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Ultramercial vs Hulu

Posted Monday, June 18, 2012 by Mike Cicero

Under 35 U.S.C. §101 “[w]hoever 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 therefore, subject to the conditions of this title” (emphasis added). The categories italicized in the previous sentence define the bounds of patent eligible subject matter. The Supreme Court has explained that “Congress plainly contemplated that the patent laws would be given wide scope” as evidenced by its “choosing such expansive terms modified by the comprehensive ‘any.’” Bilski v. Kappos, 130 S. Ct. 3218, 3225, 561 US __, 177 L. Ed. 2d 792 (2010). The use of such broadly inclusive categories aims to ensure that ingenuity receives substantial encouragement. Only a few exceptions have been carved out of this broad language including the categories of laws of nature, physical phenomena, and abstract ideas (As a side note, the Atomic Energy Act of 1954 also declared that atomic weapons cannot be patented which is probably best considering that a patent must enable one of ordinary skill in the art to practice the invention).

In the case of Ultramercial, LLC v. Hulu, LLC, Ultramercial alleged that Wildtangent was infringing on a patent which claimed a method for monetizing a copyrighted product, and Wildtangent filed a motion to dismiss arguing that the patent failed to claim patent eligible subject matter. 657 F.3d 1323 (2011). The patent at issue claimed a method, 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.

In the opinion Chief Justice Rader noted that “[a]s a method [the claim] satisfies §100’s definition of “process,” and he then focused the analysis on whether the claim was directed to an abstract idea and therefore ineligible for patent protection. Id. The court turned to the machine-or-transformation test as a tool for determining whether a claim was directed towards merely an abstract idea. Under this test, a process claim is patent eligible (as opposed to patentable, see www.ruttlerlaw.com/blog/2012/1/patent-eligible-/) if (1) it is implemented with a particular machine, i.e. one specifically devised to carry out the process, or (2) it transforms an article to a different state or thing. Taking note that many of the steps were “likely to require intricate and complex computer programing” and that certain steps “clearly require specific application to the Internet and a cyber-market environment,” the Court held that the invention as a whole involved an extensive computer interface. Id. The Court then grappled with whether the claim was implemented with a particular machine when any general purpose computer could be programed to perform the method.

The Court cited to the case of In re Alappat, and noted that “programing creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programed to perform particular functions.” 33 F.3d 1526 (Fed. Cir. 1994). To better illustrate this point, Rader explained that an inventor can achieve the same result by describing a software invention in terms of a dedicated circuit or simply a process that emulates such a circuit. Because the method claimed required the use of an extensive computer interface to effect implementation and once programed that computer interface “contains circuitry unique to that computer,” the court held that the method was to be implemented with a particular machine, any machine programmed to perform the method, and it was therefore patent eligible. Lastly, the Court made explicit that it issued no opinion as to the patentability of the subject matter under the substantive criteria of §102, §103, and §112.

Whether the Ultramercial decision will remain good law remains to be seen. On May 21, 2012, the Supreme Court vacated and remanded Ultramercial back to the Court of Appeals for the Federal Circuit in light of its holding in Mayo Collaborative Services v. Prometheus Laboratories, Inc. Thus, clearly the eligibility of the Ultramercial claims is in question. What is less clear is exactly how the Prometheus holding, which dealt largely with laws of nature being ineligible for patent protection under §101, will be applied to the Ultramercial claims directed toward a “method for monetizing a copyrighted product”.

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