The Software IP Report

E-Commerce Patent Claims Held Not Patent-Eligible

By Charles Bieneman

Categories: Patent Eligibility, Software Patents, The Software IP Report

Patent claims directed to “automated testing and selection of prices for goods and services sold online” have been held invalid under 35 U.S.C. § 101 for failing to recite patent-eligible subject matter.  In Oip Techs. v., Inc., No. C-12-1233 EMC (N.D. Cal. Sept. 11, 2012), the court granted Amazon’s Rule 12(b)(6) motion to dismiss Oip’s complaint alleging that Amazon infringed claims of U.S. Patent No. 7,970,713.

Oip argued that Amazon’s motion was premature because it was brought before the patent claims were construed.  Noting that the Federal Circuit has stated that determining patent eligibility does not always require claim construction, the court rejected this argument.

Then, after a lengthy and detailed review of Supreme Court and Federal Circuit jurisprudence, the court held that Oips’ “patent describes an abstract idea of price optimization and is therefore patent-ineligible.”  The patent failed the machine-or-transformation test because the claims recited a computer only for the “inconsequential functions” of “storing, retrieving and providing data.”  Further, the claims recited an abstract idea because they recited nothing more than “steps [that] describe what any business owner or economist does in calculating a demand curve for a given product.”  The court agreed with Amazon’s argument that “absent the computer limitations, which the Court has already rejected as insignificant, ‘a merchant in a bazaar could have performed OIP’s invention centuries ago–and no doubt did.'”

The patent claims at issue did not include any “concrete steps of, e.g., actually selling the products at issue or coordinating the sale thereof.”  Rather, the “patent explicitly disclaims any application to the actual sale of goods at the selected price.”  From applicable precedent, the court distilled the teaching that “a patent need not wholly preempt the abstract idea of price optimization in all of its forms in order to be ineligible under § 101; rather the degree of preemption relevant to the § 101 analysis is a relative concept.”  Here, the court answered in the affirmative the “central question” of “whether the patentee seeks “broad monopoly rights over a basic concept, fundamental principle, or natural law without a concomitant contribution to the existing body of scientific and technological knowledge.”