Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca13-12-01696/USCOURTS-ca13-12-01696-0/pdf.json

Parties Involved:
Amazon.com, Inc.
Appellee
Oip Technologies, Inc.
Appellant

Document Text:

United States Court of Appeals 

for the Federal Circuit ______________________ 

OIP TECHNOLOGIES, INC.,

Plaintiff-Appellant

v.

AMAZON.COM, INC.,

Defendant-Appellee

______________________ 

2012-1696

______________________ 

Appeal from the United States District Court for the 

Northern District of California in No. 12-CV-1233, Judge 

Edward M. Chen.

______________________ 

Decided: June 11, 2015

______________________ 

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.

______________________ 

Case: 12-1696 Document: 59-2 Page: 1 Filed: 06/11/2015
2 OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC. 

Before TARANTO, MAYER, and HUGHES, Circuit Judges.

Opinion for the court filed by Circuit Judge HUGHES. 

Concurring opinion filed by Circuit Judge MAYER. 

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 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 priceoptimization method that “help[s] vendors automatically 

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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;

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4 OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC. 

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. 16 ll. 56–60 (claim 5), col. 18 ll. 1–22 

(claims 17-18) . 

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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 (2013) (quoting Mayo 

Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 

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6 OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC. 

1289, 1293 (2012)). Under the now familiar two-part test 

described by the Supreme Court in Alice, “[w]e must first 

determine whether the claims at issue are directed to a 

patent-ineligible concept,” such as an abstract idea. Alice 

Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 

(2014). If so, we must then “consider the elements of each 

claim both individually and ‘as an ordered combination’ to 

determine whether the additional elements ‘transform the 

nature of the claim’ into a patent-eligible application.” Id.

(quoting Mayo, 132 S. Ct. at 1298, 1297).

Here, the claims are directed to the concept of offerbased price optimization. Claim 1 broadly recites a 

“method of pricing a product for sale,” and the specification describes the invention as an “automatic pricing 

method and apparatus for use in electronic commerce.” 

’713 patent col. 2 ll. 49–50; id. at col. 1 ll. 27–31. This

concept of “offer based pricing” is similar to other “fundamental economic concepts” found to be abstract ideas by 

the Supreme Court and this court. See, e.g., Alice, 134 

S. Ct. at 2357 (intermediated settlement); Bilski v. Kappos, 561 U.S. 593, 611 (2010) (risk hedging); Ultramercial, 

Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) 

(using advertising as an exchange or currency); Content 

Extraction & Transmission LLC v. Wells Fargo Bank, 

Nat’l Ass’n, 776 F.3d 1343, 1347 (Fed. Cir. 2014) (data 

collection); Accenture Global Servs., GmbH v. Guidewire 

Software, Inc., 728 F.3d 1336, 1346 (Fed. Cir. 2013) 

(generating tasks in an insurance organization). And that 

the claims do not preempt all price optimization or may be 

limited to price optimization in the e-commerce setting do 

not make them any less abstract. See buySAFE, Inc. v. 

Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (collecting cases); Accenture, 728 F.3d at 1345. 

Beyond the abstract idea of offer-based price optimization, the claims merely recite “well-understood, routine 

conventional activit[ies],” either by requiring conventional 

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OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC. 7

computer activities or routine data-gathering steps. Alice, 

134 S. Ct. at 2359 (quoting Mayo, 132 S. Ct. at 1294)

(alterations in original). Considered individually or taken 

together as an ordered combination, the claim elements 

fail “to ‘transform’ the claimed abstract idea into a patenteligible application.” Id. at 2357 (quoting Mayo, 132 

S. Ct. at 1294, 1298). For example, claim 1 recites “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. Just as in Alice, “all of these computer 

functions are ‘well-understood, routine, conventional 

activit[ies]’ previously known to the industry.” Alice, 134 

S. Ct. at 2359 (quoting Mayo, 132 S. Ct. at 1294) (alterations in original); see also buySAFE, 765 F.3d at 1355 

(“That a computer receives and sends the information 

over a network—with no further specification—is not 

even arguably inventive.”). Moreover, the claims are 

exceptionally broad and the computer implementation 

limitations do little to limit their scope. Indeed, the 

specification makes clear that this “programming” and 

the related computer hardware “refers to any sequence of 

instructions designed for execution on a computer system.” ’713 patent col. 6 ll. 31–33.

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.” Id. at col. 3 ll. 10–11. Likewise, 

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8 OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC. 

the patentee distinguished traditional pricing research, 

by emphasizing that “the techniques described in [the 

prior art] generally cost more and take more time, and are 

less accurate than the technique recited in [the claims].” 

J.A. 393. And “automatically determining an estimated 

outcome using each of the plurality of prices for the product . . . means that pricing decisions are made with more 

granularity.” J.A. 525. But relying on a computer to 

perform routine tasks more quickly or more accurately is 

insufficient to render a claim patent eligible. See Alice, 

134 S. Ct. at 2359 (“use of a computer to create electronic 

records, track multiple transactions, and issue simultaneous instructions” is not an inventive concept); Bancorp 

Servs., L.L.C. v. Sun Life Assur. Co. of Can. (U.S.), 687 

F.3d 1266, 1278 (Fed. Cir. 2012) (a computer “employed 

only for its most basic function . . . does not impose meaningful limits on the scope of those claims”); cf. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1258–59

(Fed. Cir. 2014) (finding a computer-implemented method 

patent eligible where the claims recite a specific manipulation of a general-purpose computer such that the claims 

do not rely on a “computer network operating in its normal, expected manner”).

Nor does the claims’ recitation of “present[ing] [offers] 

to potential customers” and “gathering . . . statistics

generated during said testing about how the potential 

customers responded to the offers” provide a meaningful 

limitation on the abstract idea. These processes are wellunderstood, routine, conventional data-gathering activities that do not make the claims patent eligible. See 

Alice, 134 S. Ct. at 2359; Mayo, 132 S. Ct. at 1298. Like 

the claims in Mayo, which added only the routine steps of 

administering medication and measuring metabolite 

levels for the purposes of determining optimal dosage, 

here the addition of steps to test prices and collect data 

based on customer reactions does not add any meaningful 

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limitations to the abstract idea. Mayo, 132 S. Ct. at 

1297–98; see also Alice, 134 S. Ct. at 2357 (“‘Simply appending conventional steps, specified at a high level of 

generality,’ was not ‘enough’ to supply an ‘inventive 

concept.’”) (quoting Mayo, 132 S. Ct. at 1300, 1297, 1294); 

see also Ultramercial, 772 F.3d at 716 (“[T]he steps of 

consulting and updating an activity log represent insignificant ‘data-gathering steps,’ . . . and thus add nothing of 

practical significance to the underlying abstract idea.”) 

(citations omitted). 

On appeal OIP focuses its arguments on comparing 

the claimed invention to the invention found patent 

eligible in Diamond v. Diehr, 450 U.S. 175 (1981). However, we must read Diehr in light of Alice, which emphasized that Diehr does not stand for the general proposition 

that a claim implemented on a computer elevates an 

otherwise ineligible claim into a patent-eligible improvement. Alice, 134 S. Ct. at 2358. Rather, Diehr involved “a 

‘well-known’ mathematical equation . . . used . . . in a 

process designed to solve a technological problem in 

‘conventional industry practice.’” Id. (quoting Diehr, 450 

U.S. at 177, 178). Just 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. See id. at 

2359–60 (“Nor do [the claims] effect an improvement in 

any other technology or technical field.”) (citing Diehr, 450 

at 177–78).

III

We have considered all of OIP’s arguments and find 

them unpersuasive. Because the ’713 patent claims the 

abstract idea of offer-based price optimization and lacks 

an “inventive concept” sufficient to “transform” the 

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10 OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC. 

claimed subject matter into a patent-eligible application 

of that idea, we affirm.

AFFIRMED

Case: 12-1696 Document: 59-2 Page: 10 Filed: 06/11/2015
United States Court of Appeals 

for the Federal Circuit ______________________ 

 

OIP TECHNOLOGIES, INC.,

Plaintiff-Appellant

v.

AMAZON.COM, INC.,

Defendant-Appellee

______________________ 

2012-1696

______________________ 

MAYER, Circuit Judge, concurring.

I write separately to address the argument advanced 

by OIP Technologies, Inc. that the district court erred in 

resolving the patent eligibility issue on the pleadings. 

Failure to recite statutory subject matter is the sort of 

“basic deficiency,” that can, and should, “be exposed at the 

point of minimum expenditure of time and money by the 

parties and the court,” Bell Atl. Corp. v. Twombly, 550 

U.S. 544, 558 (2007) (citations and internal quotation 

marks omitted). Addressing 35 U.S.C. § 101 at the outset 

not only conserves scarce judicial resources and spares 

litigants the staggering costs associated with discovery 

and protracted claim construction litigation, it also works 

to stem the tide of vexatious suits brought by the owners 

of vague and overbroad business method patents. Accordingly, where, as here, asserted claims are plainly directed 

to a patent ineligible abstract idea, we have repeatedly 

sanctioned a district court’s decision to dispose of them on 

the pleadings. See, e.g., Content Extraction & TransmisCase: 12-1696 Document: 59-2 Page: 11 Filed: 06/11/2015
2 OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC. 

sion LLC v. Wells Fargo Bank, 776 F.3d 1343, 1349 (Fed. 

Cir. 2014); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 

717 (Fed. Cir. 2014); buySAFE, Inc. v. Google, Inc., 765 

F.3d 1350, 1352 (Fed. Cir. 2014). I commend the district 

court’s adherence to the Supreme Court’s instruction that 

patent eligibility is a “threshold” issue, Bilski v. Kappos, 

561 U.S. 593, 602 (2010), by resolving it at the first opportunity. 

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