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District of Delaware Grants AOL Advertising, Inc.’s Motion to Dismiss Patent Infringement Suit

In, Inc. v. AOL Advertising, Inc., 2015 WL 1246781 (D. Del. Mar. 18, 2015), the District of Delaware granted AOL Advertising, Inc.’s Rule 12(b)(6) Motion to Dismiss a patent infringement suit filed against it by, Inc.  In the lawsuit, PricePlay accused AOL of patent infringement of two e-commerce patents, U.S. Patent Nos. 8,050,982 (“the ’982 patent”) and 8,494,917 (“the ’917 patent”).  These patents covered a system that allowed users to buy items at a discount based on their performance in certain activities.

More specifically, the abstract of the ’982 patent described the invention as: “[a] business process … for conducting business transactions over the Internet, allowing buyers an opportunity to reduce the price of a product/service based on the buyer’s performance during a Price-Determining-Activity (PDA).”  The ’982 specification provided that “[t]he present invention comprises a business model used to determine the price of goods and/or services” where:

Sellers offer a product or service within a specified price range, and buyers enter into a contract to buy the product or service within that price range.  The ultimate price (within the range) is determined based upon the buyer’s performance rating, or score, which the buyer receives from participating in a collateral activity.

The collateral activity “may be a video game (including audio/visual games), electronic board game, crossword puzzle or other word game, sports bet, card game, or any other activity or combination of activities ….”  During oral argument, Priceplay did not address the ’917 claims, but advised the Court to apply the same analysis for its ’917 claims.

The Court held that the claims at issue were abstract ideas which lacked an inventive concept under the U.S. Supreme Court’s Alice decision.  Alice Corp. Pty. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014).  The Court applied the two-prong test that was laid out in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289 (2012), and recently reaffirmed in Alice.  Under this two-prong test, a court must first determine whether the claims at issue are directed to a patent-ineligible concept.  The second step in the analysis requires the court to determine whether the claims contain an “‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.”

Applying Alice, the Court held that the ’982 and ’917 claims were directed to an abstract idea but the claims did not contain an “‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Specifically, the Court held 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.’. . . Contrary to [plaintiff’s] assertion during oral argument, 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.

Accordingly, the claims were not sufficient to transform the abstract ideas into patentable subject matter and thus are patent-ineligible.

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