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Judge Richard Andrews Finds E-Commerce Patents Subject Matter Ineligible where Claim Construction would not Affect Outcome

Judge Andrews recently granted a Rule 12(b)(6) motion to dismiss for lack of patentable subject matter under 35 U.S.C. § 101 and Alice Corp., Inc. v. AOL Advertising, Inc., C.A. No. 14-92-RGA, Memo. Op. at 10 (D. Del. Mar. 18, 2015). Under the first step of the Alice analysis, His Honor found that the patents-in-suit were directed to the abstract idea of “a sales transaction,” a “fundamental economic practice long prevalent in our system of commerce.” Id. at 5-6. “[The plaintiff] argues that the claimed invention cannot be directed to patent-ineligible subject matter when ‘hundreds of e-commerce models have been commercialized and developed’ in recent years. . . . [but t]here are many products and services that are commercially available that are not directed to patent-eligible subject matter. Therefore, the examples provided by [the plaintiff] have little impact on the patentability of the claimed subject matter. . . . Performing a sales transaction over the Internet, or in conjunction with an auction and a competitive activity, does not make the concept any more ‘concrete.’” Id.

The Court then found that the patents-in-suit lacked an inventive concept. The plaintiff argued that “the ‘novel combination of a buyer’s participation in both an auction and a ‘competitive’ or ‘intermediary’ activity is distinct from any of the systems for conducting e-commerce,’ and thus makes the subject matter patent-eligible.” Id. at 7. But Judge Andrews explained that “the addition of an auction and a competitive activity to a sales transaction is nothing more than the addition of ‘well-understood, routine, conventional activity.’” Further, “the Internet is not essential to perform the claimed functions. Reliance on an intermediary activity to determine price has been a practice in sale negotiations throughout history, long before the existence of the Internet or computers.” Id. at 7-8.

After the motion was briefed, Judge Andrews ordered the plaintiff to submit proposed claim constructions to determine if construction would impact the motion. During oral argument on the motion, the parties agreed that the proposed construction did not affect any argument regarding the motion. Id. at 1.

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