EP0900424B1 - Method and system for processing and transmitting electronic auction information - Google Patents

Abstract

A system and method for conducting a multi-person, interactive auction, in a variety of formats, without using a human auctioneer to conduct the auction. The system is preferably implemented in software. The system allows a group of bidders to interactively place bids over a computer or communications network. Those bids are recorded by the system and the bidders are updated with the current auction status information. When appropriate, the system closes the auction from further bidding and notifies the winning bidders and losers as to the auction outcome.

Description

BACKGROUND OF THE INVENTION1. Field of the Invention
• The present invention relates generally to electronic commerce andmore particularly to conducting an interactive auction over an electronicnetwork.
2. Description of the Related Art
• Auctions usually take the form of a physical gathering of biddersassembled together within an auction house. Auctions presenting morevaluable, collectible merchandise, such as art, coins and antiques, areoften preceded by preparation of a catalog of merchandise, circulated tointerested parties in advance of the gathering at the auction house,where bidding by those physically present will take place. For auctionsof more mundane items, such as household possessions, estate salesand the like, the interested bidders simply appear at the appointed timeand place and bid on merchandise in which they are interested.
• Traditional auctions requiring a bidder's physical presencedisadvantageously require that the merchandise lots up for sale beavailable at the auction venue for inspection by the bidders andsubsequent pickup by the successful bidders. For many types ofmerchandise it would be far easier for both buyer and seller to leave theinventory at its original source and ship purchased items to thesuccessful bidders at the end of the auction. Moreover, physicalauctions have the still further disadvantage that only one item may beauctioned at a time. The auctioneer solicits bids from the floor for agiven lot, but once the highest bid has been accepted, the lot is closedand the next lot brought forward. This sequential processing combinedwith the finite amount of time available to a gathered group is inherentlylimiting because multiple lots cannot be auctioned simultaneously to thesame group of people during their limited period of availability.
• Some changes in bidding requirements have made traditionalauctions somewhat more convenient for bidders. Many auction firmsallow bidders to submit their bids in advance of the auction. Advancebidding may be done by mail as a convenience to the bidders so thatthey do not have to be physically present at the auction. Also, theadvent of the telephone and facsimile machine allowed bidders to submitbids in near real-time during the course of an auction. Thesetechnologies free the bidder from being physically present at the auction,thereby saving time and travel expense. To incorporate thesetechnologies into the traditional auction format, representatives of theauction firm receive telephone or facsimile bids from their clients andalert the auctioneer of these new bids. Similarly, the representativesmay relay information about the current bid items, such as the currenthigh bid, back to the telephone bidders.
• Bidding by mail or facsimile suffers a significant disadvantage ascompared to bidding in person or by telephone because the mailing orfaxing bidder has no opportunity to increase a bid in quick response tocompetitive bids received from the floor or by telephone. Moreover,although telephone bidding allows the bidder to avoid travel expense andinconvenience, traditional auctions may be scheduled at inconvenienttimes for many remote bidders. Also, because of the large number ofitems or lots sold in a typical auction, which can number in thethousands, it is impractical for a telephone bidder to stay on the line fora two to eight hour period in order to be present when the few lots inwhich the bidder has an interest come up for sale. The lots in which thetelephone bidder is interested may be scattered throughout the lengthytraditional auction. Time zone differences further diminish the appeal oftelephone bidding for an international potential customer base.
• All of these limitations and disadvantages of physical auctions,even when telephone bidding or bidding by facsimile is permitted, serveto discourage a large number of bidders and ultimately leads to lowerselling prices to the economic detriment of the auctioneer and seller.
• Electronic auctions held over the Internet using electronic mail (E-mail)have provided a minor innovation as compared to more traditional physical options. In E-mail auctions, an auction catalog is electronicallymailed to people interested in bidding. Subsequently, bidders submittheir bids on individual lots to an auctioneer via E-mail. The auctioneerreads the electronic mail bids and enters them in a database of bids.When the auction closes, the auctioneer notifies the winning bidders,usually via electronic mail, and ships the merchandise to the winningbidders.
• There are several disadvantages to E-mail auctions. First, a humanauctioneer is required to prepare the auction catalog and to read andprocess the electronic mail bids. This takes a considerable amount ofeffort in a large auction. Secondly, it is difficult to keep the biddersupdated as to the current high bids on the various items. Electronic mailon most large public networks, such as the Internet, is lower prioritytraffic than most, meaning it can take several hours for bids to reach theauctioneer and for bidding updates to reach the bidders. Thirdly, as theauction closing draws near, the volume of bids may prohibit theauctioneer from sending out high bid information to the bidders becauseof the time involved in reading the electronic mail bids and in enteringthem into the bid database.
• A recent innovation applied to E-mail auctions is the use of theInternet's World Wide Web (WWW) facility to post descriptions of themerchandise and show the current high bids. This innovation providesthe advantage of eliminating the need to electronically mail biddingupdates to bidders. And since WWW traffic is much higher priority onthe Internet, bidders suffer less of a time lag in seeing updated Webpages. However, a human auctioneer is still involved and is required tomanually process the electronic mail bids, enter them into the biddatabase, and to update the World Wide Web pages with current highbid information.
• Sales firms other than auction houses have also used theInternet's World Wide Web facility to post descriptions of theirmerchandise and to offer the merchandise for sale at a set price. Thesesystems are automated and are capable of accepting an order from acustomer by having that customer fill out an online order form. This order information is taken by the system and placed into an orderdatabase or accounting system which then processes the order.However, such systems sell merchandise only at a fixed price and do notallow merchandise to be auctioned off, or to have their pricesdynamically adjusted in an interactive manner in response to bids andother market conditions such as supply and demand.
• Security brokerage firms for years have used automatedtransaction systems for matching buy and sell orders for securities. Forexample, the New York Stock Exchange's DOTS (Direct OrderTransmission System) and the NASDAQ's SOES (Small Order ExecutionSystem) systems offer complete electronic matching of buyers andsellers. However, these systems do not operate an auction. Theymerely pair buy orders with sell orders when the pricing criteria of bothsides of the trade are met.
• A number of issued U.S. patents relate to various forms ofelectronic commerce. These patents fall into three broad categories: 1)patents relating to on-line networks, 2) patents relating to electroniccommerce over on-line networks, and 3) patents related to various formsof securities (e.g., stocks and futures) trading via electronic means.From the first of these groups, on-line networks, U.S. Patents Nos.5,406,475 entitled Data Processing Network Having A Plurality OfIndependent Subscribers, 5,235,680 entitled Apparatus And Method ForCommunicating Textual And Image Information Between A HostComputer And A Remote Display Terminal, and 5,310,997 entitledAutomated Order And Delivery System, are representative of the priorart. These patents describe systems of terminals connected over widearea networks to centralized computers. However, they do not disclosethe details of electronic commerce or auctions in particular.
• In the second group, patents relating to electronic commerce, U.S.Patent Nos. 5,285,383 entitled Method For Carrying Out TransactionsUsing Electronic Title, and 5,297,031 entitled Method And Apparatus ForOrder Management By Market Brokers, describe various means forconducting transactions over electronic communications networks. Theyalso describe various means for displaying merchandise for sale to a plurality of customers connected to a central computer of a computernetwork and various means for conducting simple sale transactionswhere a buyer purchases an item at the stated price. As a group, thesepatents do not disclose the means for conducting electronic auctions orany sales format other than a simple or "straight" sale.
• One particular U.S. patent, No. 4,789,928, discloses a means forsoliciting bids over an electronic network from bidders that are remote tothe site of a live auction. This system records bids from remote biddersand simultaneously transmits the current high bid from the floor of thephysical auction to the terminals of the remote bidders. However, thispatent does not disclose or suggest the concept of an electronicallyconducted auction including a means for automatically closing theauction under certain conditions and without benefit of a live humanauctioneer. Furthermore, this patent fails to disclose or suggest a meansfor auctioning a plurality of items simultaneously; rather, the disclosedsystem is strictly tied to the sequential proceedings of a physicalauction. Finally, this system contemplates only a simple "highest bidder"auction where a single lot goes to an individual high bidder. This systemcannot handle a lot available for auction which includes a plurality ofitems and where a plurality of winning bidders sufficient to match theplurality of auctioned items exists.
• In the third group of patents related to electronic commerce,patents relating to securities trading, U.S. Patents Nos. 4,412,287entitled Automated Stock Exchange, and 5,077,665 entitled DistributedMatching System, disclose means for prospective buyers to post offersto buy a given security at a specific price and for prospective sellers topost offers to sell a given security at a specific price. These automatedsystems maintain lists of buy and sell orders. If an offer to buy asecurity is placed at a price greater than or equal to an existing offer tosell that security at a given price, these systems will automaticallyconsummate the trade by matching the buyer with the seller. While thesecurities industry uses, and these patents disclose, such terms as"auction" and "bid", they are actually referring to the process ofmatching a set of buyers' bids with a set of sellers' prices. There is noauction in the true sense of a plurality of bidders simultaneously bidding in a manner accessible to all bidders and sellers in order to achieve a highselling price. In fact, these patented systems do not include disclosure ofthe list of open buy or sell orders, thus depriving the seller of the ability toopenly solicit the highest price for securities. Instead, the market price ofsecurities sold through these automated systems fluctuates up and downbased upon the last successful match between an open buy order and anopen sell order when both the buyer and seller have placed orders atcompatible prices. There is no ability in such systems to conduct trulycompetitive and open bidding.
• The present invention overcomes the above-listed drawbacks ofthe background art by providing a method and system for conductingauctions and mark down sales of merchandise over a computer networkwithout the aid of a human auctioneer. The system is open to biddersanywhere in the world, leading to increased bid activity. Complete andthorough descriptions of all offered merchandise may be placed on-line,since the costs associated with printing auction catalogs are minimized inan electronic medium. An auction within the inventive system may beconducted over a period of time, mitigating the problems of inconvenientscheduling and time zone differences. A variety of auction formats can beemployed within the inventive system depending on the type ofmerchandise being sold. And finally, the method and system of thepresent invention can be conducted automatically without the need for ahuman auctioneer, thereby allowing for a large number of items to becontinuously auctioned.
• NL 9300266A discloses a computer system for conducting auctionsover a computer network, comprising means for posting on a computernetwork information describing each lot of a plurality of lots that areavailable for bidding by a plurality of bidders; a bid receiving means forreceiving a bid related to one of the plurality of lots; and a bidcategorization means for categorizing the received bid as successful orunsuccessful.
• According to one aspect of the present invention there is provideda computer system for conducting auctions over a computer network,comprising: a posting means for posting on a computer networkinformation describing each lot of a plurality of lots that are available forbidding by a plurality of bidders, each lot including at least one item; anauction selection means for associating each lot of the plurality of lots withan auction format selected from a plurality of available auction formats; abid receiving means for receiving a bid related to at least a portion of a lotof the plurality of lots; and a bid categorization means for automaticallycategorizing the received bid as successful or unsuccessful in accordancewith the selected auction format for the lot.
• The present invention also provides corresponding methods andcomputer-readable media.
• A primary advantage of this system is that it results in greaterprices for merchants as well as broader distribution of their products. Byincorporating an auction format which is available to a wide audience viaelectronic means, the inventive system and method results in morebidders, greater demand, and hence higher prices for the seller. Andbecause this electronic system reaches a geographically diverseaudience, merchants' product lines become visible in areas where theirproducts are not normally distributed or advertised, resulting in increasedsales volume without increased marketing expense. As the networkgrows, business grows. Furthermore, the electronic auction system is automatic and does not require a human auctioneer, thereby allowingmany individual items to be auctioned during the same time period andproviding a decrease in costs associated with running an auction. Indeed,it would not be possible to operate an equivalent twenty-four hour per day,seven day per week auction with potentially hundreds or even thousandsof individual items and millions of potential bidders without such aninventive electronic auction method and system.
• FIG. 1 illustrates a preferred computer environment forimplementing the system and method of the present invention.
• FIG. 2 illustrates a merchandise catalog page offering an item forsale via electronic auction on the Internet's World Wide Web;
• FIG. 3 depicts a bid form for bidding on an auction item;
• FIG. 4 is a block diagram of components illustrating a preferredembodiment of the present invention;
• FIG. 5 is a flowchart illustrating the bid validator and its method ofoperation;
• FIG. 6 is a flowchart illustrating the auction manager and itsmethod of operation;
• FIG. 7 is a flowchart illustrating the bid manager and its method ofoperation;
• FIG. 8 is a flowchart illustrating the electronic mail messenger andits method of operation;
• FIG. 9 is a flowchart illustrating the standard auction format andits method of operation;
• FIG. 10 is a flowchart illustrating the Dutch auction format and itsmethod of operation;
• FIG. 11 is a flowchart illustrating the progressive auction formatand its method of operation;
• FIG. 12 is a flowchart illustrating the buy or bid sale format and itsmethod of operation;
• FIG. 13 is a flowchart illustrating bid quantity determination andits method of operation; and
• FIG. 14 is a flowchart illustrating the markdown price adjustmentfeature of the present invention and its method of operation.
DETAILED DESCRIPTION OF A PREFERRED EMBODIMENT
• An inventive method and system is disclosed for conducting amulti-bidder, interactive auction without using a human auctioneer toconduct the auction. Preferably implemented in software, the electronicauction system allows a group of bidders to interactively place bids overa computer or communications network, automatically records the bids,updates the bidders with the current auction status information, closesthe auction from further bidding when appropriate, and notifies thewinning bidder or bidders and loser or losers as to the auction outcome.
• The inventive system includes a database for maintainingdescriptions of the merchandise for auction, the bids, and other relevantinformation in a commercially available database system. Databasesearches are preferably performed periodically to check for new items tobe made visible to potential bidders. Such periodic searching allows anindividual charged with maintaining this system to load relevantinformation into the database at his or her leisure. Once the database isloaded with information about the item and the item is scheduled forpresentation to potential bidders, the system takes the merchandiseinformation and creates a human readable catalog page for a viewingover a public network such as the Internet's World Wide Web. Biddersare then able to view the new item for auction and to place their bids.These catalog pages preferably contain the current high bid, bidincrement, quantity available, merchandise description, and picture of theitem.
• Upon accessing a public network and seeing an item's catalogpage, the bidder may press a button on the catalog page or take somesimilar action which causes a bid form to be displayed on the screen.The bidder then enters the information necessary to place a bid, such astheir name and address, bid amount, payment information, etc., and thenpresses a bid submission button, or takes a similar action which sendsthe bid to the system.
• The system receives the electronic bid information and places it inthe bid database. Because this new bid will, in general, be a bid for ahigher amount than was last bid by another party, the system willregenerate the item's catalog page. This updated catalog page will thenshow the new high bid to any prospective bidders who later access thatcatalog page.
• Because most bidders will not, in general, be accessing thenetwork and viewing the merchandise catalog pages as they are updatedwith new high bids, the system may send electronic mail notifications tobidders who have been outbid by the just-placed bid. These electronicmail notification messages preferably contain the relevant merchandiseinformation, the current high bid, the bid increment, etc., and encouragethe bidder to submit a new and higher bid to outbid the current highbidder. These electronic mail notification messages allow the bidder toenter a new bid by replying to the electronic mail message and sending itback to the system.
• Upon receiving a new or revised bid via electronic mail, the systemfollows the same set of actions as when the bidder places a bid usingthe electronic bid form when viewing a merchandise catalog page,namely, the system extracts the relevant bid information from theelectronic mail message, deposits this information in the bid database,and then updates the merchandise catalog page as appropriate. Such anelectronic mail message bid may further cause a new round of electronicmail notifications to go out to the recently outbid bidders.
• This process preferably continues until the system detects that theitem is scheduled to be closed for further bidding or another closingtrigger is detected. At this point, the system closes the auction byupdating the merchandise catalog page with the final winning bidinformation and by sending electronic mail notifications to both thewinning bidder or bidders and the losing bidder or bidders.
• The present invention provides an electronic auction method andsystem for presenting merchandise for sale at auction to customers overan electronic network, such as the Internet's World Wide Web. Potential customers are presented with a series of descriptive merchandise catalogpages through which they may navigate to find items (lots) of interest.Upon finding a lot of interest, customers may click a button on screen todisplay a form for placing a bid on the lot. After submitting this bid, theelectronic auction system records the bid and updates the lot'smerchandise catalog page to show the current high bid or bids and towhom such bids are attributable. When the auction is closed, after aperiod of no bidding activity, at a predetermined time, or when a desiredsales volume is reached, the electronic auction system notifies thewinning and losing bidders by electronic mail and posts a list of thewinning bidders on the closed lot's merchandise catalog page.
• The present invention is preferably implemented as acomputerprogram 248 running on a centralserver host computer 250, shown inFIG. 1, attached to awide area network 275 accessible by manypotential customers throughremote terminals 210. A preferred networkfor implementing the present invention is the Internet which is accessibleby a significant percentage of the world population, although thenetwork may also be a local area or limited area accessible network.Potential customers are presented atscreen 280 with merchandisecatalog pages, such as the one shown in FIG. 2, generated bymerchandisecatalog page generator 25 shown in FIG. 4. Eachmerchandise catalog page includesseveral action buttons 5 that allowthe customer to move from catalog page to catalog page and to placebids using keyboard 240 andpointing device 260. The user may call upan index of available merchandise by pressingbutton 7 or may return toa central home page by pressingbutton 9.
• By pressing bid button 1 in FIG. 2, the customer is presented witha bid form such as the one shown in FIG. 3. The customer fills out therequired information in the bid form and presses "Place Bid"button 2 tosend the bid to the electronic auction system for processing. Otherequivalent means for submitting a bid could be used, as understood bythose skilled in the art to which the present invention pertains.
• FIG. 4 illustrates a high level block diagram of the electronicauction system of the present invention. As shown, information frombid form 20 is received by the electronic auction system where it isprocessed bybid validator 21.Bid validator 21 examines the bidinformation entered by the customer onbid form 20 to ensure that thebid is properly formatted, all necessary data is present, and the datavalues entered look credible. Exemplary functions ofbid validator 21include verifying credit card information entered by the customer,checking that a complete name and shipping address has been entered,that the proper state abbreviation and zip code have been entered, thatan appropriate bid amount has been entered, and that a telephone orfacsimile number has been entered. Once the bid information has beenvalidated, thebid validator 21 places the bid inbid database 31.
• Auction manager 26 preferably frequently queries thebid database31 to see if any new bids have been placed. If new bids are foundduring the query, thenauction manager 26 calculates the current highbidder or bidders and instructs merchandisecatalog page generator 25 toregenerate a catalog page with the updated bid information.
• Auction manager 26 is also responsible for opening and closingauctions. This entails making merchandise lots available for bidding bycustomers and disabling their associated buy or bid features on themerchandise pages that have been posted to potential bidders but haveclosed. Whenauction manager 26 determines that a new lot should beopened for bidding or an available lot should be closed, it instructsmerchandisecatalog page generator 25 to create or update themerchandise catalog pages for the appropriate lots.
• Electronic mail messenger 27 frequently queriesbid database 31for bids recently marked byauction manager 26 as having been outbid oras having won an item in a recently closed auction. If such bids arefound, theelectronic mail messenger 27 formats an appropriateelectronicmail notification message 24 and sends this message to thecustomer. Many customers read their electronic mail throughout theday, making this a convenient mechanism for keeping them informedabout the status of merchandise on which they are actively bidding.Bidders may reply to an electronicmail notification message 24 informingthem that they have been outbid by including an increased bid amount in the reply message. Anelectronic mail bid 22 sent in reply to thenotification is received by the electronic auction system and processedbybid vaiidator 21 as described above.
• FIG. 5 illustrates in detail the procedure of bid validation asaccomplished bybid validator 21 shown in FIG. 4. A bid is received bybid validator 21 and the customer is looked up atstep 41 incustomerdatabase 28. If no customer record exists for the customer then a newcustomer record is created 42 and placed incustomer database 28.From there, the bid information is validated 43 as previously described.If the bid data includes one or more errors, then an error message isreturned 44 to the bidder, preferably in the form of a well-formattedpage posted across the network, itemizing the errors found in the bid. Ifthe bid is valid, as found instep 43, then the bid is placed 46 inbiddatabase 31.
• FIG. 6 provides a detailed illustration of the procedures carried outbyauction manager 26.Auction manager 26 is preferably acontinuously running system that begins by getting the current time asatstep 51. It then checks to see if any new items for sale are to beopened by examining the merchandise database to see if any newmerchandise items are scheduled to be made available for bidding bycustomers at or before the current time.Operator 300, or someautomated substitute, may upload merchandise and schedulinginformation to the database, as shown in FIG. 1. If new merchandiseitems are scheduled for posting, these items are opened for bidding 52.The auction manager then examines the merchandise database to see ifany merchandise items are scheduled to be closed from customerbidding. If so, these items are closed from bidding 53.Auction manager26 then examines the merchandise database to see if any merchandiseitems posted with a price markdown feature are scheduled to have theirprices adjusted. If so, the prices of these items are adjusted 54 inaccordance with the particular item's price adjustment parameters. Suchparameters may include bidding activity over time, amount of bidsreceived, and number of items bid for.Auction manager 26 thenupdates 55 the bid list for open items by recalculating the current highbidder list and regenerating the merchandise catalog pages 56 to reflect these new bids. This step is more fully described below with referenceto FIG. 7.
• FIG. 7 illustrates the procedures carried out by the bid manager inupdating the bid list foropen items 55 as shown in FIG. 6. The bidmanager begins by checking 61 if there are more merchandise items tobe processed. If such items are found, the bid manager selects 62 amerchandise item to process and queries 64 the bid database for bids forthis item. These bids are sorted 65 using a variety of different priorityranking schemes depending upon the auction method and system usedfor the particular merchandise item, as described in more detail below.Then, the bids are marked 66 as either successful or unsuccessfuldepending upon the bid price of the respective bids and the quantity ofthe item being bid on relative to the quantity of the item beingauctioned. In a preferred embodiment, a quantity of an item may be putup for auction, and individual bidders may bid on any quantity of theitem desired, up to the quantity of the item being auctioned.
• The bid manager then checks 67 to see if there are any activeproxy bids marked as unsuccessful. A proxy bid is a special bid typethat allowsauction manager 26 to automatically bid on the bidder'sbehalf up to a limited amount established by the bidder when his or herinitial bid is placed. The auction manager will increase the bid asnecessary up to the limit amount. This feature allows the customer toget the lowest possible price without exceeding a limit preferablyestablished when the bid is entered. If there are active proxy bidsmarked as unsuccessful, then thebid manager increments 69 the proxybids by a preset bid increment. This procedure of sorting 65 marking 66bids and incrementing 69 the proxy bids as required continues untileither there are no additional proxy bids marked as unsuccessful or theproxy limits have been reached on the proxy bids. At this point,biddatabase 31 is updated 68 with the marked bids. This process is thenrepeated for each merchandise lot open at the current time for biddingby customers.
• FIG. 8 illustrates the procedures carried out byelectronic mailmessenger 27 which notifies bidders when they have been outbid. When marked bids are updated inbid database 31 as shown in FIG. 7,electronic mail messenger 27 detects 81 the presence of these markedbids and then looks up 82 the customer's electronic mail address andlooks up 83 inventory information on the item desired by the bidder.With this information,electronic mail messenger 27 constructs 84 anelectronic mail message informing the bidder that he or she has beenoutbid. Once constructed, the electronicmail notification message 24 issent to the bidder as shown atstep 85.
• One skilled in the art to which the present invention pertains willrecognize that the various components of the electronic auction systemcan communicate between themselves in a variety of ways. In apreferred embodiment,bid validator 21,auction manager 26, andelectronic mail messenger 27 communicate by adding, marking, andupdating records in the various databases. Each of these componentsperiodically checks at least one of the databases to see if anythingrelevant to their respective functions has changed and take actionaccordingly. However, the components could send direct messagesbetween themselves or call each other by means of program subroutinesto signal important events that would require one or the othercomponent to update its state.
• One skilled in the art to which the present invention pertains willfurther recognize that a variety of different auction formats may beimplemented using the basic technique described above. The simplest isthe "Standard Auction" format, whereby the electronic auction systemawards the merchandise to the top bidder or bidders in accordance withtheir bids once bidding has stopped. Using this format, if there is aplurality of a specific item, the system awards the merchandise to thetop bidders. Bidders may bid on more than one unit, and differentsuccessful bidders will, in general, pay different prices for an item.
• FIG. 9 illustrates the Standard Auction format wherebid manager55, shown in FIG. 6, determines which bids to mark as successful orunsuccessful, as shown instep 66 in FIG. 7.Bid manager 55 begins bysorting 91 the bids by amount of the bid. If there are bids remaining tobe processed, determined atstep 97, the highest remaining bid is selected 98 to be checked. If the bid is below the minimum bid allowedfor the particular merchandise item, as determined atstep 93, the bid ismarked 99 as unsuccessful. If not, the bid is checked 94 to see if thequantity may be satisfied. A bid may be satisfied if the quantity of theitem bid upon is available. This information is available fromauctiondatabase 29. If not, then the bid is marked 99 as unsuccessful.Optionally, the system could ask the user if a lesser quantity than bidupon will be acceptable, as shown in FIG. 2 at box 310. If the bidquantity can be satisfied, as determined atstep 94, then the bid ismarked 95 as successful and the item quantity remaining, recorded inauction database 29, is decremented 96 by the bid quantity. After thequantity remaining is decremented 96, and if, as determined atstep 97,there are still bids remaining to be marked, the next highest bid isselected 98 and the steps of FIG. 9 are repeated.
• The electronic auction system of the present invention alsoprovides a "Dutch Auction" format, wherein the electronic auctionsystem awards the merchandise to all of the top bidders for whom thereis available inventory at the price bid by the lowest successful bidder.This format may be preferred by customers for being the most fair whena plurality of a specific item is being auctioned. As with all bidding,there will be a range of bids submitted. In the Dutch Auction format,the highest bidders are awarded the merchandise but at the same pricefor all successful bidders, the price bid by the lowest successful bidder.
• FIG. 10 illustrates the Dutch Auction format wherebybid manager55 shown in FIG. 6 determines which bids to mark 66 as successful orunsuccessful, as shown in FIG. 7.Bid manager 55 begins by sorting 111the bids by amount of the bid. If there are bids remaining to beprocessed, as determined atstep 97 the highest bid is selected 98 to bechecked. If the bid is below the minimum bid allowed for the particularmerchandise item, as determined atstep 93, the bid is marked asunsuccessful 99. If not, the bid is checked 94 to see if the bid quantitymay be satisfied. If the bid cannot be satisfied, then the bid is markedas unsuccessful atstep 99. If the bid quantity can be satisfied, then thebid is marked as successful atstep 95 and the item quantity remaining isdecremented 96 by the bid quantity. At this time the MinWin price is recorded 117. The MinWin price is the price above which a new biddermust bid in order to be successful in the Dutch Auction format were theauction to close at that moment. The MinWin price is, in general, the bidprice of the lowest bid that is marked as successful. After recording theMinWin price atstep 117, where there are still bids remaining to bemarked, as determined atstep 97, the next highest bid is selected 98and the steps of FIG. 10 are repeated.
• The electronic auction system of the present invention alsoincludes a "Progressive Auction" format, wherein the electronic auctionsystem awards the merchandise to the top bidders based on price bid.As with the Dutch Auction format, the highest price bids are awardedthe merchandise up to the quantity available of the item being auctioned.However, unlike the Dutch Auction format, the system awards themerchandise to the successful bidders at different prices depending onthe quantity bid. In a preferred embodiment, a successful bidder for asingle unit of an item is awarded the item at the price of the lowestsuccessful bid for a single unit of the item. A successful bidder for ahigher quantity of the same item is awarded the item at the price of thelowest successful bid at that quantity or any lower quantity. Forexample, a successful bidder for a quantity of five would pay the lowestprice for any successful bid for quantity one through five of the item.The price paid for a given quantity is termed the "MinWin" price for thatquantity. The Progressive Auction format ensures that successfulbidders for a quantity of an item pay the lowest price paid by any othersuccessful bidder at that quantity level or below. Use of this formatleads to lower prices for those who successfully bid on larger quantitiesof an item, provides an impetus for volume buying, and therefore leadsto greater sales volume.
• FIG. 11 illustrates the Progressive Auction format, whereinbidmanager 55 shown in FIG. 6 determines which bids to mark assuccessful or unsuccessful 66 as shown in FIG. 7.Bid manager 55begins by sorting 131 the bids by amount of the bid. If there are bidsremaining to be processed, as determined atstep 97, the highest bid isselected 98 to be checked. If the bid is determined to be below theminimum bid allowed for the particular merchandise item atstep 93, the bid is marked as unsuccessful 99. If not, the bid is checked atstep 94to see if the bid quantity can be satisfied. If not, then the bid is marked99 as unsuccessful. If the bid quantity is checked and found to besatisfied atstep 94, then the bid is marked as successful 95 and theitem quantity remaining is decremented 96 by the bid quantity. TheMinWin price is then recorded 137. The MinWin price is the price abovewhich a new bidder must bid in order to be successful in the ProgressiveAuction format were the auction to close at that moment. The MinWinprice is, in general, the bid price of the lowest bid at the current bidquantity or lower that is marked as successful. After recording theMinWin price 137, if there are still bids remaining to be marked, the nexthighest bid is selected 98 and the steps of FIG. 11 are repeated.
• The electronic auction system also includes a "Buy Or Bid" formatwherein the electronic auction system awards merchandise to bidderswho place bids at or above a posted selling price. The item remains forsale until the available quantity is purchased. Bids that are below theposted selling price are maintained in reserve by the system. If a certainsales volume is not achieved in a specified period of time, the electronicauction system automatically reduces the price by a predeterminedamount or a predetermined percentage of the price and updates themerchandise catalog page accordingly. The lower price may be at orbelow some of the bids already in the bid database. If such bids arepresent, they are then converted to orders and the quantity available isreduced accordingly. Similarly, if a certain sales volume is exceeded in aspecified period of time, the electronic auction system automaticallyincreases the price by a set amount or by a set percentage of the priceand updates the merchandise page accordingly. These automatic pricechanges allow the seller to respond quickly to market conditions whilekeeping the price of the merchandise as high as possible to the sellersbenefit.
• FIG. 12 illustrates the Buy Or Bid format wherebybid manager 55,as shown in FIG. 6, determines which bids to mark as successful orunsuccessful 66, as shown in FIG. 7.Bid manager 55 begins by sorting151 the bids by amount. If there are bids remaining to be processed, asdetermined atstep 97, the highest bid is selected 98 to be checked. If the bid is below the current price of the merchandise item, as determinedat 93, then the bid is marked 99 unsuccessful. If the bid is not belowthe current price, as determined at 93, then the bid is checked 94 to seeif the bid quantity can be satisfied. If not, the bid is marked asunsuccessful 99. If the bid quantity can be satisfied, then the bid isconverted into anorder 155 at the current price of the item and theitem's quantity remaining is decremented 96. The bids remaining to beprocessed, as determined at 97, are then checked and the steps of FIG.11 are repeated. From time to time, the current price of themerchandise item may be raised or lowered either by manual input fromanoperator 300 as shown in FIG. 1 or by automatically using the"markdown" feature described below with reference to FIG. 14.
• FIG. 13 illustrates in more detail the step of determining if the bidquantity can be satisfied 94. If the bid quantity is determined to be lessthan the available quantity of the merchandise item atstep 171, then thetest is found satisfied atstep 174. If not, then the bid is checked at 172to see if the bidder is willing to accept a reduced quantity. Preferably,when placing a bid, the bidder indicates its willingness to accept a partialquantity in the event that an insufficient quantity of the item is availableto satisfy the bid if successful. If the bidder is found willing to accept areduced quantity at 172, then the test is found satisfied at 174. If not,the test fails at 173 and the bid is marked as unsuccessful at, forexample, 99 in FIG. 9.
• The electronic auction system also includes a "markdown" feature,wherein the electronic auction system of the present invention awardsmerchandise to buyers who place orders at the currently posted sellingprice. The item remains on sale until the available quantity is purchased.If a certain sales volume is not achieved in a specified period of time, theelectronic auction system automatically reduces the price by a setamount or a set percentage and updates the merchandise catalog pageaccordingly. This lower price encourages buyers to take advantage ofthe new price. If a certain sales volume is exceeded in a specified periodof time, the electronic auction system automatically increases the priceby a set amount or a set percentage and updates the merchandise pageaccordingly. These automatic price changes allow the system to respond to market conditions while keeping the prices of themerchandise as high as possible to the seller's benefit.
• FIG. 14 illustrates the Markdown price adjustment featurewherebyauction manager 26, as shown in FIG. 4, periodically adjusts 54the sales prices or minimum bid prices, of the merchandise itemsaccording to a predetermined schedule as shown in FIG. 6. If moremerchandise items are found in the merchandise database at 181, amerchandise item is selected 183 for Markdown. If a Markdown eventhas occurred for the item, as determined at 184, the item's price isadjusted 185 according to the schedule preset for the individual item.Alternatively, the adjustment could be relative to prices offered for themerchandise. The merchandise item is then updated 186 in the databasewith the new sale price or minimum bid price. The steps of FIG. 14 arethen repeated for each successive merchandise item in the merchandisedatabase.
• The electronic auction system of the present invention preferablyincludes a "Proxy Bidding" feature that may be applied to any of theauction formats described above. FIG. 7 fully describesauction manager26 including the Proxy Bidding feature. When Proxy Bidding isemployed, a bidder places a bid for the maximum amount they arewilling to pay. The electronic auction system, however, only displaysthe amount necessary to win the item up to the amount of the currentlyhigh proxy bids of other bidders. Typically, the currently high bidsdisplay an amount that is one bidding increment above the secondhighest bid or bids, although a percentage above the second highest bidsmay be used as well. When a new bidder places a bid that is above acurrently displayed high bid, the proxy feature will, in general, cause thecurrently high bid to move up to an amount higher than the new bid, upto the maximum amount of the currently high bidder's proxy bid. Once anew bidder places a bid in excess of the currently high bidder's proxybid, the new bid becomes the current high bid and the previous high bidbecomes the second highest bid. This feature allows bidders toparticipate in the electronic auction without revealing to the otherbidders the extent to which they are willing to increase their bids, whilemaintaining control of their maximum bid without closely monitoring the bidding. Participation is engaged in automatically on the bidder's behalfby the inventive system. The feature guarantees proxy bidders thelowest possible price up to a specified maximum without requiringfrequent inquiries as to the state of the bidding.
• One skilled in the art to which the present invention pertains willrecognize that a variety of different auction formats may be implementedin addition to those described above. One skilled in the art will alsorecognize that the electronic auction system of the present invention canemploy a "Floating Closing Time" feature whereby the auction for aparticular item is automatically closed if no new bids are received withina predetermined time interval. This feature would typically beimplemented in a manner similar to that used to close auctions of olditems, as shown atstep 53 in FIG. 6. This feature forces the biddingactivity to occur within a shorter amount of time than would otherwisebe achieved because bidders are aware that the item will automaticallyclose if no new bids have been received in a timely manner. Thus,bidders have an incentive to stay active in the bidding process to avoidclosure of an item before maximum, and most potentially winning, bidshave been entered. The Floating Closing Time feature also allows moreitems to be auctioned during a period of time since each item is closedonce bidding activity ceases; the bidding period is not protracted to anartificial length as is the case when an item closes at a preset date andtime. The Floating Closing Time feature of the present invention may beemployed either in conjunction with or independent of a fixed closingtime for an item. When employed in conjunction with a fixed closingtime, the auction is closed either when the preset fixed time period hasexpired for the item or when no bidding activity has occurred within apreset time interval. This forces the bidding to cease at a particular timein case the bidding activity becomes artificially protracted.
• A general description of the present invention as well as apreferred embodiment of the present invention has been set forth above.Those skilled in the art to which the present invention pertains willrecognize and be able to practice additional variations in the methodsand system described which fall within the teachings of this invention.For example, although a preferred embodiment of the present invention chooses winning bids according to monetary amount included in the bid,preference for bids may also be determined according to time ofsubmission, quantity of merchandise bid for, total bid value, or someother combination of these characteristics. Accordingly, all suchmodifications and additions are deemed to be within the scope of theinvention which is to be limited only by the claims appended hereto.

Claims (37)

1. A computer system for conducting auctions over a computernetwork, comprising:

   a posting means (25) for posting on a computer networkinformation describing each lot of a plurality of lots that are available forbidding by a plurality of bidders, each lot including at least one item;an auction selection means (26) for associating each lot of the plurality oflots with an auction format selected from a plurality of available auctionformats;

   a bid receiving means for receiving a bid related to at least aportion of a lot of the plurality of lots; and

   a bid categorization means (26) for automatically categorizing thereceived bid as successful or unsuccessful in accordance with theselected auction format for the lot.
2. The computer system of claim 1, wherein an auction format of theplurality of auction formats comprises one selected from the group,comprising:
      Dutch auction, standard auction, progressive auction, and buy orbid auction.
3. The computer system of claim 1, wherein the bid receiving meansreceives the bid for the lot from a bid form.
4. The computer system of claim 1, wherein the posting means isadapted to receive a text message from a bidder of the plurality of bidderson a lot and post the message in association with the descriptiveinformation for a lot of the plurality of lots.
5. The computer system of claim 1, wherein the posting means isavailable to add a lot to the plurality of lots during an auction of another lotin the plurality of lots.
6. The computer system of claim 1, wherein the bid receiving meansreceives bids for at least two lots that are simultaneously open for auction,the at least two lots having different associated auction formats, andwherein the bid categorization means automatically categorizes thereceived bids as successful or unsuccessful in accordance with theassociated auction format for each lot.
7. The computer system of claim 3, further comprising a bid formgenerating means for generating the bid form, wherein the bid form isaccessible through the computer network by a bidder of the plurality ofbidders for use in submitting a bid for at least a portion of a lot of theplurality of lots.
8. A method for conducting auctions over a computer network, themethod comprising the steps of:

   posting on a computer merchandise information describing eachlot of a plurality of lots that are available for bidding by a plurality ofbidders, each lot having at least one item;

   associating each lot of the plurality of lots with an auction formatselected from a plurality of available auction formats;

   receiving a bid related to at least a portion of a lot of the plurality oflots; and

   automatically categorizing the received bid as successful orunsuccessful in accordance with the associated auction format for the lot.
9. The method for conducting auctions in claim 8, wherein an auctionformat of the plurality of auction formats comprises one selected from thegroup, comprising:
      Dutch auction, standard auction, progressive auction, and buy orbid auction.
10. The method for conducting auctions in claim 8, wherein the receiving step further comprises the step of receiving the bid for the lotthrough a bid form.
11. The method for conducting auctions in claim 8, further comprisingthe step of receiving a text message from a bidder of the plurality ofbidders and posting the message in association with the descriptiveinformation for a lot of the plurality of lots.
12. The method for conducting auctions in claim 8, further comprisingthe step of adding a lot to the plurality of lots during an auction of anotherlot of the plurality of lots.
13. The method for conducting auctions in claim 8, the receiving a bidstep further comprising the step of receiving bids on at least two lots thatare simultaneously open for auction, the at least two lots having differentassociated auction formats, and the automatically categorizing stepfurther comprising the step of automatically categorizing the received bidsas successful or unsuccessful in accordance with the associated auctionformat for each lot.
14. A computer-readable medium containing instructions forconducting auctions over a computer network through steps comprising:

    posting on a computer merchandise information describing eachlot in a plurality of lots that are available for bidding by a plurality ofbidders, each lot having at least one item;

    associating each lot of the plurality of lots with an auction formatselected from a plurality of available auction formats;

    receiving a bid for at least a portion of a lot of the plurality of lots;and

    automatically categorizing the received bid as successful orunsuccessful in accordance with the associated auction format for the lot.
15. The computer-readable medium of claim 14, wherein an auction format of the plurality of auction formats comprises one selected from thegroup comprising:
       Dutch auction, standard auction, progressive auction, and buy orbid auction.
16. The computer-readable medium in claim 14, wherein theinstructions for the receiving step further comprises instructions forreceiving the bid for the lot through a bid form.
17. The computer-readable medium in claim 14, the instructions forthe posting step further comprising instructions for receiving a textmessage from at least one of the plurality of bidders and posting themessage in association with the descriptive information for a lot of theplurality of lots.
18. The computer-readable medium in claim 14, the instructionsfurther comprising instructions for adding a lot to the plurality of lots byposting information for that lot during an auction of another lot of theplurality of lots.
19. The computer-readable medium in claim 14, the instructions forthe receiving step further comprising instructions for receiving bids on atleast two lots that are simultaneously open for auction, the at least twolots having different associated auction formats, and
       for the automatically categorizing step further comprisinginstructions for automatically categorizing the received bids as successfulor unsuccessful in accordance with the associated auction format for eachlot.
20. A computer system for enabling a plurality of simultaneousauctions over a network, at least two auctions having different auctionformats, the system comprising:

    posting means (25) for posting on a computer merchandise information describing each lot of a plurality of lots that are simultaneouslyopen for auction for bidding by a plurality of bidders, each lot having atleast one item;

    an auction selection means (26) for associating each lot of theplurality of lots with an auction format selected from a plurality of availableauction formats;

    a bid receiving means for receiving bids for the plurality of lots thatare simultaneously open for auction, wherein at least two lots of theplurality of lots have different associated auction formats; and

    a bid categorization means (26) for automatically categorizingeach bid received for a lot as successful or unsuccessful in accordancewith the selected auction format for that lot.
21. The computer system in claim 20, wherein an auction format of theplurality of auction formats comprises one selected from the groupcomprising:
       Dutch auction, standard auction, progressive auction, and buy orbid.
22. The computer system in claim 20, wherein the bid receivingmeans receives the bid for the lot from a bid form.
23. The computer system in claim 20, wherein the posting means isadapted to receive a text message from a bidder of the plurality of biddersand to post the message in association with the descriptive information ofa lot of the plurality of lots.
24. The computer system in claim 20, wherein the posting means isavailable to add a lot to the plurality of lots during an auction of another lotof the plurality of lots.
25. The computer system in claim 20, wherein an auction selectionmeans associates each lot of the plurality of lots with the auction format selected from the plurality of available auction formats.
26. A method for conducting a plurality of auctions simultaneouslyover a computer network, at least two auctions of the plurality of auctionshaving different auction formats, the method comprising the steps of:

    posting on a computer merchandise information describing eachlot of a plurality of lots that are available for bidding by a plurality ofbidders, the plurality of lots being simultaneously open for auction, eachlot including at least one item and having an associated auction format selected from a plurality of available auction formats;

    receiving bids for the plurality of lots that are simultaneously openfor auction, at least two of the lots of the plurality of lots having differentassociated auction formats; and

    automatically categorizing each bid received for a lot as successfulor unsuccessful in accordance with the associated auction formatassociated for that lot.
27. The method for conducting auctions in claim 26, wherein at leastone auction format is selected from the group comprising:
       Dutch auction, standard auction, progressive auction, and buy orbid auction.
28. The method for conducting auctions in claim 26, wherein thereceiving step further comprises receiving a bid for a lot through a bidform.
29. The method for conducting auctions in claim 26, wherein theposting step further comprising the step of receiving a text message froma bidder of the plurality of bidders and posting the message in associationwith the descriptive information for a lot of the plurality of lots.
30. The method for conducting auctions in claim 26, further comprisingadding a lot to the plurality of lots during an auction of another lot in theplurality of lots.
31. The method for conducting auctions in claim 26, further comprisingthe step of assigning an auction format from a plurality of availableauction formats to each lot of the plurality of lots.
32. A computer readable medium having instructions for conducting aplurality of auctions simultaneously over a computer network, at least twoauctions of the plurality of auctions having different auction formats, theinstructions for:

    posting on a computer merchandise information describing eachlot of a plurality of lots that are available for bidding by a plurality ofbidders, each lot including at least one item and having an associatedauction format selected from a plurality of available auction formats;

    receiving bids on plural lots that are simultaneously open forauction, at least two lots of the plural lots having different associatedauction formats; and

    automatically categorizing each bid received for a lot as successfulor unsuccessful in accordance with the associated auction format for thatlot.
33. The computer readable medium in claim 32, wherein an auctionformat of the plurality of auction formats comprises one selected from thegroup comprising: Dutch auction, standard auction, progressive auction,and buy or bid auction.
34. The computer readable medium in claim 32, wherein theinstruction for receiving bids includes instructions for receiving a bid for alot through a bid form.
35. The computer readable medium in claim 32, further comprisinginstructions for receiving a text message from a bidder of the plurality ofbidders on a lot of the plurality of lots and for posting the message inassociation with the descriptive information for that lot.
36. The computer readable medium in claim 32, wherein theinstructions further comprise instructions for adding a lot to the plurality oflots during an auction of another lot of the plurality of lots.
37. The computer readable medium in claim 32, further comprisinginstructions assigning to each lot an auction format from a plurality ofavailable auction formats.

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