On November 14, 2014, the Federal Circuit rejected claims of U.S. Patent No. 7,346,545 as not being directed to patent eligible subject matter. See Ultramercial, Inc. v. Hulu, LLC, __ F.3d __ (Fed. Cir. Nov. 14, 2014) (LOURIE, Mayer (concur), O’Malley) (C.D. Cal.: Klausner). The short version — the Federal Circuit affirms a Rule 12(b)(6) dismissal of the lawsuit because the patent claims recite an abstract idea, “an abstraction . . . having no particular concrete or tangible form.”
The long version is more interesting to patent lawyers. Claim 1 is representative of all the claims in dispute (emphasis added):
1. A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:
a first step of receiving, from a content provider, media products that are covered by intellectual-property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;
a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;
a third step of providing the media product for sale at an Internet website;
a fourth step of restricting general public access to said media product;
a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;
a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;
a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;
an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;
a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;
a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and
an eleventh step of receiving payment from the sponsor of the sponsor message displayed.
This method can be summarized as follows:
“get a media product that is protected by legal rights and make it available for sale, restrict access to it until a consumer watches an advertisement, record evidence of the transaction, and receive payment from a sponsor of the advertisement.”
Previously, on instruction from the U.S. Supreme Court, the Federal Circuit judges determined that the claims were patent-eligible even in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___, 132 S. Ct. 1289 (2012) (which requires something “significantly more” than an abstract idea). However, after the June 2014 decision in Alice Corp v. CLS Bank, and again on instruction from the U.S. Supreme Court, the Federal Circuit judges changed their mind and issued the third Ultramercial opinion. Insights from this opinion are provided below.
In Alice, both the method and system claims were patent ineligible.
- On appeal, questions concerning patent-eligible subject matter under 35 U.S.C. 101 are reviewed without deference to the trial court.
- There is a two-step procedure for determining patent-eligible subject matter. First, the court must decide whether the claims are directed to one of the patent-ineligible concepts (e.g., laws of nature, natural phenomena, and abstract ideas). Second, the court must decide if the claims contain an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” (quote to Mayo Collaborative Services).
- Quoting Mayo, 132 S. Ct. at 1297-98, a “claim that recites an abstract idea must include ‘additional features’ to ensure ‘that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].'” The “additional features” must be more than “well-understood, routine, conventional activity.”
- Any novelty in implementation of the abstract idea is a factor to be considered only in the second step of the Alice analysis. Op. at 10.
- The claimed sequence of steps above in claim 1 comprise only “conventional steps, specified at a high level of generality,” which is insufficient to supply an “inventive concept,” citing to Alice Corp. v. CLS Bank International, 573 U.S. ___, 134 S. Ct. 2347, 2357 (2014).
- Steps such as consulting and updating an activity log represent insignificant “data-gathering steps,” citing Cybersource Corp. V. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011). This sounds like anything in a claim that merely and generically searches or writes to a database is patent ineligible without “something more.” Such would “add nothing of practical significance to the underlying abstract idea.” Op. at 11.
- Even though some of the eleven steps of claim 1 were not previously employed in the relevant art is not enough — standing alone — to confer patent eligibility upon the claims.
- The claims of the ‘545 patent are not tied to any particular or novel machine or apparatus, and thus the Bilski machine-or-transformation test tends to confirm that the claims at issue recite patent ineligible subject matter.
In the opinion, the Federal Circuit again disclaimed any per se rule against software patents: “we do not purport to state that all claims in all software-based patents will necessarily be directed to an abstract idea. Future cases may turn out differently.” Op. at 10.
In a lengthy concurring opinion, Judge Mayer emphasizes three points:
- whether claims meet the demands of 35 U.S.C. § 101 is a threshold question that must be addressed at the outset of every patent litigation;
- no presumption of eligibility attends the section 101 inquiry; and
- the decision in Alice Corporation v. CLS Bank International, 134 S. Ct. 2347, 2356–59 (2014) sets out a technological arts test for patent eligibility.
The first question is similar to a jurisdictional inquiry. Judge Mayer states, “The Supreme Court has thus dictated that section 101 imposes ‘a threshold test’ [under Bilski] . . . that must be satisfied before a court can proceed to consider subordinate validity issues such as non-obviousness . . . or adequate written description.” See In re Comiskey, 554 F.3d 967, 973 (Fed. Cir. 2009). A preliminary inquiry “conserves scarce judicial resources,” provides a “bulwark against vexatious infringement suits,” and protects the public by “weeding out those patents that stifle innovation and transgress the public domain.”
Second, no presumption of validity applies to section 101. Judge Mayer states, because “the PTO has for many years applied an insufficiently rigorous subject matter eligibility standard, no presumption of eligibility should attach when assessing whether claims meet the demands of section 101.” However, since this is a concurring opinion, it is best not to rely too heavily on this line of argument when challenging claims for ineligible subject matter.
The legislative history is frequently misquoted as to the expansiveness that some judges have given to patentable subject matter. The full legislative statement is instructive to clarify what is proper patent eligible subject matter under section 101. The committee report reads: “A person may have ‘invented’ a machine or a manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.” H.R. Rep. No. 1923, 82d Cong., 2d Sess., at 6 (1952).
Third, Judge Mayer reminds us that, “Alice articulated a technological arts test for patent eligibility.” In Alice, the asserted method and system claims were patent ineligible because they did not “improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.” The technological arts test prohibits claims which are “overly broad,” in proportion to the technological dividends they yield. See Mayo, 132 S. Ct. at 1301. To satisfy the technological arts test, “claims must harness natural laws and scientific principles” but must be limited by the precise set of instructions for achieving the technological objective articulated by the inventors.
It seems that the Federal Circuit, by following the lead of the U.S. Supreme Court, is trying to do its part to raise the bar on patent eligible subject matter by separating “entrepreneurial” innovations (non-technical advances in business law and the social sciences) from ‘technological” innovations. After all, patents are supposed to promote science and the useful arts.