PTAB

CBM2017-00026

eBay Inc v. XPRT Ventures LLC

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Petition
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1. Case Identification

2. Patent Overview

  • Title: Computerized Electronic Auction Payment System
  • Brief Description: The ’563 patent discloses a computerized system and method for automatically processing payments for items won in electronic auctions or purchased via electronic commerce. The system utilizes pre-funded user payment accounts to enable immediate, pre-authorized fund transfers upon the conclusion of a transaction.

3. Grounds for Unpatentability

Ground 1: Claims 1, 6, and 7 are Unpatentable under 35 U.S.C. § 101 as Directed to an Abstract Idea

  • Prior Art Relied Upon: The petition did not rely on specific prior art patents but instead argued that the claimed concept is a long-standing, fundamental economic practice. It cited evidence of historical pre-authorization schemes, such as the Neuman Declaration (Ex. 1005), and excerpts from The Law of Electronic Funds Transfer (Ex. 1006, 1007) to establish the conventionality of the underlying business method.
  • Core Argument for this Ground: The petition’s argument followed the two-step framework established in Alice Corp. v. CLS Bank Int’l.
    • Alice Step 1 (Directed to an Abstract Idea): Petitioner asserted that the challenged claims are directed to the abstract idea of executing a pre-authorized, automatic payment from a pre-funded account upon the occurrence of a triggering event (e.g., winning an auction). This concept was framed as a fundamental economic practice analogous to escrow services or automated bill payments, which have existed for decades. Petitioner argued that limiting this practice to the context of an "electronic auction web site" or "electronic commerce web site" is merely a contextual limitation that does not render the underlying idea any less abstract. The claims were also characterized as purely functional, describing a desired outcome without specifying a particular, concrete implementation.
    • Alice Step 2 (Lack of Inventive Concept): Petitioner contended that the claim elements, viewed individually and as an ordered combination, add nothing "significantly more" to transform the abstract idea into a patent-eligible invention. The claims merely recite generic computer components—such as a "processor," "computing device," and "computing architecture"—performing their well-understood, routine, and conventional functions. These functions, including debiting funds, transferring funds, and maintaining account records, were characterized as basic electronic record-keeping insufficient to supply an inventive concept. Petitioner argued the claims do not improve the functioning of the computer itself but simply use a computer as a tool to automate a known business practice.
    • Key Aspects: A central supporting argument was that the claims preempt all effective uses of the abstract idea of pre-authorized payments in the context of electronic auctions and commerce. By claiming the fundamental steps required for any such transaction using only generic computer technology, the patent allegedly monopolizes the abstract idea itself.

4. Key Claim Construction Positions

  • Web site: Petitioner proposed that under the broadest reasonable interpretation, this term should be construed as "a computer or system connected to the Internet that maintains one or more pages on the World Wide Web." This construction was intended to reinforce the argument that the claims are directed to implementing a fundamental business practice in a generic, conventional online environment, rather than a specific, inventive technological setting.

5. Key Technical Contentions (Beyond Claim Construction)

  • Not a "Technological Invention": To establish that the ’563 patent was eligible for a Covered Business Method (CBM) review, Petitioner presented a substantial argument that the claims are not directed to a "technological invention." It asserted that the claims fail to recite any novel or unobvious technological feature and instead rely entirely on generic, off-the-shelf hardware (servers, processors, databases) to automate a financial process. The petition contended that the patent purports to solve a business problem (payment delays) rather than a technical problem, and therefore falls squarely within the scope of patents eligible for CBM review and outside the technological invention exception.

6. Relief Requested

  • Petitioner requested the institution of a Covered Business Method review and the cancellation of claims 1, 6, and 7 of the ’563 patent as unpatentable under 35 U.S.C. § 101.