet,
`comprising:
`48. Friedland discloses the distributed live auction I developed with LiveBid.
`
`Specifically, the method and system disclosed in Friedland facilitate distribution of a
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`live auction over the Internet. (See, e.g., Ex. 1003 Abstract.) For example, Friedland
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`discloses “four primary modules: a client program running on a remote computer, a
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`network of collector/redistributor nodes running on the broadcaster's enterprise
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`backbone, an auction server process associated with a database where auction state
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`and persistent data are stored, and an auction console that resides at the site of the live
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`event, allowing a proxy to introduce remote bids on the floor and report status back
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`to the remote audience.” (See, e.g., Ex. 1003, 2:66-3:9; 7:61-10:12; and Figs. 3, 4.)
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`49. Accordingly, Friedland discloses a method of hosting a computer-based
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`auction over the internet.
`
`1.b. using a computer to produce information representing a webpage
`indicative of an electronic auction,
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`
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`
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`24
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`eBay Ex. 1002, Page 24
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`50. Friedland discloses using computers
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