Archive for the ‘Uncategorized’ Category

Dave Kappos calls for abolition of Section 101

Wednesday, April 13th, 2016

As reported today in Law360, David Kappos, the former director of the U.S. Patent and Trademark Office on Monday called for the abolition of Section 101 of the Patent Act, which sets limits on patent-eligible subject matter, saying decisions like Alice on the issue are a “real mess” and threaten patent protection for key U.S. industries.

Kappos was quoted by Law360 saying “It’s time to abolish Section 101, and the reason I say that is that Europe doesn’t have 101 and Asia doesn’t have 101 and they seem to be doing just fine in constraining patent-eligible subject matter”.

Kappos, like many others in the patent field, are now recommending that their clients more aggressively seek protection in other countries where protection for biotechnology and software is readily available.

Its a sad commentary to the state of the law when the former Director of the USPTO is recommending to his clients that they seek protection in other countries due to the mess the Supreme Court and the Federal Circuit have made of Section 101.

The Biggest Technology Give-Away in History?

Sunday, April 10th, 2016

Manny Schecter, Chief Patent Counsel of IBM, argues in his article “The Downside of Making Innovation Look Easy” (http://recode.net/2016/04/08/the-downside-of-making-innovation-look-easy/) that we risk damaging one of this country’s most innovative and successful industries because our patent system now makes it too difficult to obtain and enforce patents for legitimate computer-implemented inventions.  Mr. Schecter says we “must find a way to course-correct before irreparable harm is done in order to continue to promote innovation and the creation of newer, better computer technology.”

That Mr. Schecter, one of the most world’s most astute experts on computer patent protection, and an expert not known to engage in hyperbole, is sounding an alarm like this , should tell us all that something is terribly wrong with the direction taken by the Supreme Court and the Federal Circuit in the five years.

As Mr. Schecter points out, the Federal Circuit has found ineligible the patents on computer-implemented inventions in all but one of the last few dozen or so patent cases it has considered.

Sadly, Mr. Schecter is not being overly dramatic.  In point of fact, US jurisprudence on patent eligibility for computer-implemented inventions is fast becoming the laughingstock of the world IP community.  Worse yet, the court that once helped spearhead the expansion of the US’s lead in computer technology is now aggressively facilitating what may someday come to be known as one of the most massive give-aways of US technology in our history, and perhaps one of the biggest technology give-aways of all time.

 

PTAB hits delete key on Intellectual Ventures patent for electronic content distribution

Sunday, March 27th, 2016

The most recent 101 PTAB road kill is an Intellectual Ventures, LLC, patent on electronic content distribution –  U.S. Patent No. 6,658,464 — in a CBM review of challenged claims 1, 8, 16, and 17 (reproduced below) brought by Motorola Mobility, LLC.  As enumerated in greater detail below, the PTAB found the claims patent-ineligible under Section 101 as lacking in technological innovation and furthermore that the claimed subject matter does not “improve the functioning of the computer itself,” or “effect an improvement in any other technology or technical field,” as there is no recitation in the claims of improved computer technology or advanced programming techniques.  (see PTAB decision, bottom of pgs. 43-44).   In short, the PTAB found that “the steps of the challenged claims are well-known, conventional, and routine and do not transform a general purpose computer (user station comprised of a processor and storage device) into a specific machine. Rather, the claimed instructions are the normal basic functions of a computer.”

Q: What can we learn from this case?  A: What we already knew — Section 101 eligibility analysis for software is so far off the rails and it no longer

The challenged claims are set forth below:

1. A software product for use at a user station, the user station including a processor and a storage device, the software product comprising computer executable instructions that, when executed by the processor:

enable a user at the user station to select content from each of a plurality of independent publishers;

effect transport of the selected content from each of the plurality of publishers to the user station over a communications network and, without user intervention, effect storage of the transported content to the storage device such that the content is retained on the storage device upon shutting down of the user station and/or deactivation of the software product; and

effect presentation of the stored content to the user at the user station with a user interface that is customized to the respective publishers.

8. The software product as set forth in claim 1, wherein the transport of the selected content to the user station is effected without user intervention.

16. The software product as set forth in claim 1, wherein the transport of the selected content to the user station is effected using a non-proprietary data transfer protocol.

17. The software product as set forth in claim 1, wherein the communications network is the Internet.

According to the PTAB, none of claims 1, 8, 16 or 17 constitute a “technical invention”:

“Claim 1 is directed to a software product that comprises instructions that select, transport, store, and display content.  As is discussed in greater detail in the next section, the steps of claim 1 provide a very general description of how components carry out instructions. For example, the instructions are “executed” by the processor.

The method of claim 1 is analogous to claim 17 of Versata in that claim 1 is directed to a business process of distribution of electronic information products that includes minimal computer-related limitations. Likewise, the fact that the steps are accomplished via a general purpose computer (a user station, communication network, and user interface) does not change the character of the invention. Just as the patent at issue in Versata sought to reduce the need for large data tables, so too the patent at issue here sought to solve problems related to OSPs and M2M transfers. This did not transform claim 17 in Versata Development into a technological invention, nor does it do so for claim 1 here.

Accordingly, the ’464 patent does not solve a technical problem using a technical solution.”

 

 

In re Ray Smith: Gaming art patents now a bad bet

Thursday, March 17th, 2016

The CAFC just issued a brief, but potentially far reaching, opinion in In re Ray Smith; available here – http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1664.Opinion.3-8-2016.1.PDF

In seven short pages the CAFC appear to have invalidated all patents directed to the gaming arts that do not utilize some form of new material objects (e.g., new type of cards or new physical playing board).  The panel, Moore, Hughes & Stoll, found claims, which were directed to a variation of Blackjack, to be directed to the abstract idea of a “method of conducting a wagering game.”  While this abstract idea essentially ignores all of the actual recitations in the claims, it is probably a reasonable finding.  Next, the court continued by purporting to evaluate the claims under the second prong, and found that the claims here require shuffling and dealing, which are conventional activities that cannot impart an inventive concept.  Here the court seems to completely ignore the aspects of the claims that would make them patentable under any section of 35 U.S.C..

Nothing in the written opinion suggests that the court evaluated (or that Applicants argued) that the “process” (e.g, the rules of the game) were the inventive concept.  Why can’t the game rules be the inventive concept, other than under this new application of 101 game rules would seem to easily satisfy all other tests for patentability.  Until this decision, it was my understanding that game rules, such as embodied in these claims, were patent eligible subject matter and it was the “process” or rules that were evaluated to determine patentability.

The Court did leave open a crack for some limited future innovation in this area:

That is not to say that all inventions in the gaming

arts would be foreclosed from patent protection under

§ 101. We could envisage, for example, claims directed to

conducting a game using a new or original deck of cards

potentially surviving step two of Alice.

The brief opinion, with potentially wide reaching effects, is troubling, especially when one considers how limited the remaining options for intellectual property protections appear to be for novel gaming variations based on old, well-known physical elements.  Gaming rules, as such, are not protectable under copyright, since they would likely be considered functional.  Rules are not protectable as trade secrets, since they have to be published to be useful to anyone.  Trade dress and design patents would only be useful for protecting particular decorative aspects, but not the rules themselves.

Where does the CAFC come up with support for removing this formerly patentable area of innovation from the realm of patent eligible subject matter?  Is this opinion limited by the face that these claims are directed to a wagering game, providing a link to a “fundamental economic practice”?  I wouldn’t bet on future courts or litigants narrowly construing this decision. 

The game rules laid out by the example claim provided in the opinion are a very specific implementation of the abstract idea of conducting a wagering game.  These claims do not even remotely threaten all applications or future innovations around the idea of conducting a wagering game.  At least based on the information contained within the courts opinion, this case bears very little relationship to Alice, or even the type of patents Alice represented (e.g., well known business processes performed by a computer).

Apparently the pendulum is still moving in the wrong direction!

Thanks to Greg Stark, Principal, Schwegman, Lundberg & Woessner, P.A., for this post.

WIRELESS MEDIA INNOVATIONS V. MAHER TERMINALS, LLC, GLOBAL TERMINAL & CONTAINER SERVICES, LLC, Fed. Cir., February 8, 2016

Wednesday, February 17th, 2016

The realm of patent ineligible “abstract ideas” arguably grows ever larger by the day, and now encompasses inventions that require movement of shipping containers.  How the handling, storage and transportation of heavy metal objects that are the backbone of the shipping industry could plausibly be characterized as lacking presence within the realm of 101, is definitely a head scratcher (check out claims repeated below).

In this case, Plaintiff, Wireless Media Innovations, LLC, is the owner of two patents covering certain systems and methods relating to the monitoring of shipping containers. The Patents are U.S. Patent Number 6,148,291 (“ ‘291 Patent”) and U.S. Patent 5,712,789 (“ ‘789 Patent”). Defendant Maher Terminals and Global were each accused by Plaintiff of operating at least one terminal operating system and operative methods associated therewith to monitor the locations and load statuses of containers at Defendants’ respective terminals.  Defendants filed two separate motions to dismiss asserting that Plaintiff’s Patents are ineligible for patent protection under 35 U.S.C. § 101 because they are directed at an abstract idea.

As illustrated below, the Federal Circuit affirmed the invalidation of both patents under 35 U.S.C. Sec. 101 in a per curiam decision without opinion, dated February 8, 2016.  Essentially, the Wireless Media Innovations decision leaves standing a decision of the New Jersey district court that essentially precludes patent protection for computer programs adapted for inventory management, even if the claimed management system requires the physical transportation of inventory in the facility.   The decision of the New Jersey district court reasoned that the claims of the ‘789 and the ‘291 Patents are directed to the same abstract idea: monitoring locations, movement, and load status of shipping containers within a container-receiving yard, and storing, reporting and communicating this information in various forms through generic computer functions. The district court found that Plaintiff’s arguments that the patent claims are not abstract because they require physical steps and include the use of tangible components is beside the point.  According to the district court, the claims merely recite the abstract idea of monitoring the location and load status of containers in a yard.   The district court further noted that “the majority of these steps comprise the abstract ideas of the process of monitoring and moving shipping containers and collecting the relevant data as to the location of the shipping containers”, and that “adding routine steps of recording, identifying, and communicating the ID code of a particular container, or moving the container from the receiving area to a vehicle does not transform an otherwise abstract idea into patent-eligible subject matter.”

 

 

Claim 1 of each respective patent ‘291 and ‘789 are reproduced below:

1. A container monitoring system for accumulating and storing information on shipping containers including container location and container load status, the system comprising:

a receiving area for receiving containers to be monitored by the system, said receiving area within a defined boundary within which containers are to be monitored by the system,

a container entry point at the boundary at which containers are identified by pre-existing identification codes which are recorded at the container entry point,

a switching vehicle for moving containers to and from a receiving area and to and from a facility within the boundary according to instructions received from the facility, and

means for recording information on locations and load status of containers within the defined boundary.

1. A computerized system for monitoring and recording location and load status of shipping containers relative to a facility with an associated yard defined by a boundary within which containers are to be monitored by the system, and a controlled entry point to the boundary, the system comprising:

means for recording identification codes of containers which enter the boundary,

means for communicating and recording information on movements, location and load status of containers within the boundary in response to movement and changes in location and load status of containers made according to instructions received from the facility,

means for generating reports of recorded information on locations and load status of containers within the boundary, and

means for generating reports on container locations and load status relative to designated docks associated with a facility.

 

 

PTAB refuses attempt to kill ATM patent as claiming abstract idea: NRT Technology Corp. and NRT Technologies, Inc., Petitioner, v. Everi Payments, Inc., Patent Owner, CBM2015-00167

Tuesday, January 26th, 2016

In what appears to be a small measure of good news (and hope for the future) for patent holders in the automated teller machine art, the PTAB last week held that claims to an ATM-implemented money dispensing process were not clearly invalid under Section 101 for claiming an abstract idea.   The case, NRT Technology Corp. and NRT Technologies, Inc., Petitioner, v. Everi Payments, Inc., Patent Owner, CBM2015-00167 , refused to find the following claim 1 of US ‘782, invalid in view of Alice:

1. A method of providing money or an item of value to an account-holder, the method comprising:

identifying an account to a terminal;

entering a personal identification number into the terminal;

requesting money or an item of value based upon the account via a first type of transaction;

forwarding the first type of transaction to a processor;

forwarding the first type of transaction from the processor to a first network;

forwarding the first type of transaction from the first network to a bank;

making a denial of the first type of transaction due to exceeded pre-set limit;

forwarding the denial to the processor;

notifying the account-holder at the terminal of the denial of the first type of transaction, and asking the account holder if they would like to request the money or item of value via a second type of transaction;

requesting money or an item of value based upon the account via a second type of transaction;

forwarding the second type of transaction to the processor;

forwarding the second type of transaction from the processor to a second network;

forwarding the second type of transaction from the second network to the bank;

making an approval of the second type of transaction;

forwarding the approval to the processor;

and instructing a money location separate from the terminal to provide money or an item of value to the accountholder.

In its holding, the PTAB stated:

“As Patent Owner points out, Petitioner has oversimplified the challenged claims. Prelim. Resp. 31. The challenged claims are not directed simply to the idea of providing money to an account holder or using trial- and-error until success is achieved. Rather, the claims are directed to particular methods of providing money to an account holder using an ATM via a POS transaction after an ATM transaction has failed. See Alice, 134 S. Ct. at 2354 (“Applications of such concepts to a new and useful end . . . remain eligible for patent protection.”) (internal quotation marks and brackets omitted). Further, Petitioner’s analysis omits any consideration of the elements of the claims as ordered combinations to determine whether the additional elements transform the nature of the claims into a patent-eligible application.  It was Petitioner’s burden to do so.”

Perhaps this is a harbinger of the use of a more balanced and logical use of the abstract idea exception to 101 eligibility, with the PTAB giving “ordered combinations” of elements some credence to differentiate abstract ideas from patentatable applications of those ideas.

Excellent Presentation on Section 101 from Steve Kunin and Michael Kiklis

Monday, November 2nd, 2015

I was fortunate enough to get permission from Steve Kunin and Michael Kiklis to post a copy of their Nov. 2 presentation on Section 101 and Alice:  101 Presentation from Kunin and Kiklis 

The findings in this report could be characterized as bleak for software patents in Federal Court – both at the district court and Federal Circuit level.  I counted over 100 Federal district court cases finding software patents ineligible under Section 101, and there are dozens of Federal Circuit decisions as well coming to the same conclusion about the software patent at hand.  Few cases have found eligible subject matter.  I didn’t calculate it, but the survival rate at present couldn’t be greater than 20%, and its probably as low as 10%.  On the other hand, the large majority of the invalidated software patents were, in my opinion, squarely on the “suspect” end of the spectrum.  It will very interesting to see how all the appeals of the district court opinions play out at the Federal Circuit in the next 12 months.

Here are some of Steve and Michael’s tips from their presentation, for drafting software patents:

  • Take advantage of safe harbors

−Improvements to another technology or technical fields

−Improvements to the functioning of the computer

−Take advantage of the training examples (21, 23, 25)

  • Emphasis that claimed invention provides technical solutions to technical problems
  • Emphasize the novel and non-obvious limitations that are not conventional and are subject to the MOT test for process claims.
  • Point out why the new combination of old elements achieves a novel and non-obvious result (i.e., an inventive contribution)

Akamai Technologies, Inc. v. Limelight Networks, Inc.: Federal Circuit brings defines liability for “joint enterprises”

Wednesday, September 2nd, 2015

In Akamai v. Limelight, Inc., Case Nos. 2009-1372, -1380, -1416, -1417, (Fed. Cir. Aug. 13, 2015) (en banc), the Federal Circuit updated and clarified the standards for determining if direct infringement has occurred in cases where the actions of multiple parties must be combined in order for all elements of a claim to be performed.  It had been considered well-established that the “whoever” in the “whoever without authority makes, uses, offers to sell, or sells any patented invention … infringes the patent” of 35 U.S.C. § 271(a) must be a single entity, or an entity in combination with its agents, in order for direct infringement to occur.  Additionally, since inducement under 35 U.S.C. § 271(b) requires that the induced party be liable for direct infringement, it is often the case that when multiple parties divide the elements of a claim between them, damages are not available for either direct infringement or for inducement.  While the breadth of Akamai is not yet known, this case will change the result in at least some client-server software patent cases.

According to previous cases, an entity can be held accountable for the actions of others for the purpose of finding direct infringement when the others are agents of the entity or when the others are contractually obligated to perform the actions for the entity.  Akamai provides two additional tests:

  • “where two or more actors form a joint enterprise, all can be charged with the acts of the other, rendering each liable for the steps performed by the other as if each is a single actor” and
  • “liability under § 271(a) can also be found when an alleged infringer conditions participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method and establishes the manner or timing of that performance.”

Each of these new tests contains multiple elements that must be shown by the patentee to establish the infringer’s liability.

Joint enterprise liability was not at issue in Akamai, but the court outlined the four elements that must be shown to establish liability for a joint enterprise:

  • an agreement, express or implied, among the members of the group;
  • a common purpose to be carried out by the group;
  • a community of pecuniary interest in that purpose, among the members; and
  • an equal right to a voice in the direction of the enterprise, which gives an equal right of control.

With respect to conditional participation liability, both of the listed elements must be shown:

  • conditioning of participation in an activity or receipt of a benefit upon performance of a step or steps of a patented method, and
  • establishing the manner or timing of that performance.

For many commercial products, the “conditioning” element will be easy to show.  For example, consider the following hypothetical claim:

A method comprising:

at a server, storing data;

at a client, generating a request for the data and transmitting the request to the server; and

responsive to receiving the request at the server, transmitting a response from the server to the client.

 

In this example, the client will not receive the response unless the client generates and transmits the request.  Accordingly, the client will not realize the benefits of the method from the entity providing the server unless the client performs the method steps, and the “conditioning” element is met.

Showing the “establishing” element may be more difficult.  Akamai does not address the minimum requirements of this element.  The court found that evidence showed that Limelight provided a Technical Account Manager to “lead the implementation of Limelight’s services,” and thus “Limelight establishes the manner and timing of its customers’ performance so that customers can only avail themselves of the service upon their performance of the method steps.”  However, the general rule established by the court is that the manner or timing of the performance must be established by the accused infringer.

Potentially, establishing the manner or timing of the performance will encompass many commercial activities.  In the hypothetical example claim above, if the entity providing the server also provides a client application including a user interface to generate the request, the use of that application by a user to perform the “generating a request” step is in a manner established by the entity, even when the entity does not control the timing of the user’s action.  Similarly, if the action on the client can only be performed while the server is running (e.g., to respond to the request), then the entity controlling the server at least arguably controls the timing of the performance.

Thus, while ideal claims will still read directly on a competitor, claims requiring actions by both a competitor and its clients are no longer dead on arrival, after Akamai.

Thanks to Domenico Ippolito at Schwegman, Lundberg & Woessner for this post.

Intellectual Ventures I LLC v. Capitol One Bank (USA) (Fed. Cir.): Mental steps doctrine making a strong comeback, courtesy of Alice.

Wednesday, July 8th, 2015

In Intellectual Ventures I LLC v. Capitol One Bank (USA), Case No. 2014-1506 (Fed. Cir. July 6, 2015), the Federal Circuit affirmed the Eastern District of Virginia’s holding that the claims of two patents were invalid under Section 101. It is perhaps worth noting that the district court’s decision was made before the Supreme Court’s Alice decision issued, so while the Federal Circuit’s reasoning applies the two-part Mayo test, as dictated by Alice, this is a case in which pre-Alice and post-Alice reasoning arrived at the same result, not a case in which the new standard invalidated a previously-valid patent.

With respect to U.S. Patent No. 8,083,137 (“the ’137 patent”), the courts found claim 5 to be representative:

  1. A method comprising:

storing, in a database, a profile keyed to a user identity and containing one or more user-selected categories to track transactions associated with said user identity, wherein individual user-selected categories include a user pre-set limit; and

 

causing communication, over a communication medium and to a receiving device, of transaction summary data in the database for at least one of the one or more user-selected categories, said transaction summary data containing said at least one user-selected category’s user pre-set limit.

 

Similarly, for U.S. Patent No. 7,603,382 (“the ’382 patent”), the courts found claim 1 to be representative:

  1. A system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user, comprising:

 

an interactive interface configured to provide dynamic web site navigation data to the user, the interactive interface comprising:

 

a display depicting portions of the web site visited by the user as a function of the web site navigation data; and

a display depicting portions of the web site visited by the user as a function of the user’s personal characteristics.

 

The district court found both of the above claims to be “drawn to a mental process – i.e., an abstract idea” without “‘add[ing] enough’ by way of the disclosed applications of these abstract ideas.” The district court was not persuaded by the patentee’s argument that limitations such as “a display” provided concrete implementation details. Instead, the lower court held that “an improvement in the workings of the computer or the transmissibility of data or some other transformation of data into something qualitatively beyond the informational content of the data entered, even though the data might be organized and manipulated to disclosed useful correlations” is needed to “authorize[] the protections of a patent.” That is, the claims at issue store, retrieve, and display data, but don’t actually do anything with the data. In this respect, at least, the claims are unlike those in Diehr, for an improved process resulting from the use of a particular algorithm, and more like those warned against in Diehr, involving “insignificant postsolution activity.”

At the Federal Circuit, the two-part Mayo/Alice test was applied to each of the representative claims. For the claims of the ’137 patent, the Appeals Court found that the claims are directed to the “abstract idea” of “tracking financial transactions to determine whether they exceed a pre-set spending limit (i.e., budgeting).” The Federal Circuit did not cite any references to support the mapping of the claim language to the identified abstract idea, and relied on the patentee’s admission that “budgeting ‘… is an abstract idea’” to consider step 1 of the two-part test to be met.

Once it was determined that the claims were directed to an abstract idea, the only remaining issue was whether “the claims contain” an “inventive concept.” The court found that all recited elements are “generic computer elements,” and thus the claims simply recite “apply[ing] the abstract idea … using some unspecified, generic computer.” Furthermore, “the budgeting calculations at issue here are unpatentable because they ‘could still be made using a pencil and paper’ with a simple notification device.”

With respect to the claims of the ’382 patent, the Appeals Court found the claims to be related to “customizing information based on (1) information known about the user and (2) navigation data.” The court used the example of newspaper inserts based on a recipients address to show that customizing information based on information known about the user is “a fundamental … practice long prevalent in our system …” and thus an abstract idea. Similarly, the court noted that television advertisements have long been shown based on the time of day in which the advertisement is viewed. Since the patentee agreed that “navigation data” encompassed the time of day at which the user viewed the information, the court found the second feature to also be an abstract idea in the form of a fundamental economic practice. The court did not perform an analysis to determine if the combination itself were a fundamental economic practice long prevalent in our system of commerce.

The patentee argued that the claims of the ’382 patent included an “inventive concept that would support patent eligibility” because the claims are directed to a “‘real time’ customiz[ation]” of a “web page based on … information … about the particular viewer,” but the court held that the claims did not recite those features. Accordingly, the claims were found to be directed to an abstract idea “restricted to the Internet, on a generic computer,” which was insufficient to confer patentability.

In holding that the claims were patent-ineligible, the Federal Circuit addressed the patentee’s argument that the claims at issue were similar to the patent-eligible claims in DDR Holdings:

The patent at issue in DDR provided an Internet-based solution to solve a problem unique to the Internet that (1) did not foreclose other ways of solving the problem, and (2) recited a specific series of steps that resulted in a departure from the routine and conventional sequence of events after the click of a hyperlink advertisement. … The patent claims here do not address problems unique to the Internet, so DDR has no applicability.

Thus, the Federal Circuit leaves the door open for Internet-based solutions to modern problems, even while keeping the door firmly shut against computer implementations of fundamental economic practices long prevalent in our system of commerce.

Thanks to Domenico Ippolito, Schwegman, Lundberg & Woessner, P.A., for this posting.

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.