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U.S. Supreme Court Vacates CAFC Ultramercial Decision, Remands for Further Consideration of Business Methods

Posted Tuesday, May 22, 2012 by Mike Gibbons

Last September, the Court of Appeals for the Federal Circuit issued a ruling in Ultramercial v. Hulu related to subject matter eligibility of patents. You can read more about that decision here. The patent in suit related to a method for permitting a viewer to view content over the Internet once the viewer had watched an advertisement. The district court had invalidated the patent as being ineligible subject matter under 35 U.S.C. §101.

The Chief Judge for the Federal Circuit, Judge Rader, wrote the Ultramercial opinion. Noting that the statute includes the word “any” (the statute tells us “…any new and useful process, machine, manufacture, or composition of matter…” is patent-eligible), Judge Rader suggested the statute should be broadly inclusive. The Court subsequently reversed the lower court, holding the Ultramercial patent encompassed patent-eligible subject matter.

Soon after the Ultramercial opinion was released, I had the opportunity to hear Judge Rader speak to a group of Seattle patent practioners. Judge Rader suggested that if a computer is a recitation in a patent claim, the claim is almost assuredly patent-eligible. (You can read more about that here.)

Subsequently, the U.S. Supreme Court ruled on patent-eligibility in Mayo v. Prometheus. (You can read more about that here.) The upshot of this opinion is that if a patent claim recites a law of nature (laws of nature being held by previous Supreme Court decisions to be patent-ineligible) and only adds known steps, then the claim is patent-ineligible.

Several commentators in analyzing the Prometheus decision have pointed out that when a patent claim recites steps which are known, that part of the patent claim should be analyzed under 35 U.S.C. §102 and §103, which relate to novelty and nonobviousness, respectively. Some have even suggested the Prometheus decision conflates patent-eligibility (a §101 inquiry) with novelty and nonobviousness.

That notwithstanding, there was a general feeling in the patent community that the Prometheus decision might be limited as precedent to only future CAFC decisions that relate to claims similar to the Prometheus claims. In other words, if the claims in suit at the CAFC related to a medical test kit, Prometheus might be binding, but for other types of cases such as business methods or software patents, Prometheus might be persuasive but not binding.

Now it appears this may not be so. Yesterday (Monday, May 21, 2012), the Supreme Court vacated the CAFC’s Ultramercial decision and remanded the case back to the CAFC for further consideration in light of the Prometheus holding. (You can read the order here.) Patent attorneys and patent agents in Seattle, Bellevue, Redmond, and other areas of the country where software patents are prevalent, not to mention at the USPTO, will now be watching the CAFC closely for a decision in Ultramercial II for future guidance on patent-eligibility of methods.

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