The Industry's Leading Source For F&I, Sales And Technology

Software & Technology

Landmark Ruling Invalidates DealerTrack Patent; Appeal Expected

July 09, 2009

SANTA ANA, Calif. – DealerTrack’s six-year-old patent infringement suit against two of its competitors could be over, and all because of a man named Bernard Bilski. 

On Wednesday, the last remaining patent in the automotive software provider’s lawsuit against RouteOne LLC and Finance Express LLC was ruled invalid by Judge Andrew Guilford of the U.S. District Court for the Central District of California. Guilford cited a monumental decision by the U.S. Court of Appeals last year. That ruling, which changed the standard for determining patent eligibility, could be overturned by the Supreme Court next year, which could strengthen DealerTrack’s expected appeal.  

“It is important to note that not one claim of any DealerTrack patent has been held invalid based on prior art, so if we are able to have the District Court’s opinion reversed on appeal or obtain new claims in the Patent Office, DealerTrack will still have patents protecting its core business,” Mark O’Neil, chairman/CEO of DealerTrack, stated in a company press release. “We remain firmly committed to protecting our intellectual property rights and pursuing all possible avenues of appeal.” 

On Oct. 30, about a month after RouteOne won a key decision in the DealerTrack suit, the U.S. Court of Appeals upheld a September 2006 ruling by the U.S. Patent and Trademark Office to deny Bernard Bilski’s 10-year bid to patent a method for using hedge contracts in commodities training.  

The decision, which meant that ideas must be tied to a machine or apparatus, or that they must “transform an article into a different state or thing,” was at the center of Finance Express’ argument to invalidate DealerTrack’s Patent No. 7,181,427. Finance Express argued that none of the claims in DealerTrack’s eight-claim patent — which described a computer-aided method for managing credit applications between dealers with multiple rooftops, credit bureaus and lenders — met any one of the new standards set forth by the Bilski decision. 

“None of the claims of the ’427 Patent requires the use of a ‘particular machine,’ and the patent is thus invalid under Bilski,” argued Finance Express’ attorneys in court filings. “No reasonable fact-finder could conclude that Finance Express has failed to prove invalidity by clear and convincing evidence, and Finance Express is entitled to summary judgment of invalidity of the ’427 Patent.” 

DealerTrack’s expected appeal could rest on the Bilski decision — heralded by the U.S. Court of Appeals as “an historic opportunity to fix the U.S. patent system” — being overturned by the Supreme Court, which accepted Bilski’s petition on June 1 to have his case reviewed by the high court. Arguments are expected to begin this December.

"Although the United States Supreme Court has agreed to review the Bilski decision on which the court granted judgement in the latest invalid ruling, we're confident that the judgement in its favor will be upheld should DealerTrack elect to appeal," said Lawrence Hadley, a partner withe Los Angeles law firm, Hennigan Bennett & Dorman LLP, which represented Finance Express. "Finance Express proved that its Web-based dealer management system software did not meet any of the asserted patent infringement claims."

DealerTrack already lost a key ruling last September after the court sided with RouteOne over disputed claim language regarding two other patents involved in the case, 6,587,841 and 5,878,403. RouteOne was then granted a motion for summary judgment of non-infringement the day after the court’s determination. Finance Express was granted a similar motion yesterday.  

DealerTrack first filed its lawsuit against RouteOne on Jan. 24, 2004, charging the company with willfully infringing on three of its patents after RouteOne launched its Web-based credit application management system in 2003. DealerTrack later filed a similar suit against Finance Express and its president, David Huber, who responded shortly thereafter by filing counterclaims against DealerTrack. 

DealerTrack later filed a joint lawsuit against RouteOne and Finance Express on Oct. 27, 2006, after the two defendants partnered together. The two companies responded with their own claims.

“We are pleased, but not surprised, about the resolution in the case,” said Mike Jurecki, RouteOne CEO. “We remain steadfast in our original position announced in January 2004, that we do not, nor have we ever infringed any valid patent owned by DealerTrack. The Court, through its rulings, has confirmed RouteOne’s position in its summary judgments dismissing the case and rendering two DealerTrack patents invalid and holding the third non-infringed by RouteOne. We are highly confident that we will continue to prevail on any future court action on the matter.”

Your Comment

Please note that comments may be moderated. 
Leave this field empty:
Your Name:  
Your Email:  

CLOSE [X]

READ NEXT

CIMA Systems Selects SEcureData Solution From StoneEagle

The StoneEagle Group today announced that CIMA Systems (CIMA), a customer interactive management application that serves as an automated business development center for dealerships, selected SEcureData from StoneEagle to provide accurate, comprehensive and timely data from their clients dealership management systems (DMS).