Patent News

On Friday, September 16, 2011, the president signed into law the Leahy-Smith America Invents Act (AIA) for US patent reform. To see the USPTO’s discussion of rulemaking still needed to implement the AIA, please click here. You are welcome to also review posts by other practitioners on immediate changes to patent law and IP outlook in the reform era.

One day earlier, on Thursday, September 15, 2011, the Federal Circuit had decided Ultramercial, LLC v. Hulu, LLC, __ F.3d __ (Fed. Cir. 2011) involving patent eligibility. For a copy of the Ultramercial v. Hulu decision, please click here. The discussion below on patent eligibility from the Ultramercial v. Hulu decision focuses on grounds that appear to continue in effect upon implementation of the AIA.

Primer on Patent Eligibility

The claims section of a patent defines the owner’s rights. In one aspect, the claim language serves to present the invention in a patent-eligible form, as patentable subject matter. In another aspect, the claim language serves to distinguish the prior art.

During examination of the patent application before issuance, the patent examiner can raise objections and rejections such as to the claim language in view of the prior art, as well as over the subject matter sought to be claimed. Third parties, at various times, can similarly use procedures in the patent office and/or the courts to challenge the claims of a patent. The rules within government offices, laws for different countries and under various treaties, and interpretation and enforcement of intellectual property rights by courts and governments vary and evolve.

For more on patent application preparation and prosecution, including a review of patent claims for 1) subject matter that is eligible for patenting and 2) distinction from the prior art, please see my earlier posts here and here.

Internet Distribution Method is Eligible for Patenting

In reviewing US Patent No. 7,346,545 (“the ’545 patent”), the Federal Circuit in Ultramercial v. Hulu reversed and remanded a decision of the district court and held that the ’545 patent does claim a “process” within the language and meaning of 35 U.S.C. § 101.

Reference Materials

Pasted below is claim 1 of the ’545 patent. To see a full PDF copy of the ’545 patent, please click here.

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.

Eligibility as Threshold Check

The Federal Circuit described the review of eligibility of patent claims as a coarse gauge of the suitability of broad subject matter categories for patent protection. Section 101 sets forth the categories of subject matter that are eligible for patent protection:

Whoever 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.

Section 101 itself expresses that subject matter eligibility is merely a threshold check. Claim patentability ultimately depends on “the conditions and requirements of this title,” such as novelty and non-obviousness. Title 35 does not list a single ineligible category, suggesting that any new, non-obvious, and appropriately disclosed technical advance is eligible for protection, subject to the limited judicially created (non-statutory) exceptions discussed below.

Non-Statutory Exceptions to Eligibility

Judicial case law has created only three categories of subject matter outside the eligibility bounds of § 101: 1) laws of nature, 2) physical phenomena, and 3) abstract ideas. The Federal Circuit highlights the third category, abstract ideas, as presenting a different set of interpretive problems, particularly for the § 101 “process” category. The term “process” has a statutory definition at 35 U.S.C. § 100(b) that admits of no express subject matter limitation:

The term “process” means process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.

The Supreme Court in Bilski v. Kappos, 130 S. Ct. 3218, 3231 (2010) examined this definition and found that the ordinary, contemporary, common meaning of “method” may include even methods of doing business.

Although abstract principles are not eligible for patent protection, an application of an abstract idea may well be deserving of patent protection. Unlike the Copyright Act which divides idea from expression, the Patent Act covers and protects any new and useful technical advance, including applied ideas. Inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act. Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 869 (Fed. Cir. 2010).

Turning to the ’545 Patent

The ’545 patent seeks to remedy problems with prior art banner advertising, such as declining click-through rates, by introducing a method of product distribution that forces consumers to view and possibly even interact with advertisements before permitting access to the desired media product. ’545 patent col.2 ll.14-18. By its terms, the claimed invention purports to improve existing technology in the marketplace. Also by its terms, the claimed invention invokes computers and applications of computer technology. Beyond the threshold check of patent eligibility, the ’545 patent additionally needs to withstand substantive challenges such as the claimed invention does not advance technology (lack of novelty) and does not advance technology sufficiently to warrant patent protection (obviousness).

The mere idea that advertising can be used as a form of currency is abstract. In this way, the vague, unapplied concept of hedging proved patent-ineligible in Bilski v. Kappos. However, 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. The ’545 patent at claim 1 recites a particular 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) and (9) allowing the consumer access to the associated media product after such display and interaction, if any, (10) recording this transaction in an activity log, and (11) receiving payment from the advertiser.

Many of these steps are likely to require intricate and complex computer programming. In addition, certain of these steps clearly require specific application to the Internet and a cyber-market environment. Viewing the subject matter as a whole, the invention involves an extensive computer interface. The Federal Circuit here did not define the level of programming complexity required before a computer-implemented method can be patent-eligible. Nor did the Federal Circuit here hold that use of an Internet website to practice such a method is either necessary or sufficient in every case to satisfy § 101. The Federal Circuit stated that it is simply finding claim 1 of the ’545 patent to be patent-eligible, in part because of these factors.

Further in support of patent-eligibility, the Federal Circuit stated the ’545 patent does not claim a mathematical algorithm, a series of purely mental steps, or any similarly abstract concept. It claims a particular method for collecting revenue from the distribution of media products over the Internet. The Federal Circuit noted the eligibility exclusion for purely mental steps is particularly narrow. Claims must be considered as a whole and the presence of mental steps in a claim does not detract from the patentability of other steps. The claims here require, among other things, controlled interaction with a consumer via an Internet website, something far removed from purely mental steps.

In sum, as a practical application of the general concept of advertising as currency and an improvement to prior art technology, the claimed invention is not so manifestly abstract as to override the statutory language of § 101. Notwithstanding this determination of patent-eligibility, the Federal Circuit stated that its decision does not opine at all on the further review for patentability of claim 1 of the ’545 patent under the substantive criteria for disclosure and distinction from prior art set forth in 35 U.S.C. §§ 102, 103, and 112.

Text Copyright © 2011 Bob Brill

 

Bilski