The Software IP Report

Claims to Computer Readable Discount Coupons Held Patent-Ineligible

By Mike McCandlish

Categories: Patent Eligibility, The Software IP Report

Patent claims for applying discounts to purchases to track customer purchasing habits based on computer readable discount coupons were held to recite patent-ineligible subject matter in Motivation Innovations, LLC v. Petsmart, Inc., No. 13-957-SLR, (D. Del., January 12, 2016). The court granted defendants motion under FRCP 12(c) for judgment on the pleadings of invalidity under 35 U.S.C. § 101 of claims of U.S. Patent No. 5,612, 527.

Claim 1 of the ‘527 patent recites:

A method for redeeming discount offers comprising:

providing a circulation medium and providing said medium with indicia which includes a machine readable identification code;

causing said medium to be distributed to potential users;

associating said identification code with data identifying items which are to be offered at a discount provided as part of said medium and storing said data in memory in a data base so as to be addressable by said identification code;

providing means for reading said identification code provided with said circulation medium;

providing means associated with said code reading means for tabulating sales of items so that any discount corresponding to an item listed in said data is deducted from the price of the item in the tabulation; and

using said reading means to identify said code provided with said medium and using said means for tabulating items to obtain a price for the item if the involved item is listed as part of said data identifying an item as qualifying for a discount as called for by the data base data defined by the identification code of the medium.

The ‘527 patent specification states that a point of sale (“POS”) machine reads indicia on flyers “to identify items which are offered at a discount”, and further explains that “[e]ach point of sale machine is linked to a main computer … The point of sale machines are standard readily available machines.”

The court found that under the Mayo/Alice test the patent claimed an abstract idea without an inventive step that appropriately limited the claim.

Concerning the first prong of the two-part test, the court determined that the claim addressed the abstract idea of using coupons to provide discounts.

The court then turned to the second step of the MayoAlice analysis, analyzing whether there was an inventive concept that was “substantially more” than the abstract idea, and determined that the additional limitations of the asserted claims recited only conventional or routine activity or computer technology. For example, the recitations of claim 1 included (1) creating a circulation medium (e.g., a brochure) having a UPC bar-code; (2) distributing the circulation medium to potential users; (3) associating the bar-code with a data file, which lists discounts on two or more products; (4) using a generic bar-code scanner to scan the bar-code; and (5) using a generic point-of-sale machine (i.e., means for tabulating) to determine whether (a) a discount offered by the circulation medium should be applied to a transaction and (b) if so, adjust the sales total by the discount amount. No special programming is disclosed, and the specification explains that the POS machine is a “standard readily available machine.”

The court was not persuaded by plaintiff’s argument that using a single coupon with a single indicia to discount multiple products was novel and concluded that the method describes using routine and conventional computer technology to redeem discounts and track customer spending habits.