Archive for June, 2015

OIP TECHNOLOGIES, INC., v. AMAZON.COM, INC., (Fed. Cir. 2012-1696)

Friday, June 12th, 2015

The Federal Circuit has found the claims of yet another business/financial-oriented patent patent ineligible.  In this case, OIP Technologies sued Amazon.Com, Inc., for infringing US Patent Number 7,970,713, which claims computer-implemented methods for “pricing a product for sale.”   Amazon filed a motion to dismiss OIP’s complaint, arguing that the ’713 patent is drawn to patent-ineligible subject matter. The district court granted Amazon’s motion, finding that the asserted claims merely use a general-purpose computer to implement the abstract idea of “price optimization” and is therefore ineligible for patent protection under 35 U.S.C. § 101. The district court reasoned that without the “insignificant computer-based limitations,” the claims merely “describe what any business owner or economist does in calculating a demand curve for a given product.”  The Federal Circuit agreed.

According to the Federal Circuit opinion, claim 1 (reproduced below) has the following relevant limitations: (1) testing a plurality of prices; (2) gathering statistics generated about how customers reacted to the offers testing the prices; (3) using that data to estimate outcomes (i.e. mapping the demand curve over time for a given product); and (4) automatically selecting and offering a new price based on the estimated outcome. The Federal Circuit further noted that the dependent claims add various computer elements such as including webpages as advertisements in the second set of messages and generating statistics.

1. A method of pricing a product for sale, the method comprising:

testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices;

wherein said electronic messages include offers of said product;

wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers;

wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices;

wherein the devices are programmed to receive offers for the product based on the offer terms;

wherein the devices are not configured to fulfill orders by providing the product;

wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages;

gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices;

using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product;

selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and

sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price.

The Federal Circuit found that “[b]eyond the abstract idea of offer-based price optimization, the claims merely recite “well-understood, routine conventional activit[ies],” either by requiring conventional
computer activities or routine data-gathering steps, and that, “[c]onsidered individually or taken together as an ordered combination, the claim elements fail “to ‘transform’ the claimed abstract idea into a patent- eligible application.”
The court pointed out, for example, that “sending a first set of electronic messages over a network to devices,” the devices being “programmed to communicate,” storing test results in a “machine-readable medium,” and “using a computerized system . . . to automatically determine” an estimated outcome and setting a price, were all ‘well-understood, routine, conventional activit[ies]’ previously known to the industry.”

Moreover, the court found that “the claims are exceptionally broad and the computer implementation limitations do little to limit their scope.” “At best, the claims describe the automation of the fundamental economic concept of offer-based price optimization through the use of generic-computer functions. Both the prosecution history and the specification emphasize that the key distinguishing feature of the claims is the ability to automate or otherwise make more efficient traditional price-optimization methods. For example, the specification states that a core advantage of the invention is reducing the “extremely high testing costs” of “[b]rute force live price testing.”
Finally, the court noted that “[j]ust as Diehr could not save the claims in Alice, which were directed to “implement[ing] the abstract idea of intermediated settlement on a generic computer”, Alice, 134 S. Ct. at 2358–59, it cannot save OIP’s claims directed to implementing the abstract idea of price optimization on a generic computer.

ALLVOICE DEVELOPMENTS US, LLC v. MICROSOFT CORP. — Federal Circuit finds some speech recognition claims not patentable

Monday, June 1st, 2015

In a refreshing break from Alice/Mayo abstract idea based 35 U.S.C. § 101 rejections, the Federal Circuit released a decision invalidating certain claims of U.S. Patent No. 5,799,273 as not being directed to one of the four statutory categories of inventions (see Allvoice Developments US, LLC, v. Microsoft Corp., CAFC 2014-1258, decided May 22, 2015). The matter was on appeal, by Allvoice, from a district court decision invalidating claims 60-68 as non-statutory subject matter. The decision also affirms a non-infringement decision by the district court, while interesting that portion of the decision is not the focus of this post.

The claims of the ‘273 Patent at issue were directed towards a speech-recognition “interface,” see claim 60 reproduced below. Both the CAFC and the district court interpreted, probably correctly, the claimed interface as software without any tangible form (e.g., not interpreted as instructions on a computer-readable medium or as part of a tangible system).

60. A universal speech-recognition interface that enables operative coupling of a speech-recognition engine to at least any one of a plurality of different computer-related applications, the universal speech-recognition interface comprising:
input means for receiving speech-recognition data including recognised words;
output means for outputting the recognised words into at least any one of the plurality of different computer-related applications to allow processing of the recognised words as input text; and
audio playback means for playing audio data associated with the recognised words.   ’273 Patent, col. 29 ll. 22–34.

Allvoice essentially reinforces the Court’s interpretation by asserting that the claimed speech-recognition interfaces are described in the specification as “interface applications,” and thus the claims are limited to software. Allvoice attempts to clarify their position by further asserting that the claims should be interpreted as reciting “software instructions,” and further asserting that the instructions must necessarily be in a machine readable, physical state, in order to exist. It is interesting to consider whether the decision in this case might have been different if Allvoice had been able to argue an interpretation of the “means” elements as including hardware components of a system. Unfortunately, such an interpretation was either not supported by the specification, or not pursued for other reasons by the litigation team.

The Court dismisses Allvoice’s assertions regarding the implied physical form, stating “this Court has recognized, instructions, data, or information alone, absent a tangible medium, is not a manufacture.” (Citing Digitech Image Techs., 758 F.3d at 1349–50 (rejecting a patentee’s attempt to argue that the disputed claims were subject matter eligible because the claim language did not describe “any tangible embodiment of this information (i.e., in physical memory or other medium) or claim any tangible part of the digital processing system”).) Earlier in the decision, the Court had already determined that the claims were clearly not directed to a process. Thus, because the claims were not directed to a tangible article and were not process claims, the district court’s invalidity holding was upheld.

The good news from this case is that the Court provides a fairly clear roadmap for claiming software-based inventions – software must be claimed as a process (method) or as instructions on a machine-readable medium (tangible manufacture), at least outside of a system claim. While this case does not seem to cover any “new” ground per se, it does clearly reinforce that claims directed to pure software, such as the recited speech-recognition interfaces, and not fashioned as a process or machine-readable medium are not likely to find favor in the courts.

My thanks to Greg Stark of Schwegman, Lundberg & Woessner, P.A., for this post.