788 F.3d 1359 (Fed. Cir. 2015), 2012-1696, OIP Techs., Inc. v. Amazon.com, Inc.

Docket Nº:2012-1696
Citation:788 F.3d 1359, 115 U.S.P.Q.2d 1090
Opinion Judge:Hughes, Circuit Judge.
Party Name:OIP TECHNOLOGIES, INC., Plaintiff-Appellant v. AMAZON.COM, INC., Defendant-Appellee
Attorney:MATTHEW D. POWERS, Tensegrity Law Group, LLP, Redwood City, CA, argued for plaintiff-appellant. Also represented by STEVEN CHERENSKY, PAUL EHRLICH, STEFANI SMITH, AARON MATTHEW NATHAN. GREGORY G. GARRE, Latham & Watkins LLP, Washington, DC, argued for defendant-appellee. Also represented by GABRI...
Judge Panel:Before TARANTO, MAYER, and HUGHES, Circuit Judges. OPINION filed by Circuit Judge HUGHES. Concurring opinion filed by Circuit Judge MAYER. Mayer, Circuit Judge, concurring.
Case Date:June 11, 2015
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 1359

788 F.3d 1359 (Fed. Cir. 2015)

115 U.S.P.Q.2d 1090

OIP TECHNOLOGIES, INC., Plaintiff-Appellant

v.

AMAZON.COM, INC., Defendant-Appellee

2012-1696

United States Court of Appeals, Federal Circuit

June 11, 2015

Appeal from the United States District Court for the Northern District of California in No. 12-CV-1233, Judge Edward M. Chen.

AFFIRMED.

MATTHEW D. POWERS, Tensegrity Law Group, LLP, Redwood City, CA, argued for plaintiff-appellant. Also represented by STEVEN CHERENSKY, PAUL EHRLICH, STEFANI SMITH, AARON MATTHEW NATHAN.

GREGORY G. GARRE, Latham & Watkins LLP, Washington, DC, argued for defendant-appellee. Also represented by GABRIEL BELL, MATTHEW J. MOORE; RICHARD GREGORY FRENKEL, Menlo Park, CA; JEFFREY H. DEAN, Amazon.com., Inc., Seattle, WA.

Before TARANTO, MAYER, and HUGHES, Circuit Judges. OPINION filed by Circuit Judge HUGHES. Concurring opinion filed by Circuit Judge MAYER.

OPINION

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Hughes, Circuit Judge.

OIP Technologies alleges that Amazon.com infringes a patent that relates to a method of price optimization in an e-commerce environment. The district court granted judgment on the pleadings, concluding that the patent does not claim patentable subject matter under 35 U.S.C. § 101. Because we agree with the district court that the patent-in-suit claims no more than an abstract idea coupled with routine data-gathering steps and conventional computer activity, we affirm.

I

In March 2012, OIP Technologies filed suit against Amazon.com alleging infringement of U.S. Patent No. 7,970,713, which claims computer-implemented methods for " pricing a product for sale." See, e.g., '713 patent col. 16 ll. 2-39 (claim 1). The '713 patent explains that traditionally merchandisers

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manually determine prices based on their qualitative knowledge of the items, pricing experience, and other business policies. In setting the price of a particular good, the merchandiser estimates the shape of a demand curve for a particular product based on, for example, the good itself, the brand strength, market conditions, seasons, and past sales. Id. at col. 1 ll. 62 - col. 2 l. 2; col. 2 ll. 62-66. The '713 patent states that a problem with this approach is that the merchandiser is slow to react to changing market conditions, resulting in an imperfect pricing model where the merchandiser often is not charging an optimal price that maximizes profit. Id. at col. 2 ll. 13-19.

Accordingly, the '713 patent teaches a price-optimization method that " help[s] vendors automatically reach better pricing decisions through automatic estimation and measurement of actual demand to select prices." Id. at col. 8 l. 15-17. Claim 1 recites:

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.

Id. at col. 16 ll. 2-39. Thus, claim 1 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 dependent claims add various computer elements such as including webpages as advertisements in the second set of messages and generating statistics. See, e.g., id. at col.

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16 ll. 56-60 (claim 5), col. 18 ll. 1-22 (claims 17-18) .

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. J.A. 22. 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." J.A. 28.

OIP appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

We apply regional circuit law to the review of motions to dismiss. K-Tech Telecomms., Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1282 (Fed. Cir. 2013). The Ninth Circuit reviews appeals of a dismissal for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) de novo. Id. Our review " is generally limited to the face of the complaint, materials incorporated into the complaint by reference, and matters of judicial notice." Id. Patent eligibility under 35 U.S.C. § 101 is an issue of law reviewed de novo. Accenture Global Servs. v. Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir. 2013).

A patent may be obtained for " any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U.S.C. § 101. The Supreme Court has " long held that this provision contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable." Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289,...

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