In OIP TECHNOLOGIES, INC. v. AMAZON.COM, INC., Appeal No. 2012-1696, the Federal Circuit held that claims directed to the abstract idea of offer-based price optimization and merely automating traditional methods do not recite patentable subject matter under 35 U.S.C. § 101.

OIP Technologies sued Amazon, alleging infringement of a patent relating to a method of price optimization in an e-commerce environment.  Amazon filed a motion to dismiss OIP’s complaint, arguing that the asserted patent was drawn to patent-ineligible subject matter under § 101.  The district court granted Amazon’s motion, finding that the asserted claims merely used a general-purpose computer to implement the abstract idea of offer-based price optimization.

The Federal Circuit affirmed. Applying the Supreme Court’s two-part test described in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347, 2355 (2014), the Federal Circuit first determined that the asserted claims are directed to the abstract idea of offer-based price optimization.  Claim 1 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.”  The Federal Circuit then considered the elements of each claim, both individually and in combination, and determined that the elements “merely recite well-understood, routine, conventional activities.”  The court found that, at best, “the claims describe automation of the fundamental economic concept of offer-based price optimization through the use of generic-computer functions” such as sending electronic messages, storing results, and using a computerized system to determine estimated outcomes.  Thus, the claims failed to transform the abstract idea into a patent-eligible application.