In Re Elbaum, Federal Circuit 2021 (Software Patents)

HomeHistory of Software PatentsIn Re Elbaum, Federal Circuit 2021 (Software Patents)

Enabling an internet seller to pay a finder’s fee to a retail store when a customer finds the internet seller’s product through advertising in the retail store is not patent-eligible.

Mr. Elbaum’s patent application number 15/948,447 relates to selling products or services on the internet using physical retail locations. The specification describes the disclosed method as “enabling the sale of products or services which are available on the internet. The disclosed method allows an internet seller to provide a retail store with information about products or services available on the internet. The information includes a website address and a code, wherein the code is associated with that particular retail location. A customer entering the retail store who obtains this information can then use the code to make a purchase from an internet seller via a computer. The computer is comprised of a central processing unit, a main internal memory, and output/input modules. Because the code is associated with the particular retail location, the internet seller can then pay the retail location a finder’s fee.

It sounds like a pretty reasonable concept. Many buyers prefer to see certain products in person, such as clothing or furniture, to better assess size or color than can be done online. If the customer then buys online, the retailer has an unfair disadvantage because they have the overhead of a retail location and display models. If all retailers go out of business, online businesses might have increased returns from customers who received something that is very different from what they expected.

Claim 48 is representative and recites:
48. A method of selling non-stocked items in addition to stocked items in a traditional walk-in store comprising:

  • a) providing the store with photos of items which are available for sale on the internet but not stocked in the store;
  • b) providing the store with website addresses of the sellers of the non-stocked items;
  • c) providing visitors to the store with discount codes associated with the non-stocked items, said discount codes applicable to purchases made directly from the sellers;
  • d) enabling the sellers of said non-stocked items to recognize when a purchase is made with one of said discount codes;
  • e) enabling the sellers of the non-stocked items to identify the walk-in store in which the non-stocked items were displayed; and
  • f) paying a finder’s fee from each seller of a non- stocked item to the store.Mr. Elbaum only argued that the Appeals Board erred in concluding the claim is directed to an abstract idea. He conceded that the claim is not directed to any improvement in computer functionality.

    The Appeals Board had concluded that the claim is directed to an abstract idea, a commercial transaction that amounts to a method of organizing human activity. At step two of the Alice inquiry, the Board determined that the claim elements recite purely conventional computer functions of storing, receiving, analyzing, and processing data. Because the claim recites no more than the abstract idea, the Board concluded the claim lacked an inventive concept.

    The Federal Circuit agreed with the Board’s analysis. The plain language of claim 48 recites a method for enabling an internet seller to pay a finder’s fee to a retail store when a customer finds the internet seller’s product through advertising in the retail store. Accordingly, the claim is directed to an abstract idea, specifically a method of providing information and allowing customers to utilize that information to engage in a commercial transaction. The Federal Circuit believed that this was similar to the situation in Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343 , 1347 (Fed. Cir. 2014) (“[C]laims directed to the mere formation and manipulation of economic relations may involve an abstract idea.”). Regarding Alice step two,the Federal Circuit stated that nothing in the claim recites an inventive concept to transform the abstract idea into patent-eligible application. If anything, the claim recites generic computer functions, which the specification describes are carried out by conventional computer components. Mr. Elbaum argued that the claim elements of providing photos, website addresses, and discount codes motivate customers to return to traditional retail stores and that these additional elements provide an inventive concept. According to the Federal Circuit, these claim elements merely recite the abstract idea itself as was the case in Trading Techs. Int’l, Inc. v. IBG LLC, 921 F.3d 1378 , 1385 (Fed. Cir. 2019) (“The abstract idea itself cannot supply the inventive concept, no matter how groundbreaking the advance.”). Accordingly, the Federal Circuit agreed with the Board that the claim does not include an inventive concept that would render it patent eligible. The problem with this decision, and with Trading Techs, is that the reasoning is somewhat circular. If you use broad strokes to paint an invention as an abstract concept, ignoring detail, then any detail that could have provided something more is still ignored as being part of the abstract concept.