The Software IP Report

Some Business Methods Are Routinely Found Patent-Ineligible

A Federal Circuit panel needed one line to agree that a claims in a business method patent were patent-ineligible under Alice Corp. v. CLS Bank Corp. and 35 U.S.C. § 101.  In America’s Collectible Network, Inc. v. The Jewelry Channel, Inc., No. 2016-1521 (Fed. Cir. Jan 11, 2017), a three judge panel (Dyk, Taranto, and Hughes) entered a per curiam order affirming the PTAB’s 2015 decision in Jewelry Channel, Inc. v. America’s Collectible Network, Inc. finding claims of U.S. Patent No. 8,370,211 invalid under 35 U.S.C. § 101.

The ’211 patent is directed to a method for a reverse auction.  Claim 1 recites:

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.

Lessons for Practice

Some business methods patents have continued to have traction in litigation, and the PTAB has at times seemed to limited the scope of what is a “Covered Business Method” patent under the America Invents Act.  Nonetheless, this case continues a trend, begun with the Supreme Court’s decision in Alice, in which both the Federal Circuit and the U.S. District Courts have had an easy time holding business method patent claims patent-ineligible under the Alice abstract idea test and 35 U.S.C. § 101.