United States: A Method For Distributing Copyrighted Products Over The Internet Does Not Lack Subject Matter Eligibility

In Ultramercial, Inc. v. Hulu, LLC, No. 10-1544 (Fed. Cir. June 21, 2013), the Federal Circuit reversed and remanded the district court's judgment that the subject matter of U.S. Patent No. 7,346,545 ("the '545 patent") is not a "process" within the language and meaning of 35 U.S.C. § 101.

The '545 patent claims an eleven-step method for distributing copyrighted products over the Internet where the consumer receives a copyrighted item paid by an advertiser in exchange for viewing the advertisement.  Several of these steps require the method being performed through computers, over the Internet, and in a cyber-market environment.  Many of the steps also require intricate and complex computer programming.

Ultramercial, Inc. and Ultramercial, LLC (collectively "Ultramercial") sued Hulu, LLC ("Hulu"), YouTube, LLC ("YouTube"), and WildTangent, Inc. ("WildTangent") for infringement of the '545 patent.  Hulu and YouTube have been dismissed from the case.  WildTangent moved to dismiss the case for failure to state a claim, arguing that the '545 patent lacked patent-eligible subject matter.  The district court concluded that the subject matter of the '545 patent is not a "process" within the language and meaning of § 101.  Thus, the district court dismissed Ultramercial's claim without formally construing the claims and, further, without requiring defendants to file answers.  Ultramercial appealed. 

On appeal, the Federal Circuit reversed and remanded the district court's dismissal of Ultramercial's claim, holding that the district court erred in concluding that the '545 patent's subject matter is not considered a "process," one of the subject matter categories listed under § 101.

"The Court has long-recognized that any claim can be stripped down, simplified, generalized, or paraphrased to remove all of its concrete limitations, until at its core, something that could be characterized as an abstract idea is revealed.  A court cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims.  Instead, the relevant inquiry is whether a claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea."  Slip op. at 15-16.

As an initial matter, the Court addressed the district court's use of Federal Rule of Civil Procedure
12(b)(6) in dismissing Ultramercial's claims, noting that "it will be rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter," because every issued patent is presumed to have been issued properly, absent clear and convincing evidence to the contrary.  Slip op. at 5.  The Court further noted that when Rule 12(b)(6) is used as a defense, dismissal is appropriate only if the factual allegations in the complaint, construed in the light most favorable to the plaintiff, suffice to establish the defense.  Therefore, the Court indicated that for a Rule 12(b)(6) dismissal, "the only plausible reading of the patent must be that there is clear and convincing evidence of ineligibility.  For those reasons, Rule 12(b)(6) dismissal for lack of eligible subject matter will be the exception, not the rule."  Id. at 6.   

The Court held that the district court erred by requiring the patentee to present a claim construction that would show that the claims were subject matter eligible.  The Court noted that the claims are presumed to be eligible, and that the district court should have either required the defendant to establish by clear and convincing evidence that the only plausible construction of the patent rendered the subject matter ineligible, or should have adopted a construction most favorable to the patentee. 

The Court then turned to the district court's conclusion that the claims are ineligible subject matter, noting that for purposes of the appeal, a construction of the claims most favorable to the patentee will be adopted.  The claims recited a method for monetizing and distributing copyrighted products over the Internet, which the Court noted easily satisfies the meaning of a "process" under § 100 and hence falls within an eligible subject matter category.  Therefore, the Court also had to decide whether the claim is meaningfully limited to something less than an abstract idea that preempts the use of an abstract concept.  While the claimed method involved an abstract idea that advertising can be used as a form of currency, the Court noted that there are also meaningful limitations showing that the patent claim is a specific application of such an idea.

The Court then began to list several meaningful limitations included in the patent claim, noting that many of the steps require intricate and complex computer programming.  The Court noted that even without going into the specifics of the patent claim and by just looking at the claim on a general level, the claim cannot be considered an abstract idea and that "it wrenches meaning from the word to label the claimed invention 'abstract.'"  Id. at 27.  Based on the recited steps, the claim involved not an abstract idea, but a very specific application of the idea that advertising could be used to generate money.  Moreover, the record showed no evidence that the recited steps of the claim are all token presolution or postsolution steps.  Therefore, the Court ruled that the district court erred in deciding that the recited limitations did not limit the abstract idea.

Next, the Court turned to the contention that software programming necessary to facilitate the invention does not deserve patent protection or constitutes abstract subject matter.  In In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994) (en banc), the Court reasoned that software programming essentially creates a "new machine," because the added programming transforms a general purpose computer into a special purpose computer programmed to perform particular functions pursuant to instructions from program software.  The Court noted that this "new machine" could be efficiently claimed in terms of the programming that facilitates a unique function.   Moreover, both the Court and the PTO have long recognized that improvements made through interchangeable software or hardware enhancements deserve patent protection.

The Court then addressed the issue of the '545 patent not outlining any specific detailed mechanism for delivering the media content to the consumer.  The Court noted that this lack of specificity does not make the patent claim abstract.  As long as the patent discloses sufficient information to allow a person of ordinary skill in the art to practice the invention and to satisfy the written description requirement, the disclosure does not have to provide detailed information for every step in the process.  In addition, written description and enablement are conditions that must be met for patentability, and not for subject matter eligibility.

The Court then distinguished this case from CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1373 (Fed. Cir. 2011), a case involving a patent describing a method and system for detecting fraud in credit card transactions.  The Court noted that, unlike the patent claims in CyberSource, the claims here require, among other things, controlled interaction with a consumer over an Internet website, which is "something far removed from purely mental steps."  Slip op. at 32-33.

Accordingly, the Court reversed the district court's dismissal of Ultramercial's patent claims for lack of subject matter and remanded for further proceedings. 

In a concurring opinion, Judge Lourie agreed with the Court's reversal of the judgment on appeal and its remand for further proceedings.  While he agreed with the Court that no formal claim construction is needed to interpret the claims at this stage, Judge Lourie would have followed a two-step inquiry, derived from Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), for determination of patent eligibility under § 101.  Specifically, a court has to determine (1) whether the claimed invention falls within the four classes defined by § 101; and (2) whether the exceptions to subject matter eligibility apply to the invention.  CLS Bank Int'l v. Alice Corp., 2013 WL 1920941, at *9 (Fed. Cir. May 10, 2013).  In terms of abstractness, Judge Lourie would have determined whether the claim bears any risk of preempting an abstract idea by analyzing the fundamental concept embedded in the claim and then determining whether there are additional limitations to narrow the claim not to cover the full abstract idea.

Judges: Rader (author), Lourie (concurring), O'Malley

[Appealed from C.D. Cal., Judge Klausner]

This article previously appeared in Last Month at the Federal Circuit, July, 2013.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
17 Oct 2018, Other, Washington, DC, United States

Finnegan is a Platinum sponsor of the ChIPs Women in Tech, Law, & Policy Global Summit. The program will take place at the Mandarin Oriental Hotel in Washington, DC.

18 Oct 2018, Webinar, Washington, DC, United States

Since the Supreme Court’s 2006 decision in eBay v. MercExchange, many patent practitioners have considered preliminary or permanent injunctions nearly impossible.

23 Oct 2018, Webinar, Washington, DC, United States

How do trademark and advertising trends impact your company? Join a discussion on the latest trends in the food and beverage industry in the United States and Europe.

Similar Articles
Relevancy Powered by MondaqAI
McDermott Will & Emery
Cadwalader, Wickersham & Taft LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
McDermott Will & Emery
Cadwalader, Wickersham & Taft LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions