eBay, Inc. v. PAID, Inc.

Addressing the issue of patent-eligible subject matter in a covered business method (CBM) review, the Patent Trial and Appeal Board (PTAB or Board) found the challenged online action patent to be directed to ineligible subject matter. eBay, Inc. v. PAID, Inc., Case CBM2014-00125 (PTAB, Sept. 30, 2015) (Giannetti, APJ).

The Board instituted CBM review for the challenged patent after finding the claimed invention was directed to a financial product or service and not subject to the technological invention exception. The claimed invention was a shipping calculator for online auctions. The petitioner asserted the claimed subject matter was not patent-eligible.

The patent owner argued that the patent did not claim an abstract idea because it was directed to online auctions and because the petitioner relied on obviousness rather than anticipation challenges. The Board explained that an abstract idea does not become non-abstract by limiting the claimed invention to a technological environment such as the internet. The Board also found that the question of novelty is to be evaluated wholly separate from whether the invention falls into a category of statutory subject matter. The Board concluded that because conventional auctions and shipping rate calculations existed before the internet, the claims were directed to the abstract idea of determining shipping rates for an online auction item.

In terms of the technological exception, the patent owner argued that the patent claimed real-time shipping calculation, solving a new technical problem created when auctions moved to the internet. The patent owner asserted that the claims were an “internet-centric” solution. The Board, however, concluded that the claims did not reflect any form of new real-time calculation, but rather recited steps that were routinely and conventionally done manually. The Board also found that merely reciting use of the internet is not sufficient to save otherwise abstract claims from ineligibility, explaining that reference to online auctions did not make the claims “internet-centric.” Rather, the Board concluded the claims were not rooted in computer technology to solve a problem specifically arising in some aspect of computer technology, as the problem of real-time shipping calculations in conventional auctions could have been done manually, albeit at a slower speed. Thus, the Board concluded that the claimed invention was not entitled to the technological exception and that the claims were directed to ineligible subject matter.

Practice Note: Claiming conventional business methods as online does not create patentable subject matter. An internet-centric solution requires more than reference to online actions.