Fed. Circ.: Retailer Finder Fee Patent Invalid Under Section 101

Holland & Knight LLP

Holland & Knight LLP

In the case of In re Elbaum, No. 2021-1719, 2021 WL 3923280 (Fed. Cir. Sept. 2, 2021), Saul Elbaum applied for a patent related to selling products on the internet using physical locations, specifically where the internet retailer can pay a physical retail location a finder's fee. The U.S. Patent and Trademark Office (USPTO) and the Patent Trial and Appeal Board (PTAB) found Elbaum's claims to be patent ineligible under Section 101, and Elbaum appealed.

The application's specification described the disclosed method as "enabling the sale of products or services which are available on the internet," and the method allowed an internet seller to provide a retail store with information about products or services available on the internet. A customer entering the retail store who obtained this information could then use the code to make a purchase from an internet seller via a computer, which was comprised of a "central processing unit, a main internal memory, and output/input modules." The internet seller then paid the retail location a finder's fee based on the sale.

Representative claim 48 reads:

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.

The U.S. Court of Appeals for the Federal Circuit, in a short opinion, agreed with the PTAB's analysis. 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."

At Alice step two, the Federal Circuit found nothing in the claim that could be considered an inventive concept. "If anything, the claim recites generic computer functions, which the specification describes are carried out by conventional computer components." Elbaum argued that certain claim elements – including providing photos, website addresses and discount codes to motivate customers – provided the necessary inventive concept. The Federal Circuit disagreed, found that these elements "merely recite the abstract idea itself," and affirmed the Board's finding that the claims are not patent-eligible.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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