Abstract Idea with Routine Computer Functions not Patentable

8 Sep 2015

In OIP Technologies, Inc. v. Amazon.com, Inc. (Federal Circuit Docket No. 2012-1696, decided 11 June 2015), the patent-in-suit, US Patent No. 7,970,713 (OIP patent), relates to a method of optimizing the price of a product for sale. In a nutshell, the method involves sending out electronic messages to test how potential customers would respond to each of a set of prices. The method includes gathering the responses within a machine-readable medium, automatically determining an estimated outcome of using each price for the product using a computer, selecting a price at which to sell the product based on the estimated outcomes, and sending out electronic messages to potential consumers with offers at the selected price.

The Federal Circuit used the Supreme Court's two-part test in Alice (Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014)) to analyze the claims at issue. In the first part of the test, the Federal Circuit determined if the claims of the OIP patent are directed to a patent-ineligible concept. The Federal Circuit found that the claims of the OIP are directed to the concept of offer-based price optimization, which is a fundamental economic concept. Based on the decision in Alice, fundamental economic concepts are abstract ideas. Abstract ideas on their own are not patent eligible.

In the second part of the test, the Federal Circuit determined if there is anything else in the claims above and beyond the abstract idea that could transform the claims to patent-eligible claims. In Alice, the method claims at issue required generic computer implementation. However, the Supreme Court held that “mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.” The claims of the OIP patent recite processes such as sending messages over a network, gathering data with a machine-readable medium, and using a computer to read data from the machine-readable medium. However, the Federal Circuit determined that “[t]hese processes are well-understood, routine, conventional data-gathering activities that do not make the claims patent eligible.”