Software Patents Survive

The Federal Circuit issued a significant decision curtailing the power of district courts to dismiss patent lawsuits at the Rule 12 stage on the basis that the claimed subject matter falls outside Section 101’s categories of patent-eligible subject matter.

In Ultramercial, Inc v. Hulu LLC et al., the Federal Circuit addressed a software method claim that covered “a method for distributing copyrighted products (e.g., songs, movies, books) over the Internet where the consumer receives a copyrighted product for free in exchange for viewing an advertisement, and the advertiser pays for the copyrighted content.”  The district court held that the claim was an abstract idea and thus not patentable subject matter, dismissing the case on a Rule 12 motion.

But the Federal Circuit reversed.  It held that it is “rare” that a patent suit can be dismissed at the Rule 12 stage on Section 101 grounds.  Section 101 question, the Court held, are generally “rife” with factual questions that need to be addressed in the litigation, generally through the claim construction process.  As a result, the Federal Circuit held that the method claims in this case were not an unpatentable abstract idea, but were indeed fairly claiming a practical application of the concept of internet advertising.

Of relevance: “Specifically, the ’545 patent claims a particular internet and computer-based method for monetizing copyrighted products, consisting of the following steps: (1) receiving media products from a copyright holder, (2) selecting an advertisement to be associated with each media product, (3) providing said media products for sale on an Internet website, (4) restricting general public access to the media products, (5) offering free access to said media products on the condition that the consumer view the advertising, (6) receiving a request from a consumer to view the advertising, (7) facilitating the display of advertising and any required interaction with the advertising, (8) allowing the consumer access to the associated media product after such display and interaction, if any, (9) recording this transaction in an activity log, and (10) receiving payment from the advertiser. This court does not need the record of a formal claim construction to see that many of these steps require intricate and complex computer programming. Even at this general level, it wrenches meaning from the word to label the claimed invention “abstract.” The claim does not cover the use of advertising as currency disassociated with any specific application of that activity. It was error for the district court to strip away these limitations and instead imagine some “core” of the invention.” …

“The court also notes that the claims in this case are not highly generalized. Instead, the ten specific steps in the claim limit any abstract concept within the scope of the invention. Further, common sense alone establishes that these steps are not inherent in the idea of monetizing advertising. There are myriad ways to accomplish that abstract concept that do not infringe these claims.”

Judges Rader, Lourie, & O’Malley were on the panel.


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One LLP is an elite intellectual property and entertainment law boutique with offices in Los Angeles and Orange County. The firm is especially known for handling high-profile copyright, trademark, patent and business litigation.

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