August 2, 2022

12 Patents Surrounding Automobile Transactions Found Ineligible Under Section 101

Holland & Knight IP/Decode Blog
Anthony J. Fuga
IP/Decode Blog

Editor's note: Anthony Fuga's Section 101 Blog is a must-read for anyone trying to determine the often difficult-to-discern boundaries of subject matter that is too abstract for patent protection. That issue is central to patenting inventions embodied by software because software is often, by its nature, an abstraction of the real world. Anthony's post below provides one example of a court rendering patented software processes ineligible for protection under the Patent Act.

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Sidekick Technology owns 12 patents broadly claiming systems, methods and apparatuses for providing automobile market information and performing or facilitating automobile transactions.

Looking at the 12 patents-in-suit, the U.S. District Court for the District of New Jersey determined that they broadly "describe flaws and inefficiencies in typical automobile transactions caused, chiefly, by a lack of available information … automobile transactions are routinely plagued by uncertainty, imperfect information, and mistrust …"

The patents-in-suit purportedly solve these inefficiencies by "creating a platform through which consumers, dealers, and manufacturers can input, access, or filter through a range of available automobile market data and use that data to complete automobile transactions." The system is designed to efficiently match consumers with dealers, manufacturers or other consumer automobile sellers.

Below is a representative figure from one of the 12 patents:

HK Section 101 Blog_full

Vroom brought a declaratory judgment action against Sidekick and filed a Rule 12(c) motion for judgment on the pleadings, arguing that each of Sidekick's relevant patents is directed to ineligible subject matter under Section 101.

Representative Claims

The court first addressed what claim or claims are representative of the 405 claims across all 12 patents. The court noted that it may treat claims as representative even where the parties do not agree to such treatment: "Less established, however, is the appropriate framework for resolving disputes over which claims are in fact representative."

The court, having heard the parties' arguments and reviewed all 12 patents, chose one claim that includes "the major elements and limitations argued by the parties for and against eligibility, including, for example, the use of geolocation data and driving directions" as well as "the additional element of storing automobile market data," along with "with minor exceptions that no party has suggested bears on the eligibility analysis." The representative claim is included at the bottom of this post.

Alice Step 1

At step one, the court looked at the language of the claims to determine what the patent asserts to be the focus of the claimed advance over the prior art, with the critical inquiry being "whether the claims focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery." The court noted that in the context of software innovations, the inquiry "often turns on whether the claims focus on specific asserted improvements in computer capabilities or instead on a process or system that qualifies [as] an abstract idea for which computers are invoked merely as tools."

Here, the court determined that the patents are directed to the abstract idea of collecting and using automobile market and user data to facilitate automobile transactions.

The representative claim "recites no more than the sort of collection and storage of information that courts have routinely found abstract at Alice step one," and the remaining claim elements "recite a computerized method of performing the basic steps in an automobile transaction."

Specifically, the court found that the representative claim recited the following process:

  1. a consumer requests information about a specific automobile, which includes the consumer's geolocation information
  2. an automobile manufacturer reviews real-time market data for the requested automobile, including inventory data from a plurality of dealers to determine whether the automobile can be provided to the consumer
  3. based on the manufacturer's response to the consumer's request, a dealer in an area proximately located to the consumer submits an inventoryless bid to sell the requested automobile
  4. the consumer receives the bid, which includes at least price and delivery options, as well as driving directions to the dealer making the bid, and then selects a bid indicating an intent to purchase the automobile

In short, the court found that the representative claim "merely combines abstract concepts and practices to describe the longstanding and fundamental practice of searching for and using available market information to complete automobile transactions." Furthermore, the court found that the representative claim "does not focus on or describe any specific technological improvement … [and] the specification makes clear that the problem the patents-in-suit are designed to address is not one in either data collection or storage … Rather, the specification identifies the problem as one of imperfect information."

Finally, the inclusion of real-time market data, geolocation information, optical character recognition or driving directions did not save the patents-in-suit. While those limitations may ensure that the patents-in-suit do not preempt the entire field of automobile transactions, the court found that "a narrow claim directed to an abstract idea, however, is not necessarily patent-eligible, for while preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility."

Alice Step 2

The court, at step two, found that the representative claim failed to sufficiently recite an inventive concept, even if the claim does confer advantages over the prior art. "the Court may assume that the techniques claimed are groundbreaking, innovative, or even brilliant, but that is not enough for eligibility."

The defendant argued that the patents-in-suit were "new and innovative" methods that offer "a synergistic and optimal resource." The court, however, found these statements to be conclusory and, instead, the representative claim did not "recite any new process, technique, or method in performing any of the claimed features or limitations."

The court concluded that what was claimed were "ordinary data storage and processing functions of a computer unaccompanied by any description or explanation of a specific or unconventional development or implementation thereof."

The court, accordingly, granted Vroom's motion for judgment on the pleadings and found all claims of the 12 patents to be patent-ineligible under Section 101.

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The representative claim reads:

A method comprising:

storing, on a computer readable medium, automobile market data which is representative of recent automobile market characteristics, including at least pricing data and inventory data, wherein the automobile market data includes information received from at least one manufacturer, a plurality of dealers, and a plurality of consumers, wherein at least a portion of the automobile market data is updated in real-time;

receiving, via a consumer interface, a first request for a response regarding a first automobile, which is manufactured by a first manufacturer, the first request made by a consumer located at a first location and including geolocation information of the consumer;

executing instructions, by at least one processing device, to:

determine current inventory data of the first automobile, wherein the current inventory data of the first automobile includes a plurality of dealer inventories of a plurality of dealers, with each respective dealer of the plurality of dealers having a respective dealer inventory, and wherein the current inventory data indicates that a first dealer of the plurality of dealers does not currently have the first automobile in a first inventory of the first dealer;

provide first automobile market data including the current inventory data of the first automobile to the first manufacturer, based on the first request, via a manufacturer interface, wherein the first automobile market data is based on real-time automobile market data;

generate, based on the first automobile market data including the current inventory data of the first automobile, via the manufacturer interface, at least one of a verification indicating that the first automobile can be provided for the consumer, a confirmation indicating that the first automobile can be provided for the consumer, and an offer indicating that the first automobile can be provided for the consumer;

determine, using the geolocation information, that the consumer is located at the first location;

generate, based on the first location, an in-market dealer area proximately located to the first location;

determine that the first dealer is located at a second location within the in-market dealer area;

provide a first manufacturer response via the consumer interface, the first manufacturer response including the at least one of the verification indicating that the first automobile can be provided for the consumer, the confirmation indicating that the first automobile can be provided for the consumer, and the offer indicating that the first automobile can be provided for the consumer;

request, from the first dealer, via a dealer interface, an inventory less bid to sell the first automobile based on the first manufacturer response;

receive, from the first dealer located at the second location and engaging in inventoryless bidding, the inventoryless bid to provide the first automobile, which is at least one of yet to be manufactured and in the inventory of another entity;

generate driving directions from the first location to the second location; and provide the inventoryless bid and the driving directions to the consumer interface, the inventoryless bid including at least a price and a delivery option; and

receiving a consumer selection of the inventoryless bid including a first delivery option which specifies a pickup location at the first dealer, wherein the consumer selection indicates a consumer intention to purchase the first automobile.

The case is Vroom Inc. v. Sidekick Tech., LLC, No. 221CV06737WJMJSA, 2022 WL 2314892 (D.N.J. June 28, 2022)

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