Abstract:
A system and method are provided for rewarding participation in an auction where a first user places an item up for auction on a central database. A first potential buyer places a first bid at a first price for the item on the central database. A second potential buyer places a subsequent bid at a second bid price, exceeding the first price at least by a predetermined bid increment, to become a current high bidder for the item. When the auction is complete, the current high bidder wins the auction and the central database then records an award to non-winning bidders, such as the first potential buyer, as an incentive for future participation in other auctions. The reward can be offered to each unique bidder who does not win the auction, the last losing bidder, or some other variants of non winning bidders. The awards accumulated by non-winning bidders can be applied to future purchases where the user wins a subsequent auction.

Description:
FIELD OF THE INVENTION  
         [0001]    The present invention relates generally to systems for auctioning items and more particularly relates to an online auction system providing bidding incentives.  
         BACKGROUND OF THE INVENTION  
         [0002]    Auctions exist as a way to buy and sell goods and services. In essence, an auction occurs when a seller offers an item to a group of buyers for the highest price one of the group of buyers is willing to pay. In a traditional auction, the person running the auction, the auctioneer, starts the bidding at a first price set by the seller. Generally, a first buyer who wants the item for the first price bids that price, the auctioneer then raises the price by an amount and asks if anyone else would be willing to bid a second price for the item. If there is a second buyer who wishes to bid the second price for the item he or she does so and the cycle continues until a final bid price is reached, e.g., a price above which there are no bids.  
           [0003]    Traditionally, auctions have been held at auction houses. Auction houses include companies such as Christie&#39;s and Sotheby&#39;s. For an auction to occur at an auction house, a seller must decide to auction an item and entrust the auctioning of that item to the auction house. The auction house then publicizes the auction&#39;s time and place. At the appointed time and place the auction occurs and the item is auctioned off to a group of people who gather at the auction house.  
           [0004]    The internet has provided the capability to create new, virtual auction houses that can reach out to a larger audience than traditional auction houses were able to reach. The internet has evolved from an information repository to a virtual market for real goods. Currently, consumers seeking goods can purchase virtually anything they need on the Internet. During this evolution, online web sites started to appear which auction real goods. These sites take the place of an auctioneer and an auction house. In an online auction a selling user offers an item for auction on a web site. The selling user generally specifies the minimum price he or she will accept for the item, the starting date for the auction, and the closing date for the auction. Other users, the buying users, bid on the item. The online web site generally records the information provided by the seller, and begins auctioning of the item after the starting date for the auction. With the large number of users on the Internet these sites have become popular and useful. One of the largest online auction sites is ebay.com which offers a large number of items for auction each day.  
           [0005]    As online and offline auctions become increasingly popular, purchasing goods through auctions becomes increasingly competitive. Many users bid for the same item, but only one user gets the item. Users who did not make the high bid, and thus do not win the auction, become frustrated and some of those users seek out alternate ways, including other auction sites, online stores, or retail establishments, to purchase the goods they desire. Clearly, there remains a need for an improved system and method for retaining customers at online and offline auctions.  
         OBJECTS AND SUMMARY OF THE INVENTION  
         [0006]    An object of the present invention is to provide an auction system and method where the users who bid on the items are rewarded for their participation in an auction.  
           [0007]    Thus, a system according to an exemplary embodiment of the present invention is provided to achieve this object. The system includes a first user, a second user, a third user, and a central database. The central database, the first user, the second user and the third user communicate over a network. The first user puts an item up for auction on the central database. The second user places a first bid at a first price for the item. The third user places a second bid at a second price exceeding the first price for the item. The second user receives a reward for bidding on the item and being out bid by the third user.  
           [0008]    Preferably, the first user describes the item in an item profile. The item profile preferably includes a name for the item, a description for the item, an open date for the auction of the item, a close date for the auction, a reserve price for the item, and a bid increment for the item.  
           [0009]    In one embodiment, the reward is not credited to the recipient until the close date for the auction. The reward may be valued at fifty percent of the bid increment.  
           [0010]    Preferably, the users create a user profile before being able to put an item up for auction or bid on an item.  
           [0011]    In an alternate embodiment, a system for auctioning items is provided. The system includes a communications network, at least one seller connected to a central database through the communications network, and a group of buyers connected to the central database through the communications network. The system further includes one of the at least one seller putting an item up for auction on the central database. A first one of the plurality of buyers bidding a first bid of a first price for the item on the central database. A second one of the group of buyers bidding a second bid of a second price exceeding the first price for the item on the central database, and the central database awarding the first one of the plurality of buyers a reward for bidding on the item.  
           [0012]    In a further alternate embodiment, a central server computer is provided which can provide auction services to a group of buyers and sellers. The central server computer includes a communications interface for operatively coupling the central server computer to a communications network, digital storage media maintaining an auction database, and a processor. The processor is coupled to both the communications interface and the digital storage media. The processor creates a database record in the digital storage media in response to data received via the communications interface from a seller posting an item for auction. The processor makes the database record available to a plurality of buyers via the communications interface. The processor records a first bid from a first buyer at a first price for the item in the digital storage media, records a second bid from a second buyer at a second price exceeding the first price for the item in the digital storage media, and records an award to the first buyer in the digital storage media for bidding on the item.  
       
    
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0013]    Further objects, features and advantages of the invention will become apparent from the following detailed description taken in conjunction with the accompanying figures showing illustrative embodiments of the invention, in which:  
         [0014]    [0014]FIG. 1 is a simplified block diagram illustrating an overview of the present system.  
         [0015]    [0015]FIG. 2 is a simplified flow chart illustrating an overview of the present system.  
         [0016]    [0016]FIG. 3 is a simplified flow chart illustrating the steps involved when a user communicates with the present system.  
         [0017]    [0017]FIG. 4 is a simplified flow chart illustrating the browse auctions process.  
         [0018]    [0018]FIG. 5 is a simplified flow chart illustrating the bid process.  
         [0019]    [0019]FIG. 6 is a simplified flow chart illustrating the item purchase process.  
         [0020]    [0020]FIG. 7 is a simplified flow chart illustrating the auction close process.  
         [0021]    [0021]FIG. 8 is a simplified schematic diagram of a user profile.  
         [0022]    [0022]FIG. 9 is a simplified schematic diagram of an item profile. 
     
    
       [0023]    Throughout the figures, the same reference numerals and characters, unless otherwise stated, are used to denote like features, elements, components or portions of the illustrated embodiments. Moreover, while the subject invention will now be described in detail with reference to the figures, it is done so in connection with the illustrative embodiments. It is intended that changes and modifications can be made to the described embodiments without departing from the true scope and spirit of the subject invention as defined by the appended claims.  
       DETAILED DESCRIPTION OF PREFERRED EMBODIMENTS  
       [0024]    The invention is herein described with respect to online auctioning, but it will be recognized that the system and the configuration of the system can be likewise arranged for traditional auctions.  
         [0025]    [0025]FIG. 1 is a block diagram illustrating a system  100  for the online auctioning of items over a communications network  102 , preferably the Internet. A plurality of user computer terminals  106  can connect to an auction central server  104  through the communications network  102 . The user computers  106  can take any number of known forms including personal computer, PDA, television set top box, and the like. The auction central server  104  maintains a central processing unit  104   a , data storage capabilities  104   b , and a central database  104   c . To initiate an auction one of the plurality of users  106  must post an item profile  900  to the database  104   c  on the auction central server  104 .  
         [0026]    Referring now to FIGS. 1 and 9, to begin the auctioning of an item, one of the plurality of users  106  must provide an item profile  900  to the auction central server  104 . The auction central server  104  stores the item profile  900  in the auction database  104   c . The item profile  900  preferably contains: six user specified fields and five system specified fields. The six user specified fields are: an item name field  902 , an item description field  904 , an open date field  906 , a close date field  908 , a reserve price field  910 , and a bid increment field  912 . The five system fields are: a seller&#39;s username field  914 , a current high bid field  916 , a current high bidder field  918 , a last high bid field  920 , and a last high bidder field  922 .  
         [0027]    The item name field  902  is a data field and is the label under which the item will be auctioned. The item description field  904  is an optional field which describes characteristics of the item which is being auctioned to a prospective buyer. The open date field  906  is an optional field. The open date field  906  is used to define when the auction opens for general bidding. If the field is left blank, the auction is opened as of the date of the posting of the item profile  900  to the auction central server  104 . No bids are generally accepted before the open date of the auction. The close date field  908  is generally an optional field and is used to define when the auction closes. A default value may be provided for this field which is overridden by the close date  208  of the item profile  900  if one is specified. No bids are accepted after the close date of an auction. The reserve price field  910  is an optional field. The reserve price field  910  is used to specify the lowest price a user is willing to accept for the item. For example, if a seller is willing to accept $30 for the item the seller is auctioning, then the seller may specify the value recorded in the reserve price field  910  as $30. If during the auction $30 or more is bid on the item, the seller must sell the item for the highest price bid during the auction. If during the auction less than $30 is bid on the item, the seller does not have to sell the item. The value of the reserve price field  910  is not provided to the bidder, however, an indication of whether or not the reserve price stored in the reserve price field  910  has been met is provided. The last seller-specified field in the item profile  900  is the bid increment field  912 . The bid increment field  912  is an optional field. The bid increment field  912  is used to define the minimum amount by which a new bid must exceed an old bid. For example, if the current bid on an item is $100, and the bid increment field  912  is specified at $10, then the next bid must be for $110 or more. No new bid for under $110 will be accepted. A default bid increment can also be provided in the bid increment field  912 . The default bid increment can be set to an absolute value, such as $5, or can be set to a relative value, such as 5% of the reserve price field  910 . The default value is overridden if the bid increment field  912  is specified.  
         [0028]    The seller&#39;s username field  914  is a system field written by the auction central server  104 . After a user posts the item profile  900 , the auction central server  104  writes the user&#39;s username into the seller&#39;s username field  914 . The current high bid field  916  is a system field and is written by the auction central server  104  once a bid has been placed on the item. The current high bid field  916  is initialized to a value outside the accepted range when the item profile  900  is created. The current high bidder field  918  is a system field and is written by the auction central server  104  once a bid has been placed on the item. The current high bidder field  918  is initialized to a value outside the accepted range when the item profile  900  is created. The last high bid field  920  is a system field and is written by the auction central server  104 . The last high bidder field  922  is a system field and is written by the auction central server  104 .  
         [0029]    [0029]FIG. 2 is a flow chart  200  depicting the process by which an auction is conducted in accordance with the present method. The auction central server  104  remains in a wait state  202  until one of the following events occurs: a user communicates with the auction central server  104  or a close date specified in an item profile  900  passes. If a user communicates with the auction server computer  104 , the auction server computer  104  executes process block  204 . If a close date passes the auction central server  104  executes process block  206 .  
         [0030]    The auction central server  104  executes process block  204  in response to a communication from a user. Upon execution of process block  204 , the auction central server  104  advances to the login process  302  shown in FIG. 3. Executing process block  302  causes the auction central server  104  to verify that the user is logged into the system. If the user is logged into the system already, the auction central server  104  executes process block  304 . If the user is not logged into the system, the auction central server  104  prompts the user to indicate whether the user has an account on the system. If the user has an account on the system, the user is prompted to log into the system. If the user does not have an account on the system, the user is prompted to create a new account. After the user has logged into the system the auction central server  104  executes process block  304 .  
         [0031]    The user creates a new account by completing a user profile  800  shown in FIG. 8. The user profile  800  preferably includes: a username field  802 , a password field  804 , an email address field  806 , and an auction credit field  808 . The username field  802  stores the user&#39;s name. The password field  804  stores the user&#39;s password. The email address field  806  stores the user&#39;s email address. And the auction credit field  808  stores the user&#39;s accumulated credit. Upon creation of the account the auction credit field  808  is initialized to zero. In one embodiment, the user profile  800  also includes the user&#39;s address, credit card information, and the like.  
         [0032]    After the login process is complete, the auction central server  104  executes the process block  304 , shown in FIG. 3, which causes the auction central server  104  to display a main menu on the user&#39;s computer. The user main menu allows the user to choose to post a new item profile  900 , browse auctions, or pay for an item which the user was the high bidder on. If the user chooses to post a new item profile  900 , the auction central server executes process block  306 . If the user chooses to browse auctions, the auction central server executes process block  308 . If the user chooses to pay for an item, the auction central server  104  executes process block  310 .  
         [0033]    Once the process block  306  is executed, the auction central server  104  prompts the user to specify values for the item name field  902 , the item description field  904 , the open date field  906 , the close date field  908 , the reserve price field  910 , and the bid increment field  912 . Once the user inputs the information, the user uploads the profile to the auction central server  104 . The optional fields may be left blank. The auction central server  104  writes the user&#39;s username into the seller&#39;s username field  914  and initializes the current high bid field  916  and the current high bidder field  918 , such as to values outside the accepted range. The auction central server  104  prompts the user to verify the information. If the user indicates that the information is correct, the auction central server  104  stores the item profile  900  into the database  104   c , and returns to wait state  202 . If the user indicates that the information is incorrect the user has the option to correct the information or abandon the posting of the item profile  900 . If the user corrects the information, the item profile  900  is stored in the database  104   c  and the central auction server  104  returns to the wait state  202 . If the user abandons the posting of the item profile  900 , the central auction server  104  discards the information and returns to the wait state  202 .  
         [0034]    The process block  308  is shown in more detail in FIG. 4. The auction central server  104  begins executing process block  308  by executing decision block  402 . The auction central server  104  presents the user with an option to search the item profiles currently stored in the database  104   c  or to display information on a particular item. If the user elects to search the item profiles currently stored in the database  104   c  the process block  404  is executed. If the user elects to display information on a particular item, the user provides the item name, or other item indicia, and the process block  408  is executed.  
         [0035]    In executing process block  404 , the auction central server  104  presents the user with a search form. The search form allows the user to search the item profiles  900  stored in the database  104   c  based on any, some, or all of the fields of the item profile  900 . The user completes the search form and submits the search query to the auction central server  104 . The search is conducted and control passes to decision block  406 .  
         [0036]    The auction central server  104  executes the decision block  406 , which causes the auction central server  104  to display a list of the results of the search to the user. From this point the user can view information about a particular item, or the user can perform another search. If the user indicates to the auction central server  104  that the user wishes to view information on a particular item, the user selects the particular item from the list, and the auction central server  104  executes process block  408 . If the user indicates that the user wants to perform another search, the auction central server  104  executes process block  404 .  
         [0037]    Executing the process block  408  causes the auction central server  104  to display detailed information about a particular item to the user. The particular item is specified in either the decision block  402  or decision block  406 . After the information is displayed, the auction central server  104  executes decision block  410 .  
         [0038]    Executing decision block  410  causes the auction central server  104  to present the user with the option to bid on the item specified on the user&#39;s screen or return to the main menu. If the user elects to bid on the item, the auction central server  104  executes process block  412 . If the user does not want to bid on the item the process block  202  is executed.  
         [0039]    Referring now to FIG. 5, the auction central server  104  begins execution of the process block  412  by executing the decision block  502 . The auction central server  104  reads the open date field  906  of the item profile  900  for the item the user selected. If the date specified by the open date field  906  is later than the current date, the auction central server  104  executes process block  504 . The auction central server informs the user that the auction has not yet opened, rejects the user&#39;s bid, and returns to the wait state  202 . If the date specified by the open date field  906  is earlier than or the same as the current date, the auction central server  104  executes process block  505 .  
         [0040]    Executing process block  505  causes the auction central server  104  to present the user with a screen that allows the user to bid on the selected item. The screen displays the amount stored in the current high bid field  916  from item profile  900  and has a data field for the user to input his or her bid. The user keys in a bid and submits that bid to the auction central server  104 . The bid is stored in a temporary location new bid, and the auction central server  104  executes decision block  506 .  
         [0041]    Executing the decision block  506  causes the auction central server  104  to read the current high bid field  916  of the item profile  900  for the item the user is bidding on. If the current high bid field  916  is equal to a value outside the accepted range, the auction central server executes process block  510 . If the current high bid field  916  is equal to a value within the accepted range, the auction central server executes decision block  508 .  
         [0042]    While executing decision block  508  the auction central server  104  reads the bid increment field  912  and the current high bid field  916  from the item profile  900  for the item currently being bid on. The auction central server  104  performs a calculation to ascertain whether the new bid is greater than the current high bid field  916  by at least the amount stored in the bid increment field  912 . If it is, the auction central server  104  executes process block  509 . Otherwise, the auction central server  104  executes process block  512 . The auction central server  104  informs the user as to the minimum acceptable bid, rejects the user&#39;s current bid, and returns to the wait state  202 .  
         [0043]    Executing the process block  509  causes the auction central server  104  to write the current high bid field  916  and the current high bidder field  918  of the item profile  900  in the last high bid field  920  and the last high bidder field  922  respectively for the purposes of awarding a reward. The auction central server  104  then executes the process block  510 .  
         [0044]    Executing the process block  510  causes the auction central server  104  to write the user&#39;s username into the current high bidder field  918  of the item profile  900 , and the user&#39;s bid into the current high bid field  916  of the item profile  900 . The auction central server  104  then executes the process block  514 .  
         [0045]    Executing process block  514  causes the auction central server to award the reward if a reward is due. The auction central server  104  awards a reward to the user indicated in last high bidder field  922  if there is a last high bidder and if the last high bid field  920  is greater than the reserve price field  910 . The auction central server  104  ascertains whether there is a last high bidder by reading the last high bidder field  922 . If the last high bidder field  922  equals a value outside the accepted range, then there is no last high bidder and therefore no reward is awarded. Preferably, the reward is a credit which gets credited to the auction credit field  808  of the user&#39;s account profile  800  for the user specified in the last high bidder field  922 . The credit gets credited after the date specified by the close date field  908  for the item. In an alternate embodiment, the reward can be anything of value to the user. The reward can be cash, goods or services. Preferably, the reward is valued at one half of the bid increment field  912 , but it can be set to any amount. In an alternate embodiment, the reward is awarded to all last high bidders. In another alternate embodiment, the reward is awarded to all users whose username is stored in the current high bidder field  918 . In another alternate embodiment, the reward is awarded to all users who bid on an item. In yet another alternate embodiment, the reward is awarded only to the final user whose name is stored in the last high bidder field  922 . After the reward is awarded, the auction central server  104  executes process block  516 .  
         [0046]    Executing process block  516  causes the auction central server  104  to inform the user that the user is the current high bidder. After the auction central server  104  informs the user the auction central server  104  returns to the wait state  202 . In another embodiment, the user identified in the last high bidder field  922  is informed that he or she is no longer the high bidder for the item.  
         [0047]    Process block  310  is shown in more detail in FIG. 6. The auction central server  104  begins executing process block  310  by executing process block  602 . The auction central server  104  presents the user with a list of all the items stored in the database  104   c  where the user&#39;s username is recorded in the current high bidder field  918  in the item profile  900 . The user picks one of the items listed and the auction central server  104  executes decision block  604 .  
         [0048]    Executing decision block  604  causes the auction central server  104  to present the user with the option of using previously awarded credits toward the purchase price for the item or simply buying the item. If the user indicates that the user wants to use previously awarded credits toward the purchase of the item, the auction central server  104  executes process block  606 . If the user wants to simply buy the item, the auction central server  104  executes process block  608 .  
         [0049]    In an alternate embodiment, the user may use credits that were awarded for bidding on the item toward the purchase of that item.  
         [0050]    Executing process block  606  causes the auction central server  104  to offer the user the opportunity to use the user&#39;s auction credit towards the purchase of the currently selected item. The auction central server  104  reads the auction credit field  808  of the user profile  800 . The auction credit field  808  of the user profile  800  indicates how much credit the user has to use. Any of the credit stored in the auction credit field  808  of the user profile  800  can be used to purchase the selected item as long as it was not accrued by bidding on the selected item. The auction central server  104  presents a screen to the user that displays a message to the user showing the user&#39;s available auction credit and an input field where the user can indicate how much of the credit the user would like to user towards this purchase. The user inputs the amount into the input field. The auction system pays the selling user indicated in the seller&#39;s username field  914  of the item profile  900  the amount of the credit used in this purchase. The purchase price owed by the user is decreased by the amount of the credit applied to the purchase, the amount of the credit indicated by the auction credit field  808  is updated, and the process block  610  is executed.  
         [0051]    Executing process block  608  causes the auction central server  104  to present a screen to the user asking how the user is going to pay for the selected item. The user can pay by any number of known methods including check, credit card, online payment system, and the like. After the user indicates the method of payment the auction central server  104  returns to the wait state  202 .  
         [0052]    Referring now to FIG. 7, the auction central server  104  continues running auctions and reacting to communications from users until an auction closes. An auction closes on the date that is specified by the close date field  908  of the item profile  900 . No bids are accepted after the date specified by the close date field  908  has passed. Once a close date has passed the auction central server  104  executes process block  208 . Upon execution of process block  208  the auction central server  104  executes decision block  702 .  
         [0053]    Executing the decision block  702  causes the auction central server  104  to compare the current high bid field  916  of the item profile  900  with the reserve price field  910  of the item profile  900 . If the current high bid field  916  is greater than or equal to the reserve price field  910  the auction central server  104  executes process block  704 . If the current high bid field  916  is less than the reserve price field  910  the auction central server  104  executes decision block  708 .  
         [0054]    Executing the decision block  708  causes the auction central server  104  to communicate with the user specified in the seller&#39;s username field  914  of the item profile  900 , such as by electronic mail (email). The email asks the user whether the user would like to sell the item for the price specified by current high bid field  916 . If the user does not want to sell the item for the value specified in the current high bid field  916 , the auction central server  104  executes process block  710 . The auction central server  104  informs the user specified by the current high bidder field  918  and any awardees that the item did not sell, the auction is complete, and the auction central server  104  returns to the wait state  202 . If the item does not sell no rewards are awarded. If the user would like to sell the item for the value stored in the current high bid field  916 , the auction central server  104  executes process block  704 .  
         [0055]    In one embodiment, if the user would like to sell the item for the value stored in the current high bid field  916 , the user can lower the value stored in the reserve price field  910  such that the value stored in the reserve price field  910  is lower than the amount stored in the current high bid field  916 . The auction central server  104  can then execute process block  704 .  
         [0056]    Executing process block  704  causes the auction central server  104  to distribute the awards that have been accrued during the auction of the item. The auction central server  104  updates each user&#39;s account with the reward information. In one embodiment, the reward can only be used within the system to bid on items in the future, but a distributed Internet-based reward system like FREERIDE could also be used. In another embodiment, the reward may be claimed as a cash prize, a prize of goods, or a prize of services. In yet another embodiment, the reward may be used within the system to bid on the current item.  
         [0057]    In one embodiment, the awards are distributed only if the value stored in the current high bid field  916  is greater than or equal to the value stored in the reserve price field  910 .  
         [0058]    Once the awards have been awarded to the proper users, the auction central server  104  executes process block  706 . The auction central server  104  emails the user specified in the current high bidder field  918  that he or she was the high bidder at the close of the auction, and returns to the wait state  202 .  
         [0059]    The present systems and methods have been described in the context of certain preferred embodiments thereof. For the sake of clarity, the operation has generally been described in connection with the auction of a single item. However, it will be appreciated that generally, thousands of auctions of the type described will take place concurrently in a typical system. Further, other changes and modifications can be effected by those skilled in the art. It is intended that such changes are considered within the scope of the present invention as set forth in the appended claims.