Amazon Dodges OIP Pricing Patent Infringement Claims

San Diego – A California federal judge on Tuesday threw out OIP Technologies Inc.’s patent infringement suit against Amazon.com Inc. over a system for determining pricing automatically in online retail, saying the patent is ineligible.

OIP sued Amazon in March alleging it infringes OIP’s patent by making and using software systems for automated testing and selection of prices for products offered for sale on Amazon.com, wherein statistics are generated from the testing, estimated outcomes are determined and prices are selected based on those outcomes.

Amazon argued that the patent claims failed the “machine-or-transfomation” test and are directed to the abstract idea of price optimization, which is a fundamental economic principle that is reserved for the public, and Judge Edward M. Chen of the Northern District of California agreed.

The patent’s only machine elements merely incorporate a computer that is employed only for its most basic function, the performance of repetitive calculations, and so do not impose meaningful limits on the scope of those claims, Judge Chen ruled.

More fundamentally, it is clear that the patent falls within the statutory exception for abstract ideas, he said.

U.S. Patent Number 7,970,713 was issued to OIP’s predecessor Optivo Corp. in June 2011, 11 years after the application was filed, is titled “Method and apparatus for automatic pricing in electronic commerce.” The patent is designed to facilitate e-commerce price selection and optimization.

Optivo released its product, marketed as the Optivo Pricing Solution, in 2001 and allowed e-commerce companies to participate in trials of the technology, including Amazon, which took part in June 2001. The parties exchanged information under a non-disclosure agreement during that time.

The parties met in September 2001 to discuss Amazon’s potential acquisition of Optivo and its technology. Optivo gave a detailed presentation regarding the patent-pending technology, and projected that using the Optivo technology could increase margins by $100 million.

Amazon declined to purchase Optivo, but offered employment to two Optivo engineers as “price statisticians.” Both engineers fielded technical questions about the Optivo technology during the interview.