In Ultramercial LLC v Hulu LLC (Case No. 2010-1544) we see the United States Court of Appeals for the Federal Circuit support the patentability of an invention for a method for monetizing and distributing copyrighted products over the Internet.
The patent
This case arose from an appeal from the United States District Court for the Central District of California. Ultramercial, LLC and Ultramercial, Inc. (Ultramercial) filed suit against Hulu, LLC, YouTube, LLC, and WildTangent, Inc. (“WildTangent”), alleging infringement of US patent 7,346,545.
WildTangent filed a motion to dismiss, arguing that the ’545 patent did not claim patent-eligible subject matter. The district court granted WildTangent’s motion to dismiss. Ultramercial appealed.
The ’545 patent relates to a method for monetizing and distributing copyrighted products over the Internet. It seeks to remedy problems with prior art banner advertising. One such problem is declining click-through rates. The invention introduces a method of product distribution that forces consumers to view and possibly even interact with advertisements before permitting access to the desired media product.
Claim 1 for example, contained a sequence of steps paraphrased below as:
- receiving media products from a copyright holder;
- selecting an advertisement to be associated with each media product;
- providing said media products for sale on an Internet website;
- restricting general public access to the media products;
- offering free access to said media products on the condition that the consumer view the advertising;
- receiving a request from a consumer to view the advertising;
- facilitating the display of advertising and any required interaction with the advertising;
- allowing the consumer access to the associated media product after such display and interaction, if any;
- recording this transaction in an activity log; and
- receiving payment from the advertiser.
Eligible subject matter
The Court noted that 35 U.S.C. 101 sets forth the categories of subject matter that are eligible for patent protection:
“[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title”.Subject matter eligibility is merely a threshold check. The categories of patent-eligible subject matter are no more than a “coarse eligibility filter”. Claim patentability ultimately depends on the conditions and requirements such as novelty, non-obviousness, and adequate disclosure.
There is not a single ineligble category listed in title 35. This suggests that, according to the Court, “any new, non-obvious, and fully disclosed technical advance is eligible for protection, subject to limited judicially created exceptions.”
Abstractness
The Court noted that judicial case law has created only three categories of subject matter outside the eligibility bounds of 35 U.S.C. 101. These are laws of nature, physical phenomena, and abstract ideas.
This invention clearly does not relate to laws of nature nor physical phenomena.
It was noted that “[b]oth members of the Supreme Court and this court have recognized the difficulty of providing a precise formula or definition for the judge-made ineligible category of abstractness”.
In this case the mere idea that advertising can be used as a form of currency is abstract. However, the Court observed that the ’545 patent does not simply claim the age-old idea that advertising can serve as currency. Instead the ’545 patent discloses a practical application of this idea.
A practical application
The Court set out a few reasons as to why it considered the invention to be a practical application of an idea as distinct from the abstract idea itself.
Computer programming
Many of the steps in method claim 1 are likely to require intricate and complex computer programming. Some steps clearly require specific application to the Internet and a cyber-market environment. If the products are offered for sale on the Internet, they must be “restricted” by complex computer programming as well. Viewing the subject matter as a whole, the invention was said to involve an extensive computer interface.
The Court did not define the level of programming complexity required before a computer-implemented method can be patent-eligible. Nor did it hold that use of an Internet website to practice such a method is either necessary or sufficient in every case to satisfy 35 U.S.C. 101.
Abstract subject matter
The Court observed that a programmed computer contains circuitry unique to that computer. That “new machine” could be claimed in terms of a complex array of hardware circuits, or more efficiently, in terms of the programming that facilitates a unique function.
Both this court and the Patent Office have long acknowledged that improvements through interchangeable software or hardware enhancements deserve patent protection. Advances in computer technology are far from abstract. Such advances, both hardware and software, drive innovation in every area of scientific and technical endeavor.
Written description
The Court observed that the broadly claimed method in the ’545 patent does not specify a particular mechanism for delivering media content to the consumer (i.e., FTP downloads, email, or real-time streaming).
However, the “coarse eligibility filter” of 35 U.S.C 101 should not be used to invalidate patents based on concerns about vagueness, indefinite disclosure, or lack of enablement. These infirmities are expressly addressed
by 35 U.S.C. 112.
Mental steps
The Court referred to CyberSource Corp. v. Retail Decisions, Inc. (Case No. 2009-1358) (see my blog post) in which an alleged invention was found to claim an “unpatentable mental process”. However the eligibility exclusion for purely mental steps is particularly narrow.
Unlike Cybersource, the claims of the ‘545 patent require inter alia controlled interaction with a consumer via an Internet website, something far removed from purely mental steps.
Further steps
The invention represents a practical application of the general concept of advertising as currency and an improvement to prior art technology. The claimed invention was found to be not “so manifestly abstract as to override the statutory language of 35 U.S.C. 101.”
The Court reversed the district court’s dismissal of Ultramercial’s patent claims for lack of subject matter eligibility and remanded for further proceedings.
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