Earlier this year, in Alice
v. CLS Bank, the Supreme Court set out guidelines for
determining whether patents claiming software and hardware features
are statutorily eligible for patentability under 35 U.S.C. §
101. Following the Supreme Court's lead, the Federal Circuit
recently provided additional guidance on how—and procedurally
when—patentability challenges under 35 U.S.C. § 101
should be made by alleged infringers and considered by district
courts.
In Ultramercial, Inc. v. Hulu,
LLC, No. 2010-1544 (Fed. Cir. Nov. 14, 2014), the Court
of Appeals affirmed a district court's ability to rule on
patent eligibility at the motion to dismiss stage, without the
benefit of discovery or formal claim construction. With this
decision, the Federal Circuit departs from its previous procedural
and substantive views on patentable subject matter eligibility in
favor of a less rigid approach that occurs earlier in litigation.
The decision also tacitly approves the mechanisms that several
district court have recently employed in granting motions to
dismiss infringement claims under Alice pursuant to Federal
Rule of Civil Procedure 12(b)(6) and 12(c).
Background
The plaintiff, Ultramercial, brought suit in 2009
in the Central District of California, alleging infringement by
three defendants of a patent that covers a method for distributing
copyrighted media over the Internet to a consumer at no cost in
exchange for viewing an advertisement, with the advertiser paying
for the copyrighted content. Claim 1, for example, has 11 distinct
but generic steps such as "providing the media product for
sale at an Internet website" and "restricting general
public access to said media product."
One of the defendants filed a Rule 12(b)(6) motion to dismiss,
asserting that the claims were not patent-eligible under
§ 101. The district court granted the motion and ruled,
without formal claim construction, that the claims did not claim
eligible subject matter. Ultramercial, LLC v. Hulu,
LLC, No. 09-06918, 2010 WL 3360098, at *6-7 (C.D. Cal.
Aug. 13, 2010).
The tortured appellate history of Ultramercial that followed
reveals the evolution of the § 101 standard over the next
four years in both the Federal Circuit and the United States
Supreme Court. The Federal Circuit twice reversed the finding of
non-patentability, only to have both decisions vacated by the
Supreme Court in the wake of its respective decisions in Mayo Collaborative Services v. Prometheus
Laboratories, Inc. and Alice v. CLS Bank. Now, three years
after its first effort, the Federal Circuit has issued a new ruling
that reaches a different outcome than the first two.
Recent Opinion
In its recent third opinion on the subject, the
Federal Circuit completely abandoned its prior views on Rule
12(b)(6) and patent ineligibility and charted a different course
based on the Alice
framework. Under
Alice, a court
decides first whether a patent claim is directed to a
patent-eligible concept and, if not, whether the claim transforms
the abstract idea into a patent-eligible invention. The Ultramercial decision
provides further insight into how and when this two-part test
should be applied.
Applying the first part of the Alice test, the Federal
Circuit in Ultramercial
found—without construing the asserted patent
claims—that those claims recited an abstract idea. This was
the same conclusion reached by the court in its first opinion on
patent eligibility, in which it nevertheless found that the claims
were patent-eligible because they claimed a practical application
of the abstract idea.
This time, applying the second step of the Alice framework, the Federal
Circuit held that Ultramercial's patent claims were not
patent-eligible because they did not describe "significantly
more" than the abstract idea. Citing the
"machine-or-transformation" test for patent
eligibility—which has been deemed a useful tool, but not a
mandatory requirement—the court noted that the claims were
not tied to any novel machine or apparatus. More importantly, the
claims' invocation of a general computer and the Internet added
no inventive concept; rather, the "transfer of content between
computers is merely what computers do." In other words, the
claimed steps simply instructed the practitioner to implement the
abstract idea with "routine, conventional activity" and
thus failed to transform the idea into patentable subject matter.
The decision sets a high bar for novel computer implementation,
holding that the mere fact some method steps may not previously
have been employed in the art is insufficient to confer patent
eligibility upon an idea.
Judge Mayer's
Concurrence
A concurring opinion by Judge Mayer raises three
critical points that will be of keen interest to practitioners
raising the issue of patentable subject matter.
First, Judge Mayer noted that whether claims meet the demands of 35
U.S.C. § 101 is a threshold question, which he felt "must
be addressed at the outset of the litigation." As with a
jurisdictional inquiry, a court must "likewise first assess
whether claimed subject matter is even eligible for patent
protection before addressing questions of invalidity or
infringement." A failure "to recite statutory subject
matter is the sort of 'basic deficiency,' that can, and
should, 'be exposed at the point of minimum expenditure of time
and money by the parties and the court.'"
Second, Judge Mayer contended that no presumption of eligibility
should attend the § 101 inquiry. The presumption of
validity relies on the assumption that the United States Patent and
Trademark Office (USPTO) "in its expertise, has approved the
claim." However, Judge Mayer felt that because the Supreme
Court has only recently "right[ed] the ship and return[ed] the
nation's patent system to its constitutional moorings"
with regard to § 101 in Alice, the USPTO for years
had applied an incorrect subject matter eligibility standard.
Finally, Judge Mayer contended that Alice essentially set a
technological arts test for patent eligibility. It has long been
acknowledged that the patent system is meant to encourage "the
onward march of science," and so "its rewards do not flow
to ideas—even good ones—outside of the technologic
arena." Judge Mayer felt that because the purported
inventive concept in Ultramercial's asserted claims was an
entrepreneurial rather than technological one, it fell outside of
the ambit of § 101.
Conclusion
Whether or not the views in Judge Mayer's
concurrence gain widespread approval, Ultramercial encourages
alleged infringers to consider the issue of patent eligibility
early in litigation, and the majority opinion provides a clear
blueprint on how to proceed in the context of a motion to dismiss
without the need for expensive discovery or claim construction.
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.