Advanced Auctions LLC v. eBay Inc., No. 3:2013cv01612 - Document 81 (S.D. Cal. 2015)
Court Description: ORDER Granting 71 Motion for Judgment on the Pleadings. Signed by Judge Roger T. Benitez on 3/26/2015. (knb)
Download PDF
<![CDATA[
Advanced Auctions LLC v. eBay Inc. Doc. 81 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 ADVANCED AUCTIONS LLC, 10 11 12 13 vs. Plaintiff, EBAY INC., CASE NO. 13CV1612 BEN (JLB) ORDER GRANTING MOTION FOR JUDGMENT ON THE PLEADINGS [Docket No. 71] Defendant. 14 15 Before the Court is Defendant eBay, Inc.’s Motion for Judgment on the 16 Pleadings. (Docket No. 71.) Defendant eBay asserts that Plaintiff Advanced Auctions 17 LLC’s patent, U.S. Patent No. 8,266,000 (’000 Patent), claims unpatentable subject 18 matter under 35 U.S.C. § 101 — the abstract idea of an auction lacking any additional 19 inventive concept that would make it patent eligible. Advanced Auctions has filed an 20 Opposition and eBay has filed a Reply. (Docket Nos. 72-73.) The Court heard oral 21 argument on December 12, 2014. 22 23 BACKGROUND The ’000 Patent claims a two-mode computer-based Internet auction. During the 24 first mode, the item being sold is displayed, bids can be placed, and a user receives 25 updated information on the status of the auction by a manual request, i.e. manually 26 refreshing the page. At a predetermined set time, the auction moves into a second 27 mode. During the second mode, information about the status of the auction is updated 28 automatically without the user manually requesting the update. -1- 13cv1612 Dockets.Justia.com 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Claim 1 of the ’000 Patent recites: A method of hosting a computer-based auction over the internet, comprising: using a computer to produce information representing a webpage indicative of an electronic auction, where said webpage shows bid amounts and accepts bids over the internet; said computer producing second information as part of said information representing a webpage, said second information having a first parameter indicative of an ending time for said electronic auction; said computer also storing a predetermined set time before the ending time; prior to said set time before said ending time, said computer carrying out the auction in a first mode, in which information that represents a webpage with information about the auction is updated only based on a manual request for update received from a client over the internet and is not automatically updated; after said set time before said ending time, said computer changing a mode of carrying out the auction to a second mode, wherein said second mode, said computer automatically updating said information that represents the webpage to have new information and automatically sending said new information over the internet to each of a plurality of clients, in a way that causes said each of said plurality of clients to automatically display said new information without making a request for said new information. ’000 Patent , 10:1-29 17 18 The remainder of the claims vary this basic structure, including for example: 19 starting the second mode an hour before the end of the auction; automatically 20 refreshing only the price and highest bidder; and use of streaming video for an update. 21 DISCUSSION 22 I. Judgment on the Pleadings 23 “After the pleadings are closed—but early enough not to delay trial—a party 24 may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). “Judgment on the 25 pleadings is properly granted when, accepting all factual allegations in the complaint 26 as true, there is no issue of material fact in dispute, and the moving party is entitled to 27 judgment as a matter of law.” Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 28 2012). The standard for a Rule 12(c) motion is “substantially identical” to Rule -2- 13cv1612 1 12(b)(6). Id. 2 II. Unpatentable Subject Matter 3 Section 101 defines the subject matter eligible for patents, but “[l]aws of nature, 4 natural phenomena, and abstract ideas are not patentable.” Ass’n for Molecular 5 Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013) (emphasis added). 6 “The concepts covered by these exceptions are ‘part of the storehouse of knowledge 7 of all men . . . free to all men and reserved exclusively to none.” Bilski v. Kappos, 561 8 U.S. 593, 602 (2010) (quoting Funk Brothers See Co. v. Kalo Inoculant Co., 333 U.S. 9 127, 130 (1948)). “[T]he underlying concern is that ‘patent law not inhibit further 10 discovery by improperly tying up the future use of these building blocks of human 11 ingenuity.’” buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1352-53 (Fed. Cir. 2014) 12 (quoting Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014)). 13 Under the Supreme Court’s two-step analytical framework, the Court “first 14 determine[s] whether a claim is ‘directed to’ a patent-ineligible abstract idea.” Content 15 Extraction and Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 16 1346 (Fed. Cir. 2014) (quoting Alice Corp., 134 S. Ct. at 2355). If it is an abstract idea, 17 the Court moves to the second step, “the search for an ‘inventive concept.’” DDR 18 Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1255 (Fed. Cir. 2014) (quoting 19 Alice Corp., 134 S. Ct. at 2355). The Court “must determine whether the claims 20 contain ‘an element or combination of elements that is sufficient to ensure that the 21 patent in practice amounts to significantly more than a patent upon the ineligible 22 concept itself.’” Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 714 (Fed. Cir. 2014) 23 (quoting Alice Corp., 134 S. Ct. at 2354). 24 As explained below, the Court finds the ’000 Patent claims the abstract idea of 25 an auction and the generic computer implementation of that idea on the Internet 26 without the addition of any inventive concept. 27 A. 28 “The Supreme Court has not delimited the precise contours of the ‘abstract ideas’ Abstract Idea -3- 13cv1612 1 category.” Content Extraction, 776 F.3d at 1346 (quoting Alice Corp., 134 S. Ct. at 2 2355). Mathematical formulas and algorithms have been found to be abstract ideas 3 ineligible for patent protection under § 101, but a concept need not be a “preexisting, 4 fundamental truth” or reducible to a mathematical formula1 to constitute an abstract 5 idea. Alice Corp., 134 S. Ct. at 2355-56. “[F]undamental economic practice[s] long 6 prevalent in our system of commerce” are abstract ideas. Id. at 2356. In Alice and 7 Bilski, the Supreme Court found hedging financial risk and intermediated settlement 8 qualified as fundamental economic practices. Id. Recent decisions from the Federal 9 Circuit have built on these precedents. In buySAFE and Ultramercial, the court found 10 transaction performance guarantees and using advertising as currency were abstract 11 ideas. buySAFE, 765 F.3d at 1355; Ultramercial, 772 F.3d at 715. 12 Here, eBay argues that the claims are directed to a fundamental economic 13 practice, an auction. In opposition, Advanced Auctions seems to assert that what is 14 claimed must completely preempt the entire abstract idea, i.e. squarely match the 15 abstract idea, to be directed to that abstract idea. Similarly, Advanced Auctions also 16 argues that the claims are directed to something distinguishable from an auction.2 17 Generally, both of these arguments are more appropriately considered at the second 18 step in the search for an inventive concept. See Ultramercial, 772 F.3d at 715 (“any 19 1 In Parker v. Flook, the Supreme Court found a mathematical formula to adjust 20 alarm limits for temperature and pressure in a catalytic conversion process was ineligible and the computer implementation was conventional. Alice Corp., 134 S. Ct. 21 at 2358 (discussing Parker v. Flook, 437 U.S. 584 (1978)). However, the claims in Diamond v. Diehr were patent eligible, despite relying on a mathematical formula, 22 because additional steps — recording temperature measurements inside a rubber mold and using the measurements to repeatedly recalculate the cure time using the 23 mathematical formula — improved a technological process, i.e. added an inventive concept. Id. (discussing Diamond v. Diehr, 450 U.S. 175 (1981)). 24 2 Advanced Auctions also relies heavily on eBay’s patent activities, but eBay’s patents 25 are not before this Court and Advanced Auctions cites no authority for this Court to use eBay’s patents in the analysis of the patent actually before this Court. That eBay’s patents may also 26 be directed to an abstract idea is not at issue in this case. Additionally, the particular ways eBay has attempted to add inventive concepts in its own patents is also not an issue for this 27 Court to resolve. See McRO, Inc. v. Atlus U.S.A., No. SACV 13-1870, 2014 WL 4772196, *7 (N.D. Cal. Sept. 22, 2014) (noting the validity of a defendant’s patent was not before it and 28 reasoning that “it is hard to fault anyone for seeking patents that may turn out to be invalid where the application standards are shifting and uncertain”). -4- 13cv1612 1 novelty in implementation of an idea is a factor to be considered only in the second step 2 of the Alice analysis”); see Enfish, LLC v. Microsoft Corp., -- F. Supp. 3d --, 2014 WL 3 5661456, *5 (C.D. Cal. 2014) (“If the court finds the claim’s purpose abstract as step 4 one, it must then determine whether there is an inventive concept that appropriately 5 limits the claim such that it does not preempt a significant amount of inventive 6 activity”). 7 To the extent Advanced Auctions is arguing that its patent must claim an auction 8 with no variation to be directed to the abstract idea of an auction, the Court disagrees. 9 The inquiry at this first step is “whether the claims at issue are directed to one of those 10 patent-ineligible concepts,” i.e. an abstract idea. Alice Corp., 134 S. Ct. at 2355 11 (emphasis added). The Court must consider if the claims are “drawn to the concept of” 12 an auction. Id. at 2356 (“the claims before us are drawn to the concept of intermediated 13 settlement”). A variation on the abstract idea does not mean it is not directed to that 14 abstract idea. buySAFE, 765 F.3d at 1355 (The “narrowing of [a] long-familiar 15 commercial transaction[] does not make the idea non-abstract for section 101 16 purposes”). 17 Although the Court acknowledges that at some point what a patent claims 18 becomes different enough from the abstract idea that it is not directed or drawn to that 19 idea, that is not the case here. Contrary to Advanced Auctions assertion, the ’000 20 Patent does more than simply mention an auction. Putting aside the extensive 21 discussion of the auction in the specification, the claims substantively describe an 22 auction and make absolutely clear the ’000 Patent is directed to an auction. (’000 23 Patent, Claim 1 (“A method of hosting a computer-based auction over the internet”); 24 Claim 10 (“A method of interacting with a computer-based auction over the internet”); 25 Claim 17 (“A computer product comprising a processor and memory storing executable 26 instructions that when executed, implement a computer auction based program”)). 27 Even if the claims and specification did not explicitly identify an auction, it would still 28 be directed or drawn to the abstract idea of an auction because that is what the claims -5- 13cv1612 1 describe. See Ultramercial, 772 F.3d at 712, 715 (finding patent claimed abstract idea 2 of “using advertising as an exchange or currency” even though the claims do not 3 specifically identity it as such). 4 The two-part structure of the auction claimed also does not make the idea 5 claimed non-abstract. The claims describe a silent auction followed by live auction. 6 Whether the Court considers the claims directed to an auction or directed to a silent 7 auction followed by a live auction, the result is the same. The claims are directed to 8 an abstract idea. 9 Like hedging financial risk, intermediated settlement, or using advertising as 10 currency, an auction is a “fundamental economic practice long prevalent in our system 11 of commerce.” Alice Corp., 134 S. Ct. at 2356. The claims at issue are drawn or 12 directed to the abstract idea of an auction. Because the Court finds the claims of the 13 ’000 Patent are directed to the abstract idea of an auction, the Court must consider 14 whether the claims add an inventive concept. 15 B. 16 In Alice, the Supreme Court acknowledged that on some level all inventions rest Inventive Concept 17 upon laws of nature, natural phenomena, or abstract ideas. 134 S. Ct. at 2354. “An 18 invention is not rendered ineligible for patent simply because it involves an abstract 19 concept” because the application of an abstract concept “to a new and useful end . . . 20 remain[s] eligible for patent protection.” Id. Or put another way, is the patent claiming 21 the building blocks (ineligible) or “integrat[ing] the building blocks into something 22 more” (eligible)? Id. At this step the Court asks “what else is in the claims” beyond 23 the ineligible concept itself? Id. at 2355. The Court must “consider the elements of 24 each claim both individually and as an ordered combination to determine whether the 25 additional elements transform the nature of the claim into a patent-eligible application.” 26 Id. 27 Advanced Auctions points to ways the claims of the ’000 Patent differ from an 28 auction and argues it has made online auctions more successful and efficient by -6- 13cv1612 1 achieving a technological balance. Advanced Auctions points to the following features 2 of the claims that add the requisite inventive concept: using two-modes; starting the 3 second mode one hour before or at some other predetermined set time before the end 4 of the auction; and only updating a portion of a complete webpage. Viewing the claims 5 individually and in combination, the claims do not add an inventive concept. 6 “[T]he transformation of an abstract idea into patent-eligible subject matter 7 ‘requires more than simply stating the abstract idea while adding the words apply it.’” 8 Ultramercial, 772 F.3d at 715 (quoting Alice Corp., 134 S. Ct. at 2357). Significantly 9 more is required. Alice Corp., 134 S. Ct. at 2355. Here, the claims simply implement 10 a two-part auction, the Internet equivalent of a silent auction followed by a live auction. 11 “[G]eneric computer implementation” does not “transform that abstract idea into a 12 patent-eligible invention.” Id. at 2357. Nor does implementing the abstract idea on the 13 Internet. Ultramercial, 772 F.3d at 716 (“the use of the Internet is not sufficient to 14 save otherwise abstract claims from ineligibility under § 101”); see also Alice Corp., 15 134 S. Ct. at 2358 (finding “limit[ing] the use of the idea to a particular technological 16 environment” does not make it patent eligible). 17 Advanced Auctions characterizes the features noted above as improvements, but 18 as acknowledged in the ’000 Patent, the claims simply attempt to carry out an online 19 auction “more like a real live auction with certain refinements which improve it for use 20 on the Internet.” (’000 Patent 1:45-49.) The patent itself describes implementing an 21 existing abstract idea — an auction — refined for implementation on the Internet. 22 Two-modes does not change this. Bidders at a silent auction can look themselves to 23 see the status of bids during the first part of the auction, but when it shifts into a live 24 auction, the updates come to the bidder quicker and without request, as with an 25 auctioneer at a live auction. At some point a two-part auction must shift from the first 26 part to the second. The setting of a time for the shift is a minor variation to 27 accommodate Internet implementation. Likewise, a partial update of the web page with 28 only minimal information is also just Internet implementation of a “real live auction” -7- 13cv1612 1 where a participant would receive only the current bid price and possibly the identity 2 of the bidder. Individually and collectively these variations do not make the abstract 3 idea described patent eligible. 4 Additionally, to the extent these variations are anything more than generic 5 Internet implementation of the abstract idea, they are “‘well-understood, routine, 6 conventional activity.’” Id. at 2355 (quoting Mayo Collaborative Servs. v. Prometheus 7 Laboratories, Inc., 132 S. Ct. 1289, 1297-98 (2012). This is not sufficient. The claims 8 “must include additional features” beyond “conventional steps, specified at a high level 9 of generality.” Id. at 2355, 2357. “[I]nsignificant ‘[pre]-solution activity’ . . . is also 10 not sufficient to transform an otherwise patent-ineligible abstract idea into 11 patent-eligible subject matter.” Ultramercial, 772 F.3d at 716 (quoting Mayo, 132 S. 12 Ct. at 1298). 13 DDR Holdings does not compel a different conclusion.3 773 F.3d 1245 (Fed. 14 Cir. 2014). In DDR Holdings, the court found the claims were patent eligible under § 15 101. “[T]he claimed solution [was] necessarily rooted in computer technology in order 16 to overcome a problem specifically arising in the realm of computer networks.” Id. at 17 1257. When a consumer clicks on a third-party advertisement on a host website, the 18 consumer is directed to an automatically generated hybrid web site instead of being 19 directed to the third-party’s website. Id. at 1257. The hybrid website looks like the 20 host page, but contains the third-party’s product information associated with the 21 advertisement. Id. at 1257. This allows the host to retain the consumer rather than 22 losing them to the third-party’s website. Id. 23 DDR Holdings is unique among Supreme Court and post-Alice Federal Circuit 24 precedent in that the claims at issue changed “how interactions with the Internet are 25 manipulated to yield a desired result — a result that overrides the routine and 26 conventional sequence of events.” Id. at 1258. Additionally, the claims were not 27 3 The Federal Circuit issued its DDR Holdings decision after briefing on the 28 motion was complete. However, both parties address the decision’s application at oral argument. -8- 13cv1612 1 directed to implementation of a “business practice known from the pre-Internet world.” 2 Id. at 1257. 3 Advanced Auctions asserts that the claims of the ’000 Patent address bandwidth 4 constraints, a problem specific to the Internet. Advanced Auctions claims its approach 5 to an online auction minimizes server use. Requiring the user to request an update to 6 the page during the first mode conserves server use because the demand to update is 7 only triggered when the user refreshes as opposed the greater server demand associated 8 with automatic updates in the second mode. That greater demand in the second mode 9 is itself reduced when only a partial update to the page is provided. First, the Court 10 notes that the ’000 Patent does not identify server bandwidth as a problem to be solved 11 by the Patent. However, even if it were, it is only a incidental benefit to generic 12 implementation of the ’000 Patent claims. Unlike the claims in DDR Holdings, the 13 claims here do not override any routine sequence of events. The only variations on the 14 abstract idea are refinements for Internet implementation. Additionally, unlike the 15 claims in DDR Holdings, the claims here are directed to implementation of a pre16 Internet world business practice. 17 The claims in DDR Holdings also attempted to solve an Internet-specific 18 challenge, but that alone was not enough to make the claims patent-eligible. Id. at 19 1258. Relying on Ultramercial, the court specifically cautioned that “not all claims 20 purporting to address Internet-centric challenges are eligible for patent.” Id. The 21 claims here are more in line with those at issue in Ultramercial. The Ultramercial 22 court found claims describing an Internet user viewing media online in exchange for 23 requesting to view an online advertisement attempted to claim the abstract idea of 24 “using advertising as currency.” Ultramercial, 772 F.3d at 716. That this abstract idea 25 was Internet-specific did not save it because narrowing an “abstract idea to a particular 26 technological environment . . . is insufficient to save a claim.” Id. Additionally, the 27 court found the claims only added “routine additional steps such as updating an activity 28 log, requiring a request from the consumer to view the ad, restrictions on public access, -9- 13cv1612 1 and use of the Internet.” Id. These steps did “not transform an otherwise abstract idea 2 into patent-eligible subject matter.” Id. The steps recited in the ’000 Patent claims do 3 not add an inventive concept. Rather, the variations identified by Advanced Auctions 4 are more akin to routine additional steps insufficient to transform the abstract idea into 5 patent-eligible subject matter. 6 7 CONCLUSION For the reasons set forth above, the claims of the ’000 Patent are invalid as 8 patent-ineligible under § 101. The motion for judgment on the pleadings is 9 GRANTED. 10 11 IT IS SO ORDERED. 12 13 DATED: March 26, 2015 14 15 Hon. Roger T. Benitez United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28 - 10 - 13cv1612
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
