The Software IP Report

Patent Claims to Dynamic Pricing Held Not Patent-Eligible (Again)

By Charles Bieneman

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

A Delaware district judge has adopted a magistrate’s recommendation to hold patent-ineligible claims directed to dynamically pricing a transaction, and dynamically providing product upgrade options to a customer. Tenon & Groove LLC v. Plusgrade SEC, No. 1:12-cv-01118 (D. Del. March 11, 2015).

The patents-in-suit were U.S. Patent Nos. 7,418,409 and 8,145,536. In a reminder to patent drafters to include as much technical detail as possible, the court noted that the specification here disclosed little more than “methods and systems for customizing and optimizing a company’s products and services to individual customers in [a] way that concurrently maximizes customer value satisfaction and overall business performance.” Thus, the court was able to acknowledge that this subject matter might “not quite qualify as a ‘fundamental economic [or] conventional business practice[],’” while at the same time finding “by clear and convincing evidence” that the patent claims at issue embodied “an abstraction-an idea, having no particular concrete or tangible form.”

The court rejected the plaintiff’s argument that the patent claims embodied simply an idea – and not an abstract idea – because the claims were directed to allegedly novel “subset applications of ‘dynamic pricing’-applications that were previously unrealized in industry.” New ideas, the court said, can be abstract “regardless of the literature available on the subject,” or lack thereof. Patent prosecutors may be disappointed with this analysis, because one argument often suggested to overcome Section 101 rejections is a showing that claimed subject matter is different from the prior art, and therefore cannot be an abstract idea that preempts an entire field of use.

The court also rejected the plaintiff’s argument that the magistrate’s different formulations of the patents claims demonstrated that they were not in fact directed to an abstract idea. “The English language,” the court explained, “is capable of conveying like ideas in different terms.” And the plaintiffs had omitted to acknowledge that the court had said that the claims were directed to an abstract idea under any formulation proffered by the defendant.

The claims recited no additional inventive concept beyond the abstract idea. Unlike the claims in DDR Holdings, LLC v., L.P., the claims here did not solve a “problem unique or inherent to computers.”