Bottom line: In Ultramercial v. Hulu (Fed. Cir. 2014), the Federal Circuit continued to provide vague guidance as to the patentability of software, specifically, whether a claimed invention is an unpatentable abstract idea. The Federal Circuit provided little guidance as to when a novel characteristic of a claimed invention would be sufficient to move the claimed invention from an unpatentable abstract idea into the realm of patent eligible subject matter.
Practice pointer: In response to this case, patent attorneys should consider infusing the preamble of the claim to recite the benefit of the invention as a way of trying to move the needle from patent ineligible to eligible subject matter. Also, in method claims, one may consider placing the inventive concept in terms of a step of the method claim to make it more difficult for infringers and the courts to argue that all of the steps are routine. The same applies to apparatus claims.
In this case, the invention was directed to a method of providing TV shows and the like to people in their homes, for free, provided that people who receive that free content watch advertisements. In its broadest form, public TV has always worked this way. Networks provide TV programming and interrupt the TV programming intermittently with advertisements. The advertisers pay the networks. Ultramercial, in my opinion, provided advertisements in a better format. In particular, the old model involved a passive advertisement system. People were forced to watch advertisements selected by the networks.
In Ultramercial’s system, the power to select which advertisements were served to viewers were given to the viewer. As an active advertisement system, we, the people could choose which advertisements we wanted to watch. In my mind, this innovation may have a profound effect for advertising. Advertisers would be forced to make their commercials more entertaining or informative than others because viewers could choose to ignore a particular advertiser’s commercial. The metrics of a successful commercial would change because advertisers couldn’t just buy their way into the homes of viewers. Viewers could actively select advertisements that were entertaining, informative or based on some other preferred criteria of the viewer. Advertisers would be be paired up with truly interested viewers who wanted to see their commercials.
The sole issue in the litigation was whether the claimed invention recited in the patent at issue was eligible for patent protection. The issue was not related to anticipation, obviousness or enablement. Anticipation answers the question of whether the claimed invention is new or novel. Obviousness answers the question of whether the claimed invention is obvious based on existing information or technology. Enablement answers the question of whether the specification enables one to make and use the claimed invention.
In a recent Supreme Court opinion, Alice v. CLS, the Court laid out a two part framework for determining whether the claimed invention was directed to patent eligible subject matter. First, is the claimed invention directed to an ineligible concept (e.g., law of nature, natural phenomenon, or abstract idea)? Second, if so, then do the claims contain an element or a combination of elements sufficient to ensure that the patent in practice amounts to “significantly more” than a patent upon the ineligible concept itself?
In Alice, the Supreme Court failed to provide a definition for abstract idea and a standard for determining when the claimed invention is significantly more than the ineligible concept itself. Oftentimes, the lower courts might struggle at first in applying this broad criteria, but over a period of time might find a good solution as the issues are litigated in a number of cases. Unfortunately, in Ultramercial, the Federal Circuit appears to provide vague guidance by providing conclusory opinions as to a possible standard or definition for abstract idea and the standard for determining when the claimed invention is “significantly more” than the abstract idea so as to move the claim from being directed to an unpatentable abstract idea to a patentable one.
In the instant case of Ultramercial v. Hulu, the patentee argued that the invention was not directed to an abstract idea but an active advertisement model. The viewer actively selected the commercial to watch, not the network or the highest bid from an advertiser. On this active selection point, the Federal Circuit merely said that:
“the ‘545 claims are indeed directed to an abstract idea, which is, as the district court found, a method of using advertising as an exchange or currency. We do not agree with Ultramercial that the addition of merely novel or non-routine components to the claimed idea necessarily turns an abstraction into something concrete. In any event, any novelty in implementation of the idea is a factor to be considered only in the second step of the Alice analysis.”
Note that the court’s phraseaology of “the invention” is generic and does not include any active selection by the viewer. No reason is given as to why the claimed invention is directed to an abstract idea. Moreover, to the extent that the claimed invention contains novelty, such novelty cannot be considered during the first step of deciding whether the invention is directed to an abstract idea. As a patent attorney, this opinion is quite frustrating because it doesn’t provide any real guidance. It does indicate that the courts are willing to frame the invention in their own words and may conveniently downplay certain features the inventor might consider important to the invention.
In this sense, it may be worthwhile when prosecuting a patent application to frame the invention in the preamble of the claims more uniquely than previously done. Typically, the preamble sets out the generic environment of the invention. However, it may be worthwhile to set forth the unique benefit of the claimed invention and tie the benefit into the steps or elements of the claim so that during litigation the patentee can point directly to the claim itself for a description of a non-abstract aspect of the invention. This is an attempt to move the needle regarding the patentability of software from ineligible to eligible status. For example, in Ultramercial, the invention might have sounded more robust if it were described as a method for serving viewer selected commercial to increase engagement between the viewer and the commercial and to increase branding impact on the viewer, instead of “a method for distribution of products over the Internet via a facilitator” as stated in the preamble.
When the Federal Circuit did consider the “active” aspect of the invention, they characterized those aspects as an insignificant pre-solution activity without any real reason. What is the standard by which the public can gage whether a pre-solution activity is significant? The opinion apparently does not indicate any standard.
I invite you to contact me with your patent questions at (949) 433-0900. Please feel free to forward this article to your friends. As an Orange County Patent Attorney, I serve Orange County, Irvine, Los Angeles, San Diego and surrounding cities.