eBay Incv.PAID, INC.

Patent Trial and Appeal Board

Sep 16, 2015

13735586 (P.T.A.B. Sep. 16, 2015)

Trials@uspto.gov Paper No. 37
571-272-7822 Entered: September 16, 2015

UNITED STATES PATENT AND TRADEMARK OFFICE
_____________

BEFORE THE PATENT TRIAL AND APPEAL BOARD
____________

EBAY, INC.,
Petitioner,

v.

PAID, INC.,
Patent Owner.
____________

Case CBM2014-00126
Patent 8,521,642
____________

Before JAMES P. CALVE, THOMAS L. GIANNETTI, and
KRISTINA M. KALAN, Administrative Patent Judges.

GIANNETTI, Administrative Patent Judge.

FINAL WRITTEN DECISION
35 U.S.C. § 328(a) and 37 C.F.R. § 42.73

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I. INTRODUCTION
A. Background
eBay, Inc. (“Petitioner” or “eBay”) filed an Amended Petition (Paper
4; “Pet.”) seeking institution of a covered business method patent review of
claims 1–21 (all claims) of U.S. Patent No. 8,521,642 (Ex. 1001; “the ’642
patent”) pursuant to 35 U.S.C. § 321. Paid, Inc. (“Patent Owner”) filed a
Preliminary Response. Paper 12 (“Prelim. Resp.”). Based on these
submissions, we instituted trial as to claims 1–21 of the ’642 patent. Paper
15 (“Institution Decision”).
After institution, Patent Owner filed a Response (Paper 22, “PO
Resp.”) and Petitioner filed a Reply (Paper 25, “Pet. Reply”). In addition,
the parties rely upon fact and expert testimony. Petitioner proffered the
Declaration of Philip Greenspun, Ph.D. (Ex. 1003, “Greenspun Decl.”) with
the Petition. Patent Owner proffered the Declaration of Alfred Weaver,
Ph.D. (Ex. 2003, “Weaver Decl.”) with its Response. In addition, a
transcript of Dr. Weaver’s deposition (Ex. 1018, “Weaver Dep.”) was
submitted by Petitioner. Petitioner relies also on a declaration of co-inventor
Richard Rotman (Exhibit 2004, “Rotman Decl.”) and a supplemental
declaration of Mr. Rotman (Ex. 2086, “Rotman Suppl. Decl.”). The Rotman
supplemental declaration includes Exhibits 2035–85, which are the subject
of a motion to exclude. See infra.
This case is related to three other proceedings before the Board,
involving related patents. These proceedings and the patents involved are
CBM2014-00125 (U.S. Patent No. 8,352,357), CBM2014-00127 (U.S.
Patent No. 7,930,237), and CBM2014-00128 (U.S. Patent No. 8,635,150).
Pet. 6. The cases were consolidated for argument but are decided separately.
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Oral Hearing for all four cases was held on June 9, 2015. A transcript of the
argument is entered in the record as Paper 36 (“Hearing Tr.”).
We have jurisdiction under 35 U.S.C. § 6(c). This Final Written
Decision is entered pursuant to 35 U.S.C. § 328(a).
For the reasons that follow, we conclude that Petitioner has
demonstrated by a preponderance of the evidence that claims 1–21 of the
ʼ642 patent are unpatentable because they are directed to patent-ineligible
subject matter under 35 U.S.C. § 101. We further conclude that Petitioner
has demonstrated by a preponderance of the evidence that claims 1–21 are
unpatentable under 35 U.S.C. § 103(a).
B. Related Matters
Petitioner states that it was sued for infringement of the’642 patent in
PAID, Inc. v. eBay Inc., No. 4:13-cv-40151-TSH (D. Mass.). Pet. 6 (citing
Ex. 1004). The complaint in that action included U.S. Patent Nos. 7,930,237
(“the ’237 patent”) and 8,352,357 (“the ’357 patent”), and was amended to
include U.S. Patent No. 8,635,150 (“the ’150 patent”). Exs. 1004, 1005.
In addition, as noted above, the Board has instituted covered business
method patent reviews of the ’357 patent (CBM2014-00125), the ’237 patent
(CBM2014-00127), and the ’150 patent (CBM2014-00128). Final Written
Decisions in those proceedings are being issued with this decision.
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C. The ʼ642 Patent (Ex. 1001)
The ʼ642 patent relates to improvements in on-line auctions.
1
The
patent discloses that conventional online auctions do not offer the buyer
complete information about the real cost of the auction. Ex. 1001, col. 4, ll.
13–15. This is because they do not specify exact shipping cost information.
Id. at col. 4, ll. 15–16. According to the ʼ642 patent, the improved auction
method and system include a shipping calculator. The shipping calculator
can prompt a potential buyer to enter information necessary to determine
shipping cost. Id. at col. 4, ll. 16–22. That information may include entry of
the ZIP code of the buyer on a screen display. When the buyer enters ZIP
code information in the ZIP code field, the buyer may initiate the shipping
calculator by clicking a display button. Id. at col. 4, ll. 22–29. The
operation of the calculator is illustrated in Figure 14 from the patent
reproduced below:

1
The patent states that the term “auction” includes situations where a seller
offers goods online via a bidding process as well as reverse auctions and
direct online product offerings. Ex. 1001, col. 2, ll. 1–6.
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Figure 14 is a flow chart of a process for generating shipping rates.
In the flowchart reproduced above, at step 1402, the system initiates a
rate engine in response to a buyer input, such as clicking on the calculator
button appearing on the computer screen. See Ex. 1001, Fig. 5. Next, at
step 1403, the system retrieves the seller shipping preferences from a data
storage facility. If multiple items are purchased, the system recognizes this
at step 1404. Id. at col. 10, l. 62–col. 11, l. 8.
At step 1407, the system queries the seller’s preferences to determine
whether the shipping rate is a fee-based rate. If so, the fee-based rate is
calculated at step 1409. If not, at step 1408, an algorithm is applied to
determine the packaging for the items to be shipped. Id. at col. 11, ll. 23–44.
At step 1410, the system determines the location of the seller and the
buyer based on data entered in interaction with the servers of the system. At
step 1412, the system calculates and stores a rate factor based on the location
of the buyer and seller. Id. at ll. 45–49.
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At step 1414, the system queries whether weight is a factor in the
calculation, and if so, the system at step 1418 calculates and stores a weight
factor for the item. At step 1420, the system queries whether taxes apply
and at step 1422, calculates and stores a tax factor. Id. at ll. 50–55.
At step 1424, the system queries whether insurance charges apply, and
if so calculates and stores an insurance factor at step 1428. At step 1430, the
system queries whether there is a handling charge by the seller and, at step
1432, the system calculates and stores a handling factor. Once all of these
factors are determined, the system calculates a rate at step 1434. Id. at ll.
55–61.
D. Illustrative Claim
Claim 1 is an independent system claim. Claims 2–9 depend, directly
or indirectly, from claim 1. Claim 10 also is an independent system claim.
Claims 11–21 depend, directly or indirectly, from claim 10.
Claim 1 is illustrative (some paragraphing added):
1. A system comprising:
a computer interface configured to enable a plurality of
remote sellers to offer at least one item for sale on a website,
wherein the plurality of remote sellers includes a first remote
seller;
a database configured to store first data comprising:
location information for the first remote seller; and
one or more shipping preferences of the first remote
seller, wherein the shipping preferences comprise any
one of, or some combination of:
(i) a flat fee, (ii) a fee set by the seller, (iii)
one or more rates charged by one or more common
carriers, (iv) a distance between the seller location
and the buyer location, (v) size of the item, (vi)
weight of the item, (vii) free shipping, and (viii)
one or more dimensions of the item;
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a database configured to store second data corresponding
to a price of a first item offered for sale by the first remote
seller;
a rate engine configured to:
(1) determine, for a remote buyer, a shipping rate
for the first item, wherein the item is offered for sale by
the first remote seller by the computer interface, by
performing the steps of:
retrieving, from the database, the first data
corresponding to the one or more shipping
preferences of the remote seller;
retrieving data corresponding to location
information for the remote buyer;
determining whether a tax is applicable for
the item that is offered for sale on the website
based, at least in part, on the location information
for the remote buyer;
if a tax is determined applicable,
determining, based on the location information for
the remote buyer, a tax factor for the first item by
further performing the steps of:
identifying, from the location information of
the remote buyer, a political division associated
with the remote buyer; and
determining a tax rate corresponding to the
political division associated with the remote buyer
for the purchase of the first item;
calculating the shipping rate of the item based at
least in part on the one or more shipping preferences of
the remote seller;
(2) provide the shipping rate to the remote buyer
computer over a network.

E. The Asserted Grounds
The following prior art is relied on by Petitioner:
1. PCT Pub. WO 01/55931 A1, published August 2, 2001 (Ex. 1011,
“Van Zandt”).
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2. Publication entitled “Sales Tax Issues in Illinois,” dated October
2001 (Ex. 1010, “Illinois Sales Tax”).
3. PCT Pub. No. WO 00/70515, published November 23, 2000 (Ex.
1012, “Hosey”).
4. Screenshots of the PriceGrabber.com Web site,
www.pricegrabber.com, obtained through the Internet Archive Web site,
also known as the Wayback Machine (Ex. 1013, “PriceGrabber.com”).
Trial was instituted on the following grounds:
1. Whether claims 1–21 are directed to patent ineligible subject matter
under 35 U.S.C. § 101;
2. Whether claims 5, 9, and 21 are unpatentable over Van Zandt and
Illinois Sales Tax under 35 U.S.C. § 103(a);
3. Whether claims 1–7, 9–17, and 19–21 are unpatentable over Hosey
and PriceGrabber.com under 35 U.S.C. § 103(a).

III. ANALYSIS
A. Claim Construction
The Board interprets claims using the broadest reasonable
construction. See Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756,
48,766 (Aug. 14, 2012); 37 C.F.R. § 42.300(b). There is a “heavy
presumption” that a claim term carries its ordinary and customary meaning.
CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002).
In instituting trial, we interpreted three claim terms. Institution
Decision 8–10. Patent Owner argues that Petitioner’s “proposed claims
constructions . . . attempt to read distinctly claimed elements out of the
claims” and should be rejected. PO Resp.10. These arguments are not
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persuasive for the reasons set forth in the Institution Decision and we,
therefore, adopt the interpretations provided there. In addition, based upon
the submissions of the parties and their respective positions regarding Van
Zandt, discussed infra, we determine that it is necessary to construe an
additional term appearing in the claims.
“shipping rate of/for the item”
Patent Owner asserts that the term “shipping rate” is “the real
shipping costs for their items” or “the exact cost of shipping an item.” PO
Resp. 32. Patent Owner contrasts this with the total cost to the buyer, which
includes, for example, item price, shipping, handling, and taxes. Id. Patent
Owner, relying on Figure 13 of the patent and the testimony of its expert, Dr.
Weaver, further defines shipping rate as “what it costs to move a package
from place to place,” in contrast with “shipping cost” or “total cost,” which
would encompass other preferences of the buyer or seller. Hearing Tr.
80:22–81:24; Weaver Dep. 67:14–22, 107:19–109:5.
Petitioner asserts that the term “shipping rate” refers to more than
transportation cost, and may also include tax, insurance, and handling. Pet.
Reply 6–7; Hearing Tr. 9:15–25. Petitioner also asserts that Patent Owner’s
expert, in his deposition, acknowledged that his definition was inconsistent
with the patent. Pet. Reply 6; Weaver Dep. 88:7–91:19.
We are not persuaded that Patent Owner’s proposed construction is
correct. Under the broadest reasonable interpretation standard, the “claims
should always be read in light of the specification and teachings in the
underlying patent.” Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292,
1297–98 (Fed. Cir. 2015) (citation and internal quotation marks omitted).
Instead, we interpret the term “shipping rate” to mean “the overall or total
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cost of sending an auction item to a buyer.” This interpretation is consistent
with the patent specification’s disclosure of shipping calculator system 1000
and its rate engine 1024 for calculating shipping rates based on various
inputs, as illustrated in Figure 10, reproduced below. Ex. 1001, col. 6, ll.
38–42.

Figure 10 shows a computer-based system with a shipping calculator.
The ’642 patent discloses that rate engine 1024 may include modules
for calculating factors that contribute to the overall shipping rate to include
shipping rate engine 1028, tax rate engine 1030, insurance rate engine 1032,
packaging algorithm engine 1033, and fee-based rate engine 1034. Id. at
col. 7, ll. 45–50. Shipping rate engine 1028 calculates a basic shipping rate
for an item based on the distance between seller and buyer locations, the
weight of the item, the weight of any packaging, and method of shipment.
Id. at col. 8, ll. 34–42. Tax rate engine 1030 determines what taxes may
apply. Id. at col. 8, ll. 43–44. Insurance rate engine 1032 calculates a cost
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of insurance to be added to the overall shipping rate based on buyer and
seller preferences. Id. at col. 8, ll. 51–55. Packaging is an important factor
in shipping cost, so packaging algorithm engine 1033 determines appropriate
packaging based on seller preferences and the size, weight, or shape of the
item and applies a factor to the shipping rate. Id. at col. 8, ll. 6–14. Fee-
based engine 1034 calculates rates based on seller inputs such as rates
charged for shipping and handling above the rates from common carriers and
may include a flat rate for shipping, or a flat rate per item shipped. Id. at col.
8, ll. 15–29.
Rate engine 1024 integrates inputs from the calculations of these other
modules and engines, and applies whatever discounts or other factors are
required if the components are not simply added, “to obtain a shipping rate
based on the various inputs.” Id. at col. 8, ll. 56–60 (emphasis added). The
’642 patent also discloses that the shipping rate may be a flat rate from fee-
based engine 1034, a rate calculated from the other engines, or a rate from a
combination of different types of calculations. Id. at col. 8, ll. 60–63. Thus,
the patent discloses that rate engine 1000 calculates a “shipping rate” that
includes not only a basic transportation cost but also many other costs that
contribute to the total cost to send an item to a buyer.
Figure 14, which is reproduced above, also illustrates this process of
determining shipping rates using system 1000. Figure 14 is described in the
patent as “a flow diagram showing a server process for generating shipping
rates for an online auction.” Id. at col. 2, ll. 52–53 (emphasis added).
The ’642 patent discloses that system 1000 determines the locations of
seller 102 and buyer 104 and calculates and stores a rate factor based on the
locations. Id. at col. 11, ll. 45–49. System 1000 also determines if weight,
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taxes, insurance charges, or handling charges apply and, if so, calculates and
stores factors for those charges. Id. at col. 11, ll. 49–61. Once all factors are
determined, system 1000 calculates a “rate” at step 1434 by a simple
addition, or by combining factors according to any algorithm used to
determine the “cost of shipping.” Id. at col. 11, ll. 62–65. Shipping may be
“free” if the buyer is within a given distance of the seller, if the order is over
$100, or if the order is within a given time frame, and system 1000 can apply
this to the overall rate. Id. at col. 11, l. 65–col.12, l. 2. Finally, system 1000
serves a rate to the buyer via rate calculator 500. Id. at col. 12, ll. 3–4.
Thus, the ’642 patent discloses a system and process that calculate a
shipping rate based on a variety of factors that include transportation costs,
packaging, weight, taxes, insurance, packaging, and seller rate preferences.
Id. at col. 8, ll. 56–60. The basic shipping rate calculated by shipping rate
engine 1028 is only one part of the shipping rate that is calculated and
provided to buyers. Id. at col. 11, l. 62–col. 12, l.2. After an auction ends,
system 1000 determines the winner and makes appropriate calculation of
“the cost of shipping, based on the winning bid, the locations of the seller
102 . . . and buyer 104 . . . ,the weight of the items, packaging factors, taxes,
and the like.” Id. at col. 9, ll. 37–45, Fig. 11; see Rotman Decl. ¶ 47; Ex.
2017, 4–5.
Interpreting “shipping rate” to mean the total cost of shipping an item
including packaging, tax, insurance, and handling also is consistent with the
problem to which the ʼ642 patent states it is directed: providing online
buyers advance information about the real shipping cost for the items that
they purchased at auction. Id. at col. 1, ll. 49–52.
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Patent Owner’s position and its expert’s testimony are, therefore,
inconsistent with the patent specification. Interpreting “shipping rate” to
include only a transportation cost to ship an item(s) and exclude other
factors such as packaging, tax, and insurance that contribute to the total
shipping rate that is presented to the buyer would undermine the problem to
be solved and would not provide an accurate estimate of the total cost to ship
an item(s).
Patent Owner’s interpretation also is inconsistent with the language of
claim 1, which recites that determining a shipping rate for an item includes
retrieving the seller’s “shipping preferences,” retrieving the buyer’s location
information, determining an applicable “tax factor” for the item, identifying
a “political division” associated with the buyer, determining a tax rate
corresponding to that political division, and calculating the shipping rate
based at least in part on “the one or more shipping preferences of the remote
seller.” Claim 10 contains similar language describing calculation of a
shipping rate. Read in light of the specification, the claims support
Petitioner’s position that “shipping rate” refers to more than just
transportation cost, but instead reflects other costs to the buyer, including
packaging, taxes, and insurance.
We are not persuaded by Patent Owner’s argument based on Figure
13. This analysis ignores the disclosures of Figures 10 and 14 showing
shipping rate to include taxes and other costs. Figure 13 is related to system
1000, depicted in Figure 10. Ex. 1001, col. 10, ll. 28–30. Patent Owner
points to nothing in the specification limiting the shipping rate calculation to
just transportation costs and excluding the other costs that system 1000
calculates and includes in the shipping rate that is presented to a buyer. In
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the absence of such a limitation, we are not restricted to that particular
embodiment in giving the claims their broadest reasonable interpretation.
Broadcom Corp. v. Emulex Corp., 732 F.3d 1325, 1333 (Fed. Cir. 2013)
(“[A]n interpretation which ‘excludes a [disclosed] embodiment from the
scope of the claim is rarely, if ever, correct.’”).
Read in light of the specification, the claims support Petitioner’s
position that “shipping rate” refers to more than just transportation cost but
instead reflects other costs to the buyer including packaging, taxes, and
insurance. Thus, we interpret the term “shipping rate” to mean “the overall
or total cost of sending an auction item to a buyer.”

B. Patentability of Claims 1–21 under 35 U.S.C. § 101
1. Overview
Section 101 of the Patent Statute (35 U.S.C. § 101) defines the subject
matter eligible for patenting. Recently, in Versata Dev. Grp. v. SAP Am.,
Inc., 793 F.3d 1306, 1330 (Fed. Cir. 2015), the Federal Circuit confirmed
that the Board is permitted to consider challenges to patentability under §
101 in covered business method patent reviews.
2. Patentability under 35 U.S.C. § 101
Section 101 of the Patent Statute defines the subject matter eligible for
patenting: “Whoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor, subject to the conditions
and requirements of this title.” 35 U.S.C. § 101.
The Supreme Court, however, has “long held that this provision
contains an important implicit exception: Laws of nature, natural
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phenomena, and abstract ideas are not patentable.” Alice Corp. Pty. Ltd. v.
CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014) (quoting Assoc. for Molecular
Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013) (internal
quotation marks and brackets omitted)). “The ‘abstract ideas’ category
embodies the longstanding rule that ‘[a]n idea of itself is not patentable.’”
Alice Corp., 134 S. Ct. at 2355 (quoting Gottschalk v. Benson, 409 U.S. 63,
67 (1972) (quotations omitted)).
In Alice Corp., the Supreme Court emphasized the importance of the
so-called “Mayo framework,” which provides “a framework for
distinguishing patents that claim laws of nature, natural phenomena, and
abstract ideas from those that claim patent-eligible applications of those
concepts.” Id. (citing Mayo Collaborative Svcs. v. Prometheus Labs, Inc.,
132 S. Ct. 1289, 1296–97 (2012)). Under the Mayo framework, “[w]e must
first determine whether the claims at issue are directed to a patent-ineligible
concept.” Id. Next, “we consider the elements of each claim both
individually and ‘as an ordered combination’ to determine whether the
additional elements ‘transform the nature of the claim’ into a patent-eligible
application.” Id. (citing Mayo, 132 S. Ct. at 1297).
Under Mayo, to be patentable, a claim must do more than simply state
the law of nature or abstract idea and add the words “apply it.” Mayo, 132
S. Ct. at 1294; Benson, 409 U.S. at 67. Furthermore, “the mere recitation of
a generic computer cannot transform a patent-ineligible abstract idea into a
patent-eligible invention.” Alice Corp., 134 S. Ct. at 2358. “Thus, if a
patent’s recitation of a computer amounts to a mere instruction to
‘implemen[t]’ an abstract idea ‘on . . . a computer,’ that addition cannot
impart patent eligibility.” Id. (internal citation omitted).
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Thus, we first analyze the claims of the ʼ642 patent to determine
whether the claims embody an abstract idea. If they do, then we proceed to
determine whether the claims are meaningfully limited to a patent-eligible
application of an abstract idea, or cover nothing more than the abstract idea
itself.
3. Claims 1–21 are Directed to an Abstract Idea
Petitioner contends that the abstract idea claimed in the ʼ642 patent is
“determining shipping and tax rates for an item for sale on a website.” Pet.
18. In our Institution Decision, we observed that this description is
consistent with the ʼ642 patent specification, which explains “a need exists
for the parties to online auctions to have access to better information in
advance about the real shipping costs for their items.” Ex. 1001, col .1, ll.
49–52; Institution Decision 17.
Patent Owner responds that the ʼ642 patent claims “‘embody, use,
reflect, rest upon, or apply’ the abstract idea of determining shipping rates.”
PO Resp. 22. Patent Owner denies, however, that the claims are “directed to
the idea itself.” Id. (emphasis omitted). Instead, Patent Owner contends:
[the claims] are directed to a specific application of the idea,
one that takes place in a specific context (an online auction)
between specific entities (a seller and a buyer) for a specific
purpose (to rapidly and accurately calculate shipping rates
based on a variety of ever-changing inputs) using a specific
series of steps involving both computer and human action
(including inputting data, receiving and storing data, making
calculations, and transmitting information online to buyers over
a computer network).
Id. (emphases omitted).
We are not persuaded by Patent Owner’s argument that the ʼ642
patent does not claim an abstract idea simply because it is directed to online
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auctions. PO Resp. 22; Hearing Tr. 56:10–12. As the Federal Circuit
recently reminded us, “[a]n abstract idea does not become nonabstract by
limiting the invention to a particular field of use or technological
environment such as the Internet.” Intellectual Ventures I LLC v. Capital
One Bank (US), 792 F.3d 1363, 1366 (Fed. Cir. 2015) (citations omitted).
We are, therefore, not convinced by Patent Owner’s argument that the
claims are not abstract because they are limited to a specific application.
Patent Owner further contends that, unlike the claims in Bilski
2
and
Alice, the ʼ642 patent’s claims “ha[ve] never before been achieved.” PO
Resp. 23. As evidence of this, Patent Owner points to the fact that
Petitioner’s prior art challenge relies on obviousness and not anticipation.
Id. at 23, n.2 (“eBay has not been able to find or assert against the claims a
single anticipatory reference.”). This argument is unavailing. As the
Supreme Court observed in Diamond v. Diehr, 450 U.S. 175, 190 (1981),
“[t]he question therefore of whether a particular invention is novel is ‘wholly
apart from whether the invention falls into a category of statutory subject
matter.”
Despite Patent Owner’s arguments to the contrary, we see little
difference between determining shipping rates and tax rates for auctioned
items and the type of fundamental economic practices considered to be
abstract ideas in Alice Corp. and Bilski.
3
As established by the record, both

2
Bilski v. Kappos, 561 U.S. 593 (2010).
3
In Alice Corp., the Supreme Court determined that the claims at issue were
“drawn to the concept of intermediated settlement,” i.e., the use of a third
party to mitigate settlement risk. Id. at 2356. Furthermore, the Supreme
Court determined that “[l]ike the risk hedging in Bilski, the concept of

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conventional auctions and shipping rate calculations existed long before the
Internet. See, e.g., Rotman Decl. ¶¶ 4–8; Greenspun Decl. ¶¶ 31–37;
Hearing Tr. 56:17–21. We conclude, therefore, that Petitioner has
demonstrated that the ʼ642 patent claims, like the claims in Bilski and Alice,
are directed to an abstract idea, namely, determining shipping rates for
online sales.
4. Claims 1–21 are Not Meaningfully Limited
The second step of the Supreme Court’s “Mayo framework” requires
that we consider the elements of the claim and determine whether there is an
“element or combination of elements that is ‘sufficient to ensure that the
patent in practice amounts to significantly more than a patent upon the
[ineligible concept] itself.’” Alice Corp., 134 S. Ct. at 2355 (quoting Mayo,
132 S. Ct. at 1294).
A challenged patent claim, properly construed, must incorporate
enough meaningful limitations to ensure that it claims more than just an
abstract idea and not just a mere “‘drafting effort designed to monopolize the
[abstract idea].’” Alice Corp., 134 S. Ct. at 2357 (quoting Mayo, 132 S. Ct.
at 1297). “Simply appending conventional steps, specified at a high level of
generality,” is not “enough” for patent eligibility. Id. (quoting Mayo, 132
S. Ct. at 1297, 1300).

intermediated settlement is ‘a fundamental economic practice long prevalent
in our system of commerce.’” Id. (citations omitted). With respect to the
first step of the “Mayo framework,” the Supreme Court concluded in Alice
Corp. that “there is no meaningful distinction between the concept of risk
hedging in Bilski and the concept of intermediated settlement” in Alice
Corp., and that “[b]oth are squarely within the realm of ‘abstract ideas’ as
we have used that term.” Alice Corp., 134 S. Ct. at 2357.
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Step two of the “Mayo framework” analysis, therefore, may be
described as a search for an “inventive concept”—i.e., an element or
combination of elements that is sufficient to ensure that the patent in practice
amounts to significantly more than a patent upon the ineligible concept
itself. Id. (citing Mayo, 132 S. Ct. at 1294).
At the final hearing, Patent Owner acknowledged that the holdings in
Bilski and Alice could not be avoided simply by showing that a computer
was involved in the patented invention. Hearing Tr. 62:12–17; 68:6–7
(“Without it being on the Internet, the claims might not be patentable.”).
Instead, Patent Owner focused its argument on the speed necessary for
processing the high volume of transactions in Internet auctions:
[THE BOARD]: What is unique to the Internet about an
auction?

[PATENT OWNER’S COUNSEL]: Your Honor, the auction
had previously been done not on the Internet. It had been done
manually, just like the Rotmans did, through mail order, maybe
in person live. Once it got moved to the Internet, once it had
been implemented on the Internet, it greatly increased the
scope, the connectability and frankly the number of transactions
that could be processed. It rendered traditional calculations
impossible. They could no longer be done.
Hearing Tr. 56:17–57:2. Patent Owner contends that when auctions moved
to the Internet, a “new problem” was created due to the need to calculate
shipping costs “in realtime.” Hearing Tr. 67:23–68:2. But that which Patent
Owner identifies as a “new problem” was already recognized in
conventional auctions, and could have in fact been handled by doing the
same calculations manually, albeit at a slower speed, before “automating”
the auction process. Ex. 1019 (“Rotman Dep.”) 127:19–128:5.
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We are not persuaded by Patent Owner’s argument for patentability
under § 101. First, the claims of the ʼ642 patent do not reflect the asserted
“inventive concept” identified by Patent Owner, namely, the ability to
calculate shipping rates and tax rates in real time. Patent Owner asserts that
the reference in the claims to an “online auction” accomplishes this.
Hearing Tr. 62:18–20. But as Petitioner points out, the claims do not recite
any form of real-time calculations. The claims simply recite steps that were
routinely done manually before the filing date of the patent. Hearing Tr.
7:16–22; Rotman Dep. 127:19–128:5. The claims, moreover, do not even
refer specifically to online auctions.
More fundamentally, however, simply adding a computer limitation to
claims covering an abstract concept, without more, is insufficient to render
the claim patentable under § 101, even if the use of a computer enables
faster operation. Bancorp Services, L.L.C. v. Sun Life Assur. Co. of Canada,
687 F.3d 1266, 1278 (Fed. Cir. 2012).
In order for the addition of a machine to impose a meaningful
limit on the scope of a claim, it must play a significant part in
permitting the claimed method to be performed, rather than
function solely as an obvious mechanism for permitting a
solution to be achieved more quickly, i.e., through the
utilization of a computer for performing calculations.
SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d 1319, 1333 (Fed. Cir.
2010). Likewise, “the use of the Internet is not sufficient to save otherwise
abstract claims from ineligibility under § 101.” Ultramercial, Inc. v. Hulu,
LLC, 772 F.3d 709, 716 (Fed. Cir. 2014). For these reasons, Patent Owner’s
argument based on meeting the asserted need for speed and other
requirements of online auctions fails.
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We are not convinced by the other arguments presented by Patent
Owner. For example, Patent Owner’s policy-based arguments invoking the
Patent Act and Supreme Court case law (PO Resp. 10–21) ignore the
Supreme Court’s holdings in Bilski and Alice and the Federal Circuit’s
recent decisions in cases such as Ultramercial and Intellectual Ventures.
Likewise, Patent Owner’s alternative argument that the claims are
meaningfully limited because they recite steps such as receiving and storing
information is unavailing. PO Resp. 24–25; Hearing Tr. 66:4–18. We are
not convinced that reciting these standard computer operations impose
meaningful limitations on the abstract idea. As the Supreme Court held in
Gottschalk v. Benson, 409 U.S. 63 (1972), claims do not become patent-
eligible under § 101 simply for reciting a known, general purpose computer.
See id. at 67 (invalidating as patent-ineligible claimed processes that “can be
carried out in existing computers long in use, no new machinery being
necessary,” or “can also be performed without a computer.”). And in Alice
Corp., the Supreme Court rejected a similar argument, determining that “the
claims at issue amount to ‘nothing significantly more’ than an instruction to
apply the abstract idea of intermediated settlement using some unspecified,
generic computer.” Alice Corp., 134 S. Ct. at 2360 (quoting Mayo, 132
S.Ct. at 1298). More recent, and to the same effect, is Ultramercial, 772
F.3d at 716: “Adding routine additional steps . . . does not transform an
otherwise abstract idea into patent-eligible subject matter.”
Nor are we persuaded by Patent Owner’s cited authorities that the
requirements of § 101 are met here. For example, Patent Owner’s reliance
on the outcome in Diamond v. Diehr, 450 U.S. 175 (1981), is misplaced.
PO Resp. 16–19. As recently explained by the Federal Circuit in Versata,
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793 F.3d at 1332–33, Diehr involved use of a well-known mathematical
equation to solve a technological problem (curing rubber) in conventional
industry practice. Here, in contrast, the problem purportedly addressed by
the ʼ642 patent, the requirement for faster shipping cost calculations in
Internet auctions, is a business need, not a technological problem.
Likewise, the Federal Circuit’s decision in DDR Holdings, LLC v.
Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), is not apposite. Hearing
Tr. 66:19–32. As explained by the Federal Circuit in Versata, DDR
Holdings “drew a distinction between the patent-eligible claims at issue and
patent-ineligible claims in the past that had merely recited commonplace
business methods aimed at processing business information, applying known
business processes to particular technological environments.” Versata, 793
F.3d at 1333.
In relying on DDR Holdings, Patent Owner asserts that moving
conventional auctions (which Patent Owner acknowledges is “something
that had been done previously”) to the Internet created “an Internet-centric
solution.” Hearing Tr. 72:10–13. This argument fails, for it ignores the
distinction made in DDR Holdings between technical solutions and claims
reciting “commonplace business methods,” such as auctions. Unlike the
claims in DDR Holdings, there is nothing in Patent Owner’s claims that
makes them “Internet-centric.” As discussed supra, the mere reference in
the claims to online auctions does not suffice. The claims “are not rooted in
computer technology to solve a problem specifically arising in some aspect
of computer technology.” Versata, 793 F.3d at 1334.
Finally, we address Patent Owner’s argument that the patents should
stand under § 101 because there is no preemption. PO Resp. 15; Hearing Tr.
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64:14–17. We are not convinced that this argument has merit. As the
Federal Circuit recently explained in Ariosa Diagnostics, Inc. v. Sequenom,
Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015), “questions on preemption are
inherent in and resolved by the § 101 analysis.” Thus, “[w]hile preemption
may signal patent ineligible subject matter, the absence of complete
preemption does not demonstrate patent eligibility.” Id. Accordingly, the
issue of preemption is “resolved” by our analysis and resolution of the § 101
issues, and Patent Owner’s separate argument based on the asserted absence
of preemption is unavailing.
In summary, Petitioner has demonstrated by a preponderance of the
evidence that the claims of the ʼ642 patent are not patentable because they
are directed to ineligible subject matter under 35 U.S.C. § 101.
C. Asserted Grounds of Unpatentability under 35 U.S.C. § 103
1. Overview
Under 35 U.S.C. § 103(a), an invention is not patentable if the
differences between the claimed subject matter 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 art to which said
subject matter pertains. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 406
(2007). The question of obviousness is resolved on the basis of underlying
factual determinations including: (1) the scope and content of the prior art;
(2) any differences between the claimed subject matter and the prior art;
(3) the level of skill in the art; and, (4) where in evidence, so-called
secondary considerations, including commercial success, long-felt but
unsolved needs, failure of others, and unexpected results. Graham v. John
Deere Co., 383 U.S. 1, 1718 (1966).
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2. Asserted Obviousness of Claims 5, 9, and 21 over Van Zandt and
Illinois Sales Tax
a. Van Zandt (Ex. 1011)
Van Zandt discloses a comprehensive logistics support service that
manages a global shipment from door-to-door for any number of vendors
and can provide buyers of products with a guaranteed, upfront landed cost
quote that includes all shipping-related costs, international duties and taxes
for the shipment. Ex. 1011, 1. Van Zandt discloses this service for
merchant-type business format 40 and also for auction-type format 50 where
a web site sponsor acts as an exchange for matching participating sellers 54
with interested buyers 42. Id. at 14
4
; Fig. 1.
The system disclosed in Van Zandt includes the following three
components: (1) landed cost shipment quote generation engine 62;
(2) shipment booking engine 64; and (3) shipment tracking engine 66. Id.
Quoting engine 62 provides a landed cost shipment quote based on item
information provided by sellers 54 for items they are selling, buyer
information, seller information, shipment costs, shipping mode, additional
shipping services, and pickup and delivery locations. Id. at 15–16; Fig. 2A.
Quoting engine 62 also determines insurance costs, duties, and taxes for the
shipment based on shipment origin and destination information, Harmonized
Tariff System (HTS) code, product size, weight, and value. Id. at 16–21;
Figs. 2F, 2G, 3. Quoting engine 62 sends the final quote to host server 30,
which uses the shipment quote to determine a total price (i.e., product
price + shipping price) to display to buyer 42. Id. at 34:23–35:10.

4
For the purposes of this Decision, we refer to the original page numbers of
the relevant documents rather than Petitioner’s inserted page numbers.
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b. Illinois Sales Tax (Ex. 1010)
Illinois Sales Tax provides “basic facts and information that surround
sales tax issues in Illinois.” Ex. 1010, 1. Specifically, Illinois Sales Tax
provides a Flow Chart for Sales Taxes to “provide some organizational
review of Illinois sales taxes and the distribution of funds.” Id. at 19. The
Flow Chart indicates that after an item is purchased, a seller must determine
if it is subject to sales taxation, and if so, if it was purchased in Illinois, from
a vendor with a nexus in Illinois, or from a vendor without a physical
presence within Illinois. Id. Illinois Sales Tax also provides a table of State
Sales Tax Rates indicating that certain states have a sales tax rate of zero.
Id. at 22.
c. Analysis
Petitioner argues that claims 5, 9, and 21 would have been obvious
over the combination of Van Zandt and Illinois Sales Tax. Pet. 54–56. In
support of this contention, Petitioner provides detailed claim charts and
expert testimony presented through the Greenspun Declaration. Ex. 1003.
Specifically, Petitioner asserts that “given the complexity of calculating
taxes for a particular transaction,” one of ordinary skill in the art “would
have been motivated to employ the flow chart of Illinois Sales Tax in the tax
calculations as taught by Van Zandt to further improve the accuracy of the
tax estimates.” Pet. 55.
Patent Owner challenges this analysis, arguing that the proposed
combination of Van Zandt and Illinois Sales Tax is “based on a faulty
assumption.” PO Resp. 29. Patent Owner claims that the only reason Dr.
Greenspun gives for combining Van Zandt with another reference such as
Illinois Sales Tax is to facilitate international shipping. Id. Therefore,
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Patent Owner argues, there is no motivation to combine these references,
because Illinois Sales Tax is not directed to international shipping, only to
shipments within the State of Illinois. Id. at 29–30.
Patent Owner attacks the evidence of motivation to combine the
references on other grounds. Citing Dr. Greenspun’s testimony to the effect
that figuring sales tax on domestic sales is challenging, Patent Owner further
argues that performing “challenging tax calculations” is “not consistent”
with the patent claims. Id. at 30. Patent Owner also argues that, by
requiring a remote buyer to consult tax tables and flow charts, a Van
Zandt/Illinois Sales Tax combination would defeat the objective of having
the server computer performing tax calculations. Id. at 30–31.
Patent Owner alleges also that the combination of Van Zandt and
Illinois Sales Tax does not meet all the claim elements. Id. at 31.
Specifically, Patent Owner argues that Van Zandt does not meet the
“shipping rate” limitation in the claims, and that Illinois Sales Tax does not
cure this deficiency. Id. at 32–33. According to Patent Owner, Van Zandt
provides the “total price,” not the shipping rate, and Illinois Sales Tax only
discloses tax calculations performed by the buyer. Id. at 32.
We are persuaded by Petitioner’s arguments that it would have been
obvious to combine Van Zandt and Illinois Sales Tax. Pet. 55. We are
convinced by Petitioner’s arguments, supported by the testimony of Dr.
Greenspun,
5
that one of ordinary skill in the would have “readily appreciated

5
Dr. Greenspun holds a Ph.D. in Electrical Engineering and Computer
Science from MIT. He has authored five computer science textbooks. He
has taught at MIT and has over 20 years of experience in computer software

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the combinability of the sales tax calculation flow chart in Illinois Sales Tax
to perform accurate tax calculations for the state of Illinois or another
jurisdiction,” including the tax and duty calculations set forth in Van Zandt.
Pet. 55 (citing Greenspun Decl. ¶ 56).
We do not credit Patent Owner’s argument limiting Van Zandt’s
teachings to international shipping. Van Zandt provides a comprehensive
logistics services system and method, including providing landed cost
quoting (62), to integrate logistics vendors “across any industry, at any time,
no matter what vendor carrier [] or mode of transportation is to be used and
no matter what country the shipment is being handled in or delivered to.”
Ex. 1011, Abstract (emphasis added). More specifically, Van Zandt states
that its system can calculate “any shipment duties and taxes.” Id. at 22:18
(emphasis added); see also id. at 32:11–17. Nothing in Van Zandt discredits
or disallows the calculation of domestic taxes as a component of its
calculation of “any shipment duties and taxes.”
We credit Dr. Greenspun’s interpretation of the Van Zandt system as
being “capable of handling the simpler task of calculating domestic taxes.”
Greenspun Decl. ¶ 54. We further credit Dr. Greenspun’s testimony that one
of ordinary skill in the art would have been motivated to combine Van Zandt
with other references “whenever international shipping was potentially
required,” and that references such as Illinois Sales Tax would allow one of
ordinary skill in the art to figure sales tax on domestic sales. Id. at ¶ 56.
The motivation to combine references can come from many sources,

engineering. Greenspun Decl. ¶¶ 3–16. We determine him to be an expert
in the field relevant to this patent and credit his testimony.
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including the nature of the problem to be solved. ABT Sys., LLC v. Emerson
Elec. Co., Nos. 2014-1618, 2014-1700, 2015 WL 4924160, at *9 (Fed. Cir.
Aug. 19, 2015) (citing Ruiz v. A.B. Chance, 357 F.3d 1270, 1276 (Fed. Cir.
2004). We determine, therefore, that Petitioner has presented sufficiently
articulated and persuasive reasoning for combining the teachings of Van
Zandt and Illinois Sales Tax that is supported by rational underpinnings.
KSR, 550 U.S. at 418.
We are not persuaded by Patent Owner’s arguments to the contrary,
including those summarized above and the additional argument that the
combination of Van Zandt and Illinois Sales Tax would require the remote
buyer to perform the tax calculations. PO Resp. 30. Van Zandt’s quoting
engine 62 determines, without apparent buyer involvement, all the duties
and taxes that may be due on the shipment, searching tax rate data tables 92
to determine the taxes for the requested shipment. Ex. 1011, 32:11–17.
Quoting engine 62 of Van Zandt searches the duty and tax look up tables to
determine the duties and taxes for shipment, and the information contained
in Illinois Sales Tax further improves the accuracy of the tax estimates.
Pet. 55.
Patent Owner does not explain why or how an automated system as
that described in Van Zandt, referencing the tax look up tables provided in
Illinois Sales Tax, would require a remote buyer’s participation. We agree
with Petitioner that “[i]t is the system of Van Zandt –– and not the buyer ––
that is performing any tax calculations.” Pet. Reply 6. Taking this into
account, as well as Dr. Greenspun’s testimony that a person of ordinary skill
would have been motivated to combine the system of Van Zandt with the tax
information from Illinois Sales Tax (Greenspun Decl. ¶ 56), we are
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unpersuaded that a remote buyer would need to perform tax calculations if
the references were combined.
We are also convinced by Petitioner’s evidence that the combination
meets the elements of the claims. Pet. 55–56. We are not persuaded by
Patent Owner’s argument that neither Van Zandt nor Illinois Sales Tax
discloses the claimed “shipping rate.” PO Resp. 32–33. This argument is
unavailing in view of our interpretation of the term “shipping rate” to mean
“the total cost of sending an auction item to a buyer.”
We are persuaded that Van Zandt calculates a total shipping cost. In
Van Zandt, if a buyer requests a shipment quote, web site 34 gathers
purchase price information from a merchant or auction database and requests
additional information from buyer 42. Ex. 1011, 15:3–16:13. Web page 36
(Online Quoting screen, Figure 3) is presented to buyer 42 to obtain this
information, which includes shipment value 246. Id. at 16:14–21:17. Once
all required information is entered, buyer 42 clicks “Quote” button 248 to
get a landed shipment quote. Id. at 21:18–20. Quoting engine 62 then adds
pre-shipment charges (e.g., packaging costs), a calculated door-to-door
freight charge, a determined insurance premium, and calculated duties and
taxes and sends the final determined quote to the requesting host server 30.
Id. at 22:14–19; 34:18–35:3, Fig. 2G (steps 170–174). Host server 30 uses
this shipment quote from quoting engine 62 to determine a total price (i.e.,
product price + shipment price) to display to buyer 42. Id. at 33:7–10.
Therefore, the combination of Van Zandt, which provides “a total price (i.e.
product price + shipment price),” and Illinois Sales Tax discloses a
“shipping rate” as we have construed the term.
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We are not persuaded by Patent Owner’s argument that Van Zandt’s
“total price” does not meet the claims because the shipment price is not
separated out. PO Resp. 32. We agree, instead, with Petitioner, that to a
person of ordinary skill, displaying the total price would include providing
an itemized list of charges. Pet. Reply 7 (citing Greenspun Decl. ¶50).
2. Asserted Obviousness of Claims 1–7, 9-17, and 19–21 over Hosey
and PriceGrabber.com
a. Hosey (Ex. 1012)
Hosey discloses an Internet ecommerce website that
“provides/enables a premier destination for retail buyers, wholesale
distributors and suppliers worldwide.” Ex. 1012, 5:12–14. Hosey provides
buyers with a listing of available products and a Details page with details of
individual products. Pet. 56–57; Ex. 1012, 15:11–18, 15:19–29. The
Details files shown in Figure 4 “hold the manufacturer information” such as
UnilWeight [sic], MPweight, Cweight, ShippingTerms, ShippingPoint1,
ShippingPoint2, and others. Ex. 1012, Fig. 4, 13:6–7; Greenspun Decl. ¶ 58.
Hosey calculates taxes, shipping, and duties automatically based on ZIP
code or country code. Ex. 1012, 10:6–7.
b. PriceGrabber.com (Ex. 1013)
Petitioner’s Exhibit 1013 is a screenshot of a page from
PriceGrabber.com, taken from the Wayback Machine, dated June 19, 2000.
Ex. 1013, 1–2, 3. Exhibit 1013 shows a table of “Retailer Price
Comparisons” for the Palm V Organizer, and in a central column allows the
buyer to “calculate ‘YOUR’ shipping, tax, and BottomLinePrice.” Ex.
1013, 1. PriceGrabber.com explains that by “entering your zip code above
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we will calculate and display applicable sales tax, shipping and your total
price (‘BottomLinePrice’) based on your location.” Id.
c. Analysis
Petitioner asserts that claims 1–7, 9–17, and 19–21 are obvious over
the combination of Hosey and PriceGrabber.com. Pet. 56–72. Petitioner
argues that from Hosey it was known to determine first whether taxes apply
before calculating the applicable tax. Pet. 57. Petitioner further argues it
would have been known that in order to accurately calculate taxes, Hosey
would have to take into account the political division (including the state)
having taxing jurisdiction over the buyer. Id. Finally, Petitioner argues
Hosey describes that the seller enters a number of shipping details, e.g.,
“Unit weight,” “Case weight,” “freight/shipping terms,” “Shipping policy,”
and “Shipping point,” and these are items that are necessarily included in the
calculation of the shipping rate. Id.
According to Petitioner, PriceGrabber.com includes a shipping
calculator interface as part of a product listing page. Pet. 58. The page
provides an area to enter a destination ZIP code and a request button that
permits the user to request a shipping rate calculation based on location. Id.
Petitioner maintains that it would have been obvious to one of ordinary skill
in the art “to include the interface of PriceGrabber.com in Hosey’s ‘listing’
page or ‘Details’ page to provide shipping estimates to buyers in an
integrated web page, in the same manner PriceGrabber.com does.” Id.
(citing Greenspun Decl. ¶ 62).
Patent Owner responds that combining Hosey and PriceGrabber.com
is the “application of hindsight.” PO Resp. 33–36. Specifically, Patent
Owner argues that, in Hosey, the seller decides to sell to the buyer based on
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the buyer’s purchase order. Id. at 33. Patent Owner thus contends that
Hosey determines shipping costs to the buyer only after the purchase is
made. Id. at 34.
Patent Owner argues also that PriceGrabber.com does not offer any
items for sale, but rather presents item prices from other merchants, along
with an approximate cost for tax and an approximate cost for shipping. Id.
Patent Owner, therefore, summarizes its position as follows: Because
Hosey’s seller is making the purchase decision, and the buyer does not
receive pricing and/or tax and shipping information, at least before the seller
accepts the buyer’s offer, “there is no reason, other than the application of
impermissible hindsight, to combine the seller-acceptance system of Hosey
with the buyer-acceptance system of Pricegrabber.com.” Id. at 35.
Patent Owner argues alternatively that the Hosey/PriceGrabber.com
combination fails to meet the “shipping rate” limitation of the claims. PO
Resp. 36–39. According to Patent Owner, Hosey discloses an interactive
order request used for the buyer-user to identify an item to purchase. Id. at
36. Patent Owner contends that Hosey nowhere discloses providing a
shipping rate to the buyer-user. Id. at 37–38. According to Patent Owner,
the combination of Hosey and PriceGrabber.com “at best” discloses that the
seller (not the buyer) would receive “the approximate tax cost, the
approximate shipping cost, and the total price.” Id. at 39. Moreover, that
information would be received only after the transaction is completed. Id.
Similarly, Patent Owner asserts that PriceGrabber.com does not meet
the “shipping rate” limitation because Pricegrabber.com provides only an
approximate tax, approximate shipping cost, and a “BottomLinePrice”
(price, tax, and shipping) after the buyer enters a ZIP code. Id. at 38. Patent
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Owner thus asserts that PriceGrabber.com does not disclose the calculation
of the shipping rate as claimed. Id. at 39.
We are not convinced by Patent Owner’s argument that Hosey and
PriceGrabber should not be combined. Instead, we find persuasive
reasoning for combining the references in the testimony of Petitioner’s
expert, Dr. Greenspun. Both Hosey and PriceGrabber.com provide buyers
with a product listing page that allows a buyer the opportunity to obtain
details about the item to be purchased. Pet. 58; Ex. 1012, 15:19–29, Fig. 4;
Ex. 1013. Dr. Greenspun testifies that, “based on PriceGrabber.com, a
person of ordinary skill would have been motivated to display shipping and
tax costs to consumers along with the ‘List Price’ on Hosey’s product
listings or on Hosey’s ‘Detail page,’ which includes shipping information
such as ‘freight/shipping terms’ and ‘shipping policy’.” Greenspun Decl.
¶ 62. This testimony provides a convincing reason to combine teachings of
Hosey and PriceGrabber.com that is supported by rational underpinnings,
namely, providing an integrated web page for buyers to obtain desired
information. We are therefore not persuaded that Petitioner has engaged in
impermissible hindsight in combining the references. Instead, we agree with
Petitioner that it would have been obvious to make the combination.
At the oral hearing, Patent Owner’s counsel suggested that there is no
reason to combine the references because they “teach away.” Hearing Tr.
94:13–14. But in response to questioning by the panel, Patent Owner’s
counsel agreed that Hosey does not disparage the type of calculation being
done in PriceGrabber.com, taking instead the position that the two are not
“necessarily compatible.” Hearing Tr. 94:19–95:14.
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We are not persuaded by Patent Owner’s teaching away argument.
Nowhere does Patent Owner demonstrate that Hosey criticizes, discredits, or
otherwise discourages the use of its listing or Details page with a shipping
interface. In re Fulton, 391 F.3d 1195, 1201 (Fed. Cir. 2004) (prior art’s
disclosure did not criticize, discredit, or otherwise discourage the claimed
solution and therefore did not teach away). We do not agree, either, that the
references are not “compatible.” See supra.
Nor do we find support for Patent Owner’s contention that the claim
limitations are not met because Hosey determines shipping rate only after
the purchase has been made. PO Resp. 33–34. We determine that Hosey
describes software used to support the web site that includes a feature
whereby: “[t]axes, shipping, duties are automatically calculated based on
ZIP code or country code.” Ex. 1012, 10:6–7. Hosey also describes a
Details page, which is available to a user seeking more information about the
product to be purchased, including freight/shipping terms, shipping points,
and numerous other data points. Id. at 15:19–29. The buyer need not buy
anything to view the Details page. Id. at 15:30–31. Thus, the Details page,
and presumably the shipping information, could be available prior to
purchase of an item. We therefore credit Dr. Greenspun’s testimony that it
would have been obvious to do so in light of PriceGrabber.com. Greenspun
Decl. ¶ 62.
Patent Owner argues that the proposed combination of Hosey and
PriceGrabber.com does not disclose the claimed shipping rate because in
Hosey the buyer-user has not actually ordered anything and
PriceGrabber.com only provides an approximate tax, approximate shipping
cost, and a “BottomLinePrice” rather than the claimed shipping rate. PO
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Resp. 37–38. However, at oral argument, Patent Owner’s counsel agreed
that “some sort of shipping” is displayed in PriceGrabber.com, the only
question being its accuracy. Hearing Tr. 93:11–16.
There is, however, another flaw in Patent Owner’s timing argument as
it relates to Hosey’s provision of a shipping rate. Patent Owner has not
demonstrated that the claims require an “advance” (i.e., pre-purchase)
shipping rate. For example, claim 1 provides only that the shipping rate be
provided to the remote buyer computer. Claim 13 has similar language.
Likewise, Patent Owner does not demonstrate where the requirement for an
exact rather than an approximate shipping rate is reflected in the patent
claims. Pet. Reply 10. In this regard we note that the specification
consistently refers to an “estimate.” See Ex. 1001, Abstract, col. 2, ll. 6–8,
col. 7, ll. 17–21, Fig. 6.
In summary, Petitioner contends that “Patent Owner’s argument that
Hosey does not disclose ‘shipping and tax costs to the buyer’ ignores that the
applicable ground modifies Hosey in view of Pricegrabber.com to provide a
shipping estimate as PriceGrabber.com does.” Pet. Reply 8. Specifically,
Petitioner argues that it would be “natural” to provide shipping calculations
determined using the data in Hosey’s database, including “Unit Weight,”
“Case weight,” shipping points, and other information, in Hosey’s modified
user interface that incorporates the features of PriceGrabber.com. Id. at 8–9.
For the foregoing reasons, we are persuaded by Petitioner’s argument.
3. Secondary Evidence of Non-Obviousness
Patent Owner argues that secondary evidence “confirms” the non-
obviousness of the claimed invention. PO Resp. 40. We therefore consider
this evidence (sometimes referred to as objective evidence or indicia) along
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with the contentions of the parties in reaching our final determination as to
the obviousness of claims 1–21.
Secondary considerations may include any of the following: long-felt
but unsolved needs, failure of others, unexpected results, commercial
success, copying, licensing, and praise. Graham, 383 U.S. at 17. Patent
Owner argues that several objective indicia relating to the development of its
own online shipping calculator demonstrate the non-obviousness of its
claimed invention.
We note that it is not sufficient that a product or its use merely be
within the scope of a claim in order for secondary evidence of non-
obviousness tied to that product to be given substantial weight. There must
also be a causal relationship, termed a “nexus,” between the evidence and
the claimed invention. Merck & Co. v. Teva Pharms. USA, Inc., 395 F.3d
1364, 1376 (Fed. Cir. 2005). A nexus is required in order to establish that
the evidence relied upon traces its basis to a novel element in the claim, not
to something in the prior art. Institut Pasteur & Universite Pierre et Marie
Curie v. Focarino, 738 F.3d 1337, 1347 (Fed. Cir. 2013). Objective
evidence that results from something that is not “both claimed and novel in
the claim,” lacks a nexus to the merits of the invention. In re Kao, 639 F.3d
1057, 1068 (Fed. Cir. 2011). All types of objective evidence of non-
obviousness must be shown to have such a nexus. In re GPAC Inc., 57 F.3d
1573, 1580 (Fed. Cir. 1995) (nexus generally); see also Rambus Inc. v. Rea,
731 F.3d 1248, 1256 (Fed. Cir. 2013) (long-felt need); Wm. Wrigley Jr. Co.
v. Cadbury Adams USA LLC, 683 F.3d 1356, 1364 (Fed. Cir. 2012)
(copying); In re Huang, 100 F.3d 135, 140 (Fed. Cir. 1996) (commercial
success). The stronger the showing of nexus, the greater the weight
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accorded the objective evidence of non-obviousness. See Ashland Oil, Inc.
v. Delta Resins & Refractories, Inc., 776 F.2d 281, 306 (Fed. Cir. 1985).
a. Long-Felt Need and Failure of Others
Patent Owner argues that the invention of the ʼ642 patent met the
needs of merchants and customers to determine shipping and handling costs
accurately and in a timely fashion for online sales. PO Resp. 42–43. Patent
Owner asserts that industry leaders such as eBay and Amazon lacked
solutions for calculating shipping costs and had to charge flat shipping rates,
which were inherently unfair. Id. at 44. Patent Owner further argues that
other merchants tried to charge actual shipping costs but incurred higher
transaction costs to do so and faced the possibility of losing sales by
disclosing actual shipping costs too late in the transaction. Id. at 45–46.
Patent Owner also urges that merchants who offered free shipping had
problems with sales margins. Id. at 46. Patent Owner argues that its own
automated online shipping calculator addressed these problems. Id.
These arguments are not persuasive for a number of reasons. To
establish evidence of a long-felt but unresolved need, a patent owner must
show that there was a persistent problem that was recognized by those of
ordinary skill in the art. See In re Gershon, 372 F.2d 535, 538 (CCPA
1967). The problem must not have been solved previously by another, and
the claimed invention must, in fact, satisfy the long-felt need. See Newell
Cos., Inc. v. Kenney Mfg. Co., 864 F.2d 757, 768 (Fed. Cir. 1988).
Furthermore, the evidence of secondary considerations must be
commensurate with what is claimed. See In re Kao, 639 F.3d at 1068 (citing
In re Tiffin, 448 F.2d 791, 792 (CCPA 1971)).
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As noted by Petitioner, the claims of the ʼ642 patent do not support
the argument for long felt need. Pet. Reply 11. The claims themselves do
not require accurate, exact, or timely shipping rates. Id. Claim 1, for
example, calculates a shipping rate based on shipping preferences of a
remote seller. The claim does not require that the calculated shipping rate be
exact, or that the calculated rate be provided to the remote buyer computer at
a particular time in the process. Id. Claim 10 is similar in this respect.
Second, Van Zandt and PriceGrabber.com, among others, disclose
shipping calculators that provided shipping cost estimates for online
shoppers. See supra. Thus, Patent Owner has not shown that the asserted
need for a shipping calculator and novel or nonobvious features of the
claimed shipping rate calculator was unsatisfied.
Third, the evidence presented by Patent Owner indicates that merely
calculating shipping costs did not meet the most pressing needs of online
merchants or consumers. For merchants, it was order fulfillment, not
calculating shipping costs, that presented the biggest impediment to online
shopping. Thus, the Rotman Declaration describes problems faced by the
industry by referring to certain “articles [that] do not necessarily deal with
calculating shipping costs, [but] show that delivery of goods was a key
concern for merchants – including merchants selling in online auctions – as
ecommerce expanded.” Rotman Decl. ¶ 50 (discussing Exs. 2035–44)
(emphasis added). These articles discuss the need of online retailers for
inventory, shipping, and fulfillment solutions and the trend to outsource such
operations to Federal Express (FedEx) and United Parcel Service (UPS).
See Exs. 2035–44.
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The evidence presented by Patent Owner also indicates that online
shoppers wanted lower shipping costs, as acknowledged in Mr. Rotman’s
testimony. Rotman Decl. ¶ 57 (“one of the primary reasons – if not the
primary reason – that consumers would discontinue an online purchase . . .
was shock at the cost of shipping”).
6
The shipping calculator claimed in the
ʼ642 patent does not solve this problem, either.
Patent Owner’s long-felt need argument relies heavily on a failed
attempt to convince eBay to adopt Patent Owner’s online shipping
calculator. PO Resp. 48–51. We are not persuaded by this evidence.
Patent Owner argues that eBay’s acknowledged need for an improved
shipping solution was “still unresolved” in 2001 when eBay and Patent
Owner discussed Patent Owner’s shipping calculator. PO Resp. 47. But the
evidence of record shows the need (to the extent it existed) was met by
others, including iShip.com and UPS, and therefore does not support this
assertion.
As early as 1999, eBay offered a limited shipping rate calculation
service through iShip.com. PO Resp. 49. By 2000, eBay had partnered with
FedEx and UPS to lower shipping costs for its customers. Rotman Decl.
¶ 54f. By December 2001, Patent Owner was aware of iShip.com’s shipping
calculator. Rotman Dep. 252:6–257:7. And in 2003, eBay chose UPS to
provide a comprehensive shipping solution that integrated a shipping
calculator into eBay’s site. Ex. 2068–71; PO Resp. 47–48.

6
The Rotman testimony discusses articles about shoppers abandoning online
purchases due to high shipping costs. Rotman Decl. ¶ 51; see Exs. 2045–53,
2072–82. Other articles discuss the need to choose shipping costs that do
not lose customers or undermine profits of businesses. See Exs. 2054–56.

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The evidence indicates that eBay’s shipping needs changed rapidly
within the span of a few years, and when iShip.com’s shipping calculator no
longer met eBay’s need for integrated shipping solutions, other solutions
were available.
7
Thus, eBay chose instead UPS’s shipping solutions with an
integrated shipping calculator for eBay’s website. Rotman Decl. ¶ 67. eBay
later required its customers to use standard eBay tools integrated into eBay’s
web site and blocked eBay users from using third party shipping calculators.
PO Resp. 55; Rotman Decl. ¶ 68. In light of this history, therefore, we are
not persuaded that there was a long-felt need by eBay or others for the
claimed shipping calculator that others failed to meet. Nor do we perceive
any failure by eBay to “develop technology.” PO Resp. 47. eBay simply
chose to use solutions developed by others.
b. Copying
Patent Owner asserts that eBay copied Patent Owner’s invention. PO
Resp. 51–52. Copying, as objective evidence of non-obviousness, requires
evidence of effort to replicate a specific product. Wyers v. Master Lock Co.,
616 F.3d 1231, 1246 (Fed. Cir. 2010); Iron Grip Barbell Co., Inc. v. USA
Sports, Inc., 392 F.3d 1317, 1325 (Fed. Cir. 2004).
Patent Owner argues that eBay wanted to view Patent Owner’s
technology because eBay “struggled” to implement a shipping solution that
improved its user’s ability to determine actual shipping costs for
transactions. PO Resp. 52. Patent Owner argues that once eBay “accessed”
Patent Owner’s technology, eBay cut off communications with Patent

7
Initially, eBay took a hands-off approach and allowed buyers and sellers to
work out payment and shipping issues. See Rotman Decl. ¶¶ 28, 52, 54c,
54g, 54h, 54i; PO Resp. 43.
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Owner and developed its own version of Patent Owner’s calculator. Id. at
52. Patent Owner argues that the shipping calculator debuted by eBay in
June 2004 bore a “striking resemblance” to the version that Patent Owner
had demonstrated to eBay, but lacked advanced features that Patent Owner
had developed in the intervening year. Id. From this, Patent Owner
concluded that eBay copied Patent Owner’s invention. Id.
Patent Owner relies on Mr. Rotman’s testimony as the factual support
for its copying claim. Mr. Rotman testifies that eBay was interested in
integrating a shipping calculator into its platform and discussed setting up a
demonstration of Patent Owner’s calculator. Rotman Decl. ¶¶ 61–62.
Patent Owner’s demonstration to eBay involved cutting and pasting
printouts of Patent Owner’s AuctionInc website into printouts of eBay’s
website to create the “look and feel” of how Patent Owner’s calculator
would look when integrated into eBay’s website. Id. ¶ 63.
Mr. Rotman testifies that Patent Owner also presented a live
demonstration of its non-integrated shipping calculator to eBay. Id. ¶ 64.
Later, in spring 2002, Patent Owner made the demonstration available online
to eBay. Id. ¶ 65. Ultimately, however, eBay did not show any further
interest in Patent Owner’s shipping rate calculator. Id. A year and a half
later, eBay announced the introduction of its own shipping calculator. Id.
¶ 67.
Patent Owner’s contention that the eBay shipping calculator “bore a
striking resemblance to the earlier version Paid demonstrated to eBay” by
itself does not establish a nexus to the claimed invention. PO Resp. 52.
Patent Owner’s proofs do not include any direct evidence of copying or
otherwise establish that eBay copied the patented shipping calculator or a
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commercial product using the patented technology. The record indicates
that eBay’s access to Patent Owner’s calculator was very limited: a mock-up
and online demonstration. See supra. Patent Owner has not provided
sufficient evidence that eBay had access to any details or copied the patented
technology.
Moreover, at the final hearing, counsel for Patent Owner confirmed
that the shipping calculator for eBay’s site was provided by UPS. See
Hearing Tr. 51:14–52:8. This effectively rebuts any assertion of copying of
Patent Owner’s product by eBay, and, in fact, demonstrates that suitable
alternative calculators were available. See supra. We are not persuaded by
Patent Owner’s assertion that eBay copied the patented shipping calculator.
c. Commercial Success
Evidence of commercial success “is only significant if there is a nexus
between the claimed invention and the commercial success.” Ormco Corp.
v. Align Tech., Inc., 463 F.3d 1299, 1311–12 (Fed. Cir. 2006). To establish
a proper nexus between a claimed invention and the commercial success of a
product, a patent owner must offer “proof that the sales [of the allegedly
successful product] were a direct result of the unique characteristics of the
claimed invention—as opposed to other economic and commercial factors
unrelated to the quality of the patented subject matter.” Huang, 100 F.3d at
140.
Patent Owner argues that its shipping calculator was a commercial
success that led to the growth of Rotman Auction as one of the largest sports
memorabilia vendors and a Top 200 Seller on eBay. PO Resp. 54. Patent
Owner argues that its AuctionInc technology includes a shipping calculator
and is used by a core of customers. Id. Patent Owner argues that use of the
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automated shipping calculator allowed Patent Owner to grow sales and
revenues by virtually eliminating customer inquiries about shipping and
post-auction bottlenecks of calculating shipping costs. Id. at 54. Patent
Owner asserts that its technology was used by other online merchants and
eBay users until eBay blocked the use of such third-party shipping
calculators. Id. at 55.
We are not persuaded by Patent Owner’s commercial success
evidence. As a threshold matter, Patent Owner has not established a nexus
between its commercial product and the novel and non-obvious features of
its claimed calculator. Patent Owner’s AuctionInc technology includes
many features besides a shipping calculator. Rotman Dep. 59:11–61:5.
Patent Owner has not shown that the AuctionInc shipping calculator
embodies the claimed invention, or that sales of AuctionInc resulted from
the novel, non-obvious features of the claimed shipping calculator rather
than other features. See Ormco Corp., 463 F.3d at 1312–13 (evidence did
not show that commercial success was due to claimed and novel features).
In fact, Mr. Rotman admitted that his testimony does not attribute the
success of his business selling products on eBay to the shipping calculator.
Rotman Dep. 236:15–237:12.
Even if Patent Owner had established a nexus between its AuctionInc
technology and the shipping calculator claimed in the patent, however, its
commercial success argument would not be persuasive. Patent Owner has
not provided evidence of the market share held by its AuctionInc technology
or its shipping calculator to back up its claim of commercial success. PO
Resp. 53. Assertions that Patent Owner cultivated up to 1,050 customers
and a stable core of customers for AuctionInc technology does not address
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whether this represents a substantial share of the relevant market. See PO
Resp. 54–55; Rotman Decl. ¶¶ 68–69; see also Huang, 100 F.3d at 140
(“evidence related solely to the number of units sold provides a very weak
showing of commercial success, if any”).
d. Conclusion
Having considered all of the evidence and contentions of the parties
regarding the obviousness of claims 1–24, including secondary evidence and
indicia of non-obviousness presented by Patent Owner, we determine that
Petitioner has established by a preponderance of evidence that claims 1–24
are unpatentable under the asserted grounds. The relatively weak secondary
evidence of non-obviousness, diminished further by Patent Owner’s failure
to show nexus to the claimed invention, is not sufficient to overcome the
relatively strong evidence of obviousness presented by Petitioner. See Ohio
Willow Wood Co. v. Alps South, LLC, 735 F.3d 1333, 1344 (Fed. Cir. 2013)
(requisite nexus between secondary indicia and invention must be shown for
evidence to be accorded substantial weight, and where a claimed invention
represents no more than the predictable use of prior art elements according
to established functions, evidence of secondary indicia is often inadequate to
establish non-obviousness); Rothman v. Target Corp., 556 F.3d 1310, 1322
(Fed. Cir. 2009) (strong prima facie obviousness showing may stand even
with considerable evidence of secondary factors).
F. Petitioner’s Motion to Exclude
Petitioner contends that Exhibits 2035–85 should be excluded as
inadmissible hearsay under Federal Rule of Evidence 802 and for lack of
proper authentication under Federal Rule of Evidence 901. Paper 27
(“Motion”). Petitioner also seeks to exclude certain testimony in the
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Rotman Declaration (Ex. 2004) that relies on those exhibits. Motion 1.
Petitioner argues that the exhibits, printouts of websites, articles, and press
releases of third-parties, are relied upon by Patent Owner to establish the
truth of the matters asserted therein in support of its allegations of secondary
evidence of non-obviousness. Id. at 2.
Patent Owner opposes, arguing that the challenged exhibits are not
hearsay because they are not offered to prove the truth of the matters
asserted therein. Patent Owner contends also that they are authentic
reproductions of sources that are publicly-available. Paper 31, 1–2.
In reaching our decision on patentability, we have reviewed the
challenged evidence and determined it to be insufficient on the issue of
obviousness. See supra. In view of our disposition of this case, we do not
find it necessary to address the motion to exclude and therefore dismiss it as
moot.
IV. ORDER
In consideration of the foregoing, it is hereby
ORDERED that claims 1–21 of U.S. Patent No. 8,521,642 are
unpatentable; and
FURTHER ORDERED that this is a Final Decision. Parties to the
proceeding seeking judicial review of the decision must comply with the
notice and service requirements of 37 C.F.R. § 90.2.
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PETITIONER:
Timothy Riffe
riffe@fr.com
Leland Gardner
CBM25357-0024CP1@fr.com
PATENT OWNER:
Robert King
rking@hunton.com
Yisun Song
ysong@hunton.com
David Kelly
dkelly@hunton.com
Michael O’Shea
moshea@hunton.com