Legal Issues: Patenting Price Gouging

Abstract

Price gouging is not a new phenomenon by any means. Wikipedia describes it as a reaction to a “supply shock” that goes beyond what is “considered reasonable or fair.” Many states–particularly those in the hurricane belt–have laws against price gouging during states of emergency, such as those typically issued during and after hurricanes. Economists see those laws as double-edged swords, recognizing on the one hand the impact of price-gouging on consumers in times of high need and stress, but also suggesting that anti-price gouging laws can make bad situations worse by discouraging conversation and discouraging suppliers to bring in needed goods and services by limiting the basic “supply and demand” incentive to do so.

The car service company Uber has found itself within a price-gouging storm with its unashamed practice of “Surge Pricing.” Surge Pricing provides that during times of high demand, such as bad weather, sports events, holidays, etc., Uber has filed an application with the United States Patent and Trademark Office (USPTO) to patent surge pricing. In an application filed in March 2013 and published in September, Uber seeks to patent a “System and Method for Dynamically Adjusting Prices for Services.” (United States Patent Application number 2013/0246207). The patent, if granted, would give Uber exclusive rights to its “System” through at least the year 2032.

Keywords: Patent, Price Gouging, Uber, Surge Pricing, Economics, Supply and Demand