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OIP TECHNOLOGIES, INC., v. AMAZON.COM, INC., (Fed. Cir. 2012-1696)

The Federal Circuit has found the claims of yet another business/financial-oriented patent patent ineligible.  In this case, OIP Technologies sued Amazon.Com, Inc., for infringing US Patent Number 7,970,713, which claims computer-implemented methods for “pricing a product for sale.”   Amazon filed a motion to dismiss OIP’s complaint, arguing that the ’713 patent is drawn to patent-ineligible subject matter. The district court granted Amazon’s motion, finding that the asserted claims merely use a general-purpose computer to implement the abstract idea of “price optimization” and is therefore ineligible for patent protection under 35 U.S.C. § 101. The district court reasoned that without the “insignificant computer-based limitations,” the claims merely “describe what any business owner or economist does in calculating a demand curve for a given product.”  The Federal Circuit agreed.

According to the Federal Circuit opinion, claim 1 (reproduced below) has the following relevant limitations: (1) testing a plurality of prices; (2) gathering statistics generated about how customers reacted to the offers testing the prices; (3) using that data to estimate outcomes (i.e. mapping the demand curve over time for a given product); and (4) automatically selecting and offering a new price based on the estimated outcome. The Federal Circuit further noted that the dependent claims add various computer elements such as including webpages as advertisements in the second set of messages and generating statistics.

1. A method of pricing a product for sale, the method comprising:

testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices;

wherein said electronic messages include offers of said product;

wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers;

wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices;

wherein the devices are programmed to receive offers for the product based on the offer terms;

wherein the devices are not configured to fulfill orders by providing the product;

wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages;

gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices;

using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product;

selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and

sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price.

The Federal Circuit found that “[b]eyond the abstract idea of offer-based price optimization, the claims merely recite “well-understood, routine conventional activit[ies],” either by requiring conventional
computer activities or routine data-gathering steps, and that, “[c]onsidered individually or taken together as an ordered combination, the claim elements fail “to ‘transform’ the claimed abstract idea into a patent- eligible application.”
The court pointed out, for example, that “sending a first set of electronic messages over a network to devices,” the devices being “programmed to communicate,” storing test results in a “machine-readable medium,” and “using a computerized system . . . to automatically determine” an estimated outcome and setting a price, were all ‘well-understood, routine, conventional activit[ies]’ previously known to the industry.”

Moreover, the court found that “the claims are exceptionally broad and the computer implementation limitations do little to limit their scope.” “At best, the claims describe the automation of the fundamental economic concept of offer-based price optimization through the use of generic-computer functions. Both the prosecution history and the specification emphasize that the key distinguishing feature of the claims is the ability to automate or otherwise make more efficient traditional price-optimization methods. For example, the specification states that a core advantage of the invention is reducing the “extremely high testing costs” of “[b]rute force live price testing.”
Finally, the court noted that “[j]ust as Diehr could not save the claims in Alice, which were directed to “implement[ing] the abstract idea of intermediated settlement on a generic computer”, Alice, 134 S. Ct. at 2358–59, it cannot save OIP’s claims directed to implementing the abstract idea of price optimization on a generic computer.

Principal & Chief Innovation Officer

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