APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO. 95/001,589 03/30/

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1 UNITED STATES PATENT AND TRADEMARK OFFICE UNITED STATES DEPARTMENT OF COMMERCE United States Patent and Trademark Office Address: COMMISSIONER FOR PATENTS P.O. Box 1450 Alexandria, Virginia APPLICATION NO. FILING DATE FIRST NAMED INVENTOR ATTORNEY DOCKET NO. CONFIRMATION NO. 95/001,589 03/30/ IP /01/2014 GEORGE LIKOUREZOS, ESQ. 261 WASHINGTON AVE. ST. JAMES, NY EXAMINER DESAI, RACHNA SINGH ART UNIT PAPER NUMBER 3992 MAIL DATE DELIVERY MODE 04/01/2014 PAPER Please find below and/or attached an Office communication concerning this application or proceeding. The time period for reply, if any, is set in the attached communication. PTOL-90A (Rev. 04/07)

2 UNITED STATES PATENT AND TRADEMARK OFFICE BEFORE PATENT TRIAL AND APPEAL BOARD EBAY, INC. Requester and Respondent v. XPRT VENTURES, LLC. Patent Owner and Appellant Appeal Technology Center 3900 Before KEVIN F. TURNER, WILLIAM V. SAINDON, and JENNIFER L. McKEOWN, Administrative Patent Judges. McKEOWN, Administrative Patent Judge. DECISION ON APPEAL

3 Patent Owner XPRT Ventures, LLC. ( Patent Owner ) appeals under 35 U.S.C. 134(b) and 315(a) the Examiner s decision to reject claims 1, 7, 10 and Third Party Requestor ebay, Inc. responds to the Patent Owner s appeal (a). We AFFIRM. We have jurisdiction under 35 U.S.C. 134(b) and STATEMENT OF THE CASE United States B2 (hereinafter the 563 Patent ), issued to George Likourezos and Michael Anthony Scaturro on March 31, 2009, is the subject of the current inter partes reexamination. The 563 Patent along with five other patents are the subject of a civil action in the United States District Court for the District of Delaware, which is currently stayed. See App. Br Additionally, the Board of Patent Appeals and Interferences has decided appeals from the original prosecution of related patents, US Patent Nos. 7,483,856 and 7,567,937. See App. Br See Patent Owner s Revised Appeal Brief, filed April 10, 2013 (hereinafter PO App. Br. ), at 2; Examiner s Answer, mailed July 23, 2013, incorporating by reference the Examiner s Right of Appeal Notice, mailed October 5, 2012 (hereinafter RAN ). The Patent Owner also filed a reply brief. See Patent Owner s Rebuttal Brief, filed August 26, 2013 (hereinafter PO Reply Br. ). 2 See Third Party Requestor s Respondent Brief, filed May 8, 2013 (hereinafter TPR Resp. Br. ). 2

4 THE INVENTION The 563 Patent generally relates to a computerized electronic auction payment system and method for effecting a real-time payment for an item sold via an electronic auction web site. 563 Patent, Abstract and 1: Claim 1, which is illustrative of the appealed subject matter, has not been amended during reexamination and reads as follows: 1. A method for automatically effecting payment for a user of an electronic auction web site maintained by at least one computing device to an operator associated with the electronic auction web site, said method comprising the steps of: executing by at least one processor a sequence of events, the sequence of events including the steps of providing the user with an option prior to the conclusion of an electronic auction provided by the electronic auction web site, the option enabling the user to authorize a payment system to execute an automatic payment method after the conclusion of the electronic auction, the automatic payment method includes automatically deducting funds from a payment account storing funds therein and corresponding to the user; receiving authorization from the user in response to the provided option and prior to the beginning of the electronic auction to execute the automatic payment method after the conclusion of the electronic auction; and determining whether to execute the automatic payment method for the user after the conclusion of the electronic auction based on whether the user has provided authorization to execute the automatic payment method in response to the provided option; and executing by the at least one processor the automatic payment method after the conclusion of the electronic auction, if it is determined by the at least one processor to execute the automatic payment method and the user has provided authorization for executing the automatic payment method in response to the provided option, the executing step comprising the steps of: 3

5 automatically deducting funds from the funds stored in the payment account corresponding to the user of the electronic auction web site; and automatically transferring at least a portion of the deducted funds into an account corresponding to the operator associated with the electronic auction web site. App. Br., Claims App x. PRIOR ART REJECTIONS The Examiner relies on the following references: Woolston 5,845,265 Dec. 1, 1998 Churchill 7,461,022 B1 Dec. 2, 2008 Marks 7,720,743 B1 May 18, 2010 Hutchison 7,761,385 B2 Jul. 20, 2010 Gold s Auction, Sellers FAQ s, Goldsauction.com, October 13, 1999, goldsauction.com/html/sellerfaq.html; Gold s Auction, Gold s Auction User Agreement, Goldsauction.com, October13, 1999, / Gold s Auction, Gold s Auction Billing, Goldsauction.com, January 19, 2000, goldsauction.com/html/auctionbilling.html; and Gold s Auction, Gold s Auction Privacy Policy, Goldsauction.com, March 5, 2000, goldsauction.com/html/privacypolicy.html (collectively hereinafter Gold ). 4

6 The Examiner adopts, or adopts with modification, the following rejections proposed by the Requester: 1. The rejection of Claims 1, 7, 10 and 19 under 35 U.S.C. 102(e) as being anticipated Hutchison. 2. The rejection of Claims 1, 7, 10 and 19 under 35 U.S.C. 103(a) as being unpatentable over Hutchison and Churchill. 3. The rejection of Claims 1, 7, 10 and 19 under 35 U.S.C. 102(b) and 102(e) as anticipated by Woolston. 4. The rejection of Claims 1, 7, 10 and 19 under 35 U.S.C. 103(a) as being unpatentable over Woolston and Marks. 5. The rejection of Claims 1, 7, 10 and 19 under 35 U.S.C. 103(a) as being unpatentable over Gold. ISSUES 1. Did the Examiner err by failing to consider the evidence submitted after the Action Closing Prosecution? 2. Can the Patent Owner change the scope of claim terms by disavowing certain features rather than by amending the claim? 3. Did the Examiner incorrectly rely on separate and distinct embodiments of each prior art reference for the anticipation rejections? 4. Did the Examiner err by rejecting the instant claims as anticipated by each of Hutchison and Woolston? 5. Did the Examiner err by rejecting the instant claims as obvious under 35 U.S.C. 103(a) in view of the cited prior art combinations? 5

7 PRINCIPLES OF LAW To anticipate a claim, a prior art reference must disclose every limitation of the claimed invention, either explicitly or inherently. In re Schreiber, 128 F.3d 1473, 1477 (Fed. Cir. 1997). But disclosure of each element is not quite enough [the Federal Circuit] has long held that [a]nticipation requires the presence in a single prior art disclosure of all elements of a claimed invention arranged as in the claim. Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1371 (Fed. Cir. 2008)(citations omitted). The Federal Circuit has also explained that the inquiry is not constrained to proceed example-by-example when reviewing an allegedly anticipating prior art reference. Rather, the [reviewer] must, while looking at the reference as a whole, conclude whether or not that reference discloses all elements of the claimed invention arranged as in the claim. Net MoneyIN, 545 F.3d at 1369 n. 5. ANALYSIS EVIDENCE OF SECONDARY CONSIDERATIONS The Patent Owner contends that the Examiner erred in failing to consider evidence of secondary considerations submitted after the Action Closing Prosecution. See App. Br. 8-10; PO Reply Br. 1. As the Patent Owner is aware, though, the Examiner s refusal to enter the evidence into the record is a petitionable matter. See 37 C.F.R ; see also Petition Under 37 C.F.R For the United States Patent and Trademark Office to Reconsider Evidence of Secondary Considerations, dated November 26, Because the Examiner did not enter the evidence, and because the 6

8 Central Reexamination Unit denied the Patent Owner s petition to enter the evidence, the evidence is not of record and not properly before the Board. See RAN 9-11; Decision on Petition For Entry of Affidavit After ACP, dated Apr. 22, 2013 (denying entry of the evidence for failing to comply with 37 C.F.R ). Therefore, we will not consider this evidence submitted by the Patent Owner after the Action Closing Prosecution. 3 DISAVOWAL OF CLAIM SCOPE The Patent Owner allegedly disavows the claim scope of certain claim terms to distinguish over the cited prior art. See PO App. Br ; PO Reply Br. 2-4, 6-7. For example, the Patent Owner herein clearly and unambiguously disavows the full scope of its claim term payment account in each of Claims 1, 7, 10, and 19 from including payment accounts which can be used to earn reward points and where the earned points can also be applied to the buyer's payment account to pay for products; and from including payment accounts which can keep track of points, money and/or alternative forms of currency earned via an incentive system and can be redeemed via online auctions. PO Reply Br The Patent Owner also acknowledges that the rules require establishing good and sufficient reasons as to why the evidence was not presented prior to the Action Closing Prosecution, but disagrees with the Office s rules and asserts that the Patent Owner should not have to establish good and sufficient reasons why the evidence was not submitted earlier. PO Reply Br. 1. Mere disagreement with the Patent Office s rules does not permit the Patent Owner to disregard them. The Patent Owner here, like all other Patent Owners, is bound by the case law and rules governing reexamination practice before the Patent Office. 7

9 Underlying these arguments though, is the erroneous premise that claim scope can be altered during prosecution, such as in a reexamination, by clearly and unambiguously disavowing particular features, instead of amending the claim. To the contrary, it is well established that the appropriate method for changing the scope of a claim during prosecution is claim amendment. For example, while rejecting the contention that a loophole would be created by limiting intervening rights only to claim amendments, not disavowals, the Federal Circuit noted If, in reexamination, an examiner determines that particular claims are invalid and need amendment to be allowable, one would expect an examiner to require amendment rather than accept argument alone. Indeed, Congress may well have expected that changes in claim scope during reexamination would ordinarily be made by amendment, which would avoid the risk of creating a loophole in the intervening rights defense. Moreover, if an argument does suffice to overcome a rejection, it is probably because the claims at issue are not unallowable. Marine Polymer Technologies, Inc. v. Hemcon, Inc., 672 F.3d 1350 (CAFC 2012). Where, as here, the Examiner has rejected the claims as unpatentable over the cited prior art, amendment may be needed to distinguish the claims. The Patent Owner cannot circumvent this method by affirmatively stating a clear and unambiguous disavowal. Accordingly, we agree with the Requestor s position that the Patent Owner cannot change the scope of the claim terms through disavowal and find each of the arguments presented based on disavowal of claim scope (e.g., PO App. Br and PO Reply Br. 2-13) unpersuasive. 8

10 Accordingly, we agree with the Requestor s position that the Patent Owner cannot limit the scope of the claim terms through disavowal and find each of the arguments presented based on disavowal of claim scope (e.g., PO App. Br ; PO Reply Br. 2-13) unpersuasive. 4 THE ANTICIPATION REJECTION OVER HUTCHISON Claims 1, 7, 10, and 19 The Patent Owner maintains that the Examiner improperly relied on separate and distinct embodiments of Hutchinson to reject the instant claims as anticipated. PO App. Br We disagree. According to the Patent Owner, Hutchison includes, and the Examiner relies on, at least, (1) the automatically deducted embodiments of Figs. 8A and 9C, (2) a buyer indicates a desire to purchase embodiment (Figs. 11A- 11E), (3) an order[ing] products via the Internet embodiment, (4) a seller is an auction Web site embodiment, and (5) and alternate embodiment described at col. 14, l. 60 to col. 15, l. 2. PO App. Br Notably absent in the Patent Owner s argument though is any explanation of how Hutchison s elements are arranged in a different way from the claim or why each alleged embodiment is separate and distinct. The Patent Owner merely cites the Examiner s identification of more than one embodiment and different portions of the Specification using language such as [i]n one 4 Because we find the Patent Owner s ability to change the claim scope through disavowals unpersuasive, we need not reach the Patent Owner s dependent argument that the Requestor is not permitted to present new substantial new questions of patentability of the changed claim scope. See, e.g., Reply Br. 3. 9

11 actual embodiment and [i]n an alternate embodiment. See e.g., PO App. Br ; see also PO Reply Br Without more, this is not persuasive. Instead, we agree with the Requestor s position that the Patent Owner improperly fails to consider the reference as a whole and fails to consider whether the claims are arranged in the same way as in the claim. TPR Resp. Br Hutchison s Brief Description of the Figures describes that Fig. 8C depicts an exemplary webpage for applying for a virtual payment account with Hutchison s system. Hutchison, 4: Fig. 9C shows an exemplary webpage for customizing that virtual payment account. Hutchison 4: Figs. 11A-11E then outline how to use the created and customized virtual payment account to purchase goods, services, and/or content. Hutchison, 4: Given these disclosures, it is readily apparent then that these alleged embodiments are not separate and distinct, but instead are directly related. Similarly, we are also not persuaded by the Patent Owner that the alleged order[ing] products via the Internet embodiments and a seller is an auction Web site embodiments are separate and distinct. PO App. Br (emphasis omitted). Hutchison, to the contrary, describes that the virtual payment system can be used to purchase products over the Internet, including for example, an auction website. See TPR Resp. Br. 6-7 (noting that the seller is an auction website embodiment is within the order[ing] products section of the Specification). These disclosures thus do not warrant the Patent Owner s characterizations as separate and distinct embodiments. Moreover, as the Examiner finds, Hutchison combines the 10

12 claim limitations as done in the instant claims. RAN Therefore, we are not persuaded that the Examiner improperly relied upon separate and distinct embodiments in rejecting the instant claims as anticipated. The Patent Owner also, in the Reply brief, argues that Hutchison fails to disclose the claimed option prior to the conclusion of an electronic auction to enable an automatic payment method (as claimed in claims 1 and 10) and automatically deducting funds without a request from the user following a termination event (as claimed in claims 7 and 19). PO Reply Br In particular, the Patent Owner maintains that Hutchison describes a non-automatic payment method in which the buyer and seller are willing to reserve funds. PO Reply Br. 7 (emphasis omitted). The Patent Owner emphasizes that Hutchison describes having the buyer and seller reserve funds through use of the commerce gateway, but an additional purchase authorization is required from the buyer. See PO Reply Br. 7 (citing Hutchison 24:27-44). We agree that this later authorization by the buyer is one description of the payment method through use of the commerce gateway. However, as cited by the Examiner, immediately following that disclosure, Hutchison states [t]his payment method [i.e. using the commerce gateway] supports buyer-initiated, pre-approved purchases with expiration date/time, such as auction and gift-certificate purchases. Hutchison 24:42-44 (emphasis added); see also RAN Pre-approved purchases require prior approval or authorization. We agree with the Examiner and Requestor, then, that Hutchison discloses the claimed prior authorization. 11

13 Finally, the Patent Owner also argues that Hutchison fails to automatically transfer a portion of the funds to an operator associated with the electronic web site. PO App. Br As discussed in more detail below, we find this argument unconvincing. Hutchison identifies that the seller can be an auction website and further discloses that the provider of the commerce gateway (which is part of the payment system for the Hutchison s seller web site) receives a fee. See TPR Resp. Br. 8-9 (citing Hutchison 15:8-11 and 22:3-7). Thus, we agree with the Examiner and Requestor that Hutchison discloses this claimed feature. The Patent Owner s remaining arguments rely on its impermissible claim scope disavowals. See e.g., PO App. Br ; PO Reply Br As discussed above, we disagree that the Patent can change the scope of the claims through disavowal and therefore find these arguments also unpersuasive. Accordingly, we are not apprised of error in the Examiner s rejection of claims 1, 7, 10, and 19 are anticipated by Hutchison and affirm the rejection. THE OBVIOUSNESS REJECTION OVER CHURCHILL AND HUTCHISON Claims 1, 7, 10, and 19 The Patent Owner argues that Hutchison fails to disclose automatically transferring at least a portion of the deducted funds into an account corresponding to the operator associated with the electronic auction 12

14 web site. 5 PO App. Br. 18 (emphasis omitted). According to the Patent Owner, neither Hutchison nor Churchill discloses this feature. PO App. Br First, we note that the Patent Owner fails to consider Hutchison as a whole, but instead addresses each portion cited by the Examiner separately. See PO App. Br For example, the Patent Owner asserts that there is no disclosure of an electronic auction payment system in the embodiments of Figs 8A and 9C. PO App. Br. 19. However, Hutchison at least discloses that a portion of the transaction amount will go to the provider of the commerce gateway. See PO App. Br. 20 (citing Hutchison 21:64-22:12). According to the Patent Owner, though, the provider of the commerce gateway is distinct from an operator associated with the electronic auction web site. Id. (emphasis omitted.) We disagree. The claims merely require the operator be associated with the electronic web site. Therefore, we agree with the Examiner that the provider of the commerce gateway would at least be associated with the auction website. Moreover, as the Requestor points out, in Hutchison, the auction website can be the seller. TPR Resp. Br. 8. In other words, by deducting funds to transfer to pay the seller for the purchased item, the transfer is also in effect transferring at least a portion of the deducted funds to the operator of the electronic web site. Further, Churchill also discloses a transaction fee that is paid to the auction company. TPR Resp. Br. 9 (citing Churchill 1:64-5 We apply the BPAI s construction of automatically, funds, and account. from the appeal of the priority parent patent, US Patent No. 7,483,856. See Decision On Appeal, Appeal No , dated August 22, 2007, p

15 2:1). Together then, the combination of Hutchison and Churchill teaches automatically transferring at least a portion of the deducted funds into an account corresponding to the operator associated with the electronic auction web site. The Patent Owner s remaining arguments rely on its impermissible claim scope disavowals. See, e.g., PO App. Br ; PO Reply Br As discussed above, we disagree that the Patent can change the scope of the claims through disavowal and therefore find these arguments also unpersuasive. As discussed above, we disagree with the Patent Owner and are not apprised of error in the Examiner s findings. Accordingly, we affirm the rejection of claims 1, 7, 10, and 19 as unpatentable over Churchill and Hutchison. THE ANTICIPATION REJECTION OVER WOOLSTON Claims 7 and 19 The Patent Owner again presents arguments that the Examiner improperly relied on at least two separate and distinct embodiments to support the Woolston anticipation rejection. See PO App. Br As discussed above with respect to the same arguments applied to Hutchison, the Patent Owner fails to explain why these alleged embodiments are separate and distinct or how Woolston s elements are not arranged in the same way as in the claims. See PO App. Br We agree with the Requestor s position. TPR Resp. Br Woolston describes two embodiments, one relating to posting items for sale 14

16 at a consignment node and another relating to posting items to a market maker computer through a remote terminal. TPR Resp. Br. 10 (citing Woolston Figs. 1 and 12; 9:66-10:32; 14:51-53). The Patent Owner s assertion that the market maker computer includes additional devices and perform additional functions does not render it separate and distinct. See PO App. Br and PO Reply Br To the contrary, as the Requestor points out, Woolston directly relates the embodiments. TPR Resp. Br Much of the market maker computers 800 functionality is disclosed above in the consignment node functionality. TPR Resp. Br. 10 (quoting Woolston 19:34-36); see also Woolston 14: We therefore agree with the Requestor that Woolston s embodiments are not separate and distinct and Woolston s elements are arranged in the same way as in the claims. The Patent Owner s remaining arguments erroneously rely on the Patent Owner s claim disavowals. See, e.g., PO App. Br ; PO Reply Br As discussed above, we disagree that the Patent Owner can change the scope of the claims through disavowal and therefore consider these arguments also unpersuasive. Accordingly, we conclude that the Examiner did not err in rejecting claims 7 and 19 as anticipated by Woolston and affirm the rejection. THE OBVIOUSNESS REJECTION OVER WOOLSTON AND MARKS Claims 1 and 10 The Patent Owner asserts that Marks fails to disclose bidders are provided the option to have funds automatically deducted from their 15

17 accounts at the conclusion of the auction for which the bidder is the winner. PO App. Br. 25. In challenging the Requestor s reliance on Marks, the Patent Owner alleges that the Requestor mischaracterizes Marks, specifically pointing to Mark s failure to recite the words account or accounts. PO App. Br. 25. We find this argument unavailing. As the Requestor identifies, Marks discloses an electronic marketplace where customers, such as bidders in an auction, can be presented with an option to commit to buying before an auction begins. TPR Resp. Br. 11(citing Marks Abstract); see also Marks 5: Then, as outlined by the Examiner, it would be obvious to a skilled artisan to incorporate Mark s known method of enhancement, committing to buy option prior to conclusion of the auction, with Woolston s automatic payment system to make the auction more efficient and effective. See RAN 8. The Patent Owner s remaining arguments rely on its impermissible claim scope disavowals. See e.g., PO Reply Br As discussed above, we disagree that the Patent can change the scope of the claims through disavowal and therefore find these arguments also unpersuasive. Accordingly, we conclude that the Examiner did not err in rejecting claims 1 and 10 as unpatentable over Woolston and Marks and affirm the rejection. 16

18 THE OBVIOUSNESS REJECTION OVER GOLD Claims 1, 7, 10, and 19 With respect to Gold, the Patent Owner first presents arguments based on claim scope disavowals, which as discussed above, we reject. See PO App. Br Then, addressing claims 7 and 19, the Patent Owner argues that Gold fails to disclose said computing devices being in operative communication with each other via at least one non-internet connection. PO App. Br. 29. This blanket assertion, however, is not persuasive. As the Requestor explains, the claims merely require one non-internet connection between the computing devices of the computer architecture which maintains the electronic payment account and electronic commerce website. TPR Resp. Br. 14. Gold s system includes servers and databases, which store information regarding customers. TPR Resp. Br. 14. As such, we agree that it would be obvious to a skilled artisan that a company s servers, including database and web servers, would include at least one non- Internet connection. The Patent Owner s remaining arguments erroneously rely on the Patent Owner s claim disavowals. See e.g., PO App. Br As discussed above, we disagree that the Patent can change the scope of the claims through disavowal and therefore find these arguments also unpersuasive. Accordingly, for at least the reasons discussed above and by the Examiner, we conclude that the Examiner did not err in rejecting claims 1, 7, 10 and 19 as unpatentable over Gold and affirm the rejection. 17

19 DECISION The Examiner s decision to reject claims 1, 7, 10, and 19 is affirmed. Requests for extensions of time in this inter partes reexamination proceeding are governed by 37 C.F.R See 37 C.F.R Pursuant to 37 C.F.R (d), this decision is final for the purpose of judicial review. A party seeking judicial review must timely serve notice on the Director of the United States Patent and Trademark Office. See 37 C.F.R and AFFIRMED PATENT OWNER: GEORGE LIKOUREZOS, ESQ. 261 WASHINGTON AVE. ST. JAMES, NY THIRD-PARTY REQUESTER: DENTONS US LLP 1530 PAGE MILL ROAD SUITE 200 PALO ALTO, CA