On June 11, 2015, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed the decision of the United States District of California in the matter of OIP Technologies, INC. v. Amazon.com, INC. OIP Technologies alleged that Amazon.com infringed on their patent (U.S. Patent No. 7,970,713) related to a method of price optimization in an e-commerce environment. The ‘713 patent essentially claims a method for product pricing that tests consumer reactions to various prices, and automatically adjusts product prices based on estimated and actual demand in the marketplace. The purpose of the invention is to provide vendors with more accurate pricing in order to charge the optimal price that maximizes profits.
Amazon moved to dismiss the complaint on the grounds that the ‘713 patent consists of unpatentable subject matter. The district court agreed and granted Amazon’s motion because the ‘713 patent solely claims the abstract idea of price optimization using a computer program. The district court found that without the computer-limitation, the patent merely claims a standard offer-based price optimization procedure, which many business owners already perform in pricing products. The CAFC agreed with the district court. The CAFC cited the Supreme Court’s decision in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347, in which the Court held that generic computer implementation of an abstract idea fails to transform idea into patentable subject matter. The CAFC determined that the ‘713 patent was similar to the invention in Alice because these “computer functions are ‘well-understood, routine, conventional activit[ies]’ previously known in the industry.”
Clearly, the Supreme Court’s opinion in Alice has broad implications in the computer software industry as evidenced by the result in this case. In the future, those seeking patent protection for computer-implemented methods and processes would be wise to think about their invention in a “computer-less” environment and determine whether their method is sufficiently different than conventional activities in the industry. To read the opinion of the CAFC, please click here.
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