Abstract Idea Analysis – OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC.

OIP Technologies alleges that Amazon.com infringes on their patent that relates to a method of a price optimization in an e-commerce environment. Infringement is directed to claims regarding computer-implemented methods for “pricing a product for a sale”. OIP Technologies subsequently filed a lawsuit for patent infringement.

Amazon filed a motion to dismiss the complaint by OIP Technologies. District Court granted Amazon’s motion, finding that “the asserted claims merely use a general-purpose computer to implement the absract idea of ‘price optimization’ and is therefore ineligible”. District Court stated that “without the “insignificant computer-based limitaitons,” the claims merely “describe what any business owner or economist does in calculating a demand curve for given product.”

Under Section 101, a patent may be obtained for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof”; however, laws of nature, natural phenomena, and abstract ideas are not patentable.

As per Supreme Court’s two-part test in Alice, the court must first determine whether the claims at issue are directed to a patent- ineligible concept”, such as an abstract idea. If so, the court must then consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible applicaiton.

Court remarks, “the claims are directed to the concept of offer-based price optimization”. This concept is similar to other “fundamental economic concepts found to be abstract ideas by the Supreme Court and this court. Claims merely recite “well understood, routine conventional activities”, either by requiring conventional computer activities or routine data-gathering steps. Moreover, the claims are exceptionally broad and the computer implementation limitations do little to limit their scope. 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.

Federal Circuit specify, nor does the claims’ recitation of “present[ing] [offers]to potential customers” and “gathering . . . statistics generated during said testing about how the potential customers responded to the offers” provide a meaningful limitation on the abstract idea. The processes claimed in the patent are well understood, routine and conventional data-gathering activities and therefore they render the claims patent ineligible.

The Federal Circuit concluded that the patent claims the abstract idea of offer-based price optimization and lacks an “inventive concept” sufficient to “transform” the claimed subject matter into a patent eligible application of that idea.

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