Third Time Is the Charm for WildTangent Challenge of Patent Eligibility of Ultramercial Patent

In its third opinion reviewing the same district court decision, the Federal Circuit this time affirmed the district court’s grant of WildTangent’s motion to dismiss Ultramercial’s patent infringement complaint because the claims at issue fail to satisfy 35 USC § 101. The Federal Circuit applied the analytical framework set forth in the Supreme Court decision in Alice Corp. v. CLS  Bank, and determined that the claims are directed to non-patent eligible abstract ideas. In his concurrence, Judge Mayer explains his view that the presumption of validity does not attach to § 101 issues, and that only ”technological”–not “entrepreneurial”–methods are patent eligible under Alice.

The Patent at Issue

The patent at issue was U.S. Patent No. 7,346,545. In the second Federal Circuit decision in this case, the court described the patent as claiming ”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.” In this decision, the Federal Circuit summarized claim 1 as reciting ”eleven steps for displaying an advertisement in exchange for access to copyrighted media.”

The Federal Circuit Decision

The Federal Circuit decision was authored by Judge Lourie and joined by Judge O’Malley. Judge Mayer wrote a concurring opinion.

Judge Lourie began the analysis with a summary of the framework for conducting a § 101 analysis under Alice:

A § 101 analysis begins by identifying whether an invention fits within one of the four statutorily provided categories of patent-eligible subject matter: processes, machines, manufactures, and compositions of matter.

Then, the claims must be analyzed to determine whether they are directed to one of the “implicit exceptions” to § 101: “[l]aws of nature, natural phenomena, and abstract ideas.” That analysis involves two steps outlined in Alice:

“First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.” …. If not, the claims pass muster under § 101. Then, in the second step, if we determine that the claims at issue are directed to one of those patent-ineligible concepts, we must determine whether the claims contain “an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’”

Applying the first step to the claims at issue, the Federal Circuit agreed with the district court that “the abstract idea at the heart of the ’545 patent was ‘that one can use [an] advertisement as an exchange or currency.’” After summarizing the eleven steps recited in the claim, the Federal Circuit explained how they recited an abstract idea:

This ordered combination of steps recites an abstraction—an idea, having no particular concrete or tangible form. The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe an abstract idea, devoid of a concrete or tangible application.

Maybe this conclusion wouldn’t bother me so much if it found that the claims recited an abstract method as opposed to an abstract idea?

Applying the second step, the Federal Circuit explained

[T]he limitations of the ’545 claims do not transform the abstract idea that they recite into patent-eligible subject matter because the claims simply instruct the practitioner to implement the abstract idea with routine, conventional activity. ….

The claims’ invocation of the Internet also adds no inventive concept. As we have held, the use of the Internet is not sufficient to save otherwise abstract claims from ineligibility under § 101. ….

In sum, each of those eleven steps merely instructs the practitioner to implement the abstract idea with “routine, conventional activit[ies],” which is insufficient to transform the patent-ineligible abstract idea into patent eligible subject matter. …. That some of the eleven steps were not previously employed in this art is not enough—standing alone—to confer patent eligibility upon the claims at issue.

The Federal Circuit also noted that the claims do not satisfy the machine-or-transformation test, but in doing so reframed the test in a troubling way. The Federal Circuit summarized the traditional test:

A claimed process can be patent-eligible under § 101 if: “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.”

But then noted that the claims at issue ”are not tied to any particular novel machine or apparatus, only a general purpose computer.”  Maybe this is a round about way for the court to hold that computers are not “machines”?

As we have previously held, the Internet is not sufficient to save the patent under the machine prong of the machine-or-transformation test. … It is a ubiquitous information-transmitting medium, not a novel machine. And adding a computer to otherwise conventional steps does not make an invention patent-eligible. …. Any transformation from the use of computers or the transfer of content between computers is merely what computers do and does not change the analysis.

Thus, the Federal Circuit affirmed the district court decision granting WildTangent’s motion to dismiss.

Judge Mayer’s Concurrence 

Judge Mayer’s concurring opinion is summarized in the opening paragraph:

I agree that the claims asserted by Ultramercial, Inc. … are ineligible for a patent, but write separately to emphasize three points. First, whether claims meet the demands of 35 U.S.C. § 101 is a threshold question, one that must be addressed at the outset of litigation. Second, no presumption of eligibility attends the section 101 inquiry. Third, Alice … for all intents and purposes, set out a technological arts test for patent eligibility. Because the purported inventive concept in Ultramercial’s asserted claims is an entrepreneurial rather than a technological one, they fall outside section 101.

What Does This Mean For Diagnostic Claims?

Reading this decision in light of the oral arguments in Sequenom, it is not be hard to imagine an opinion finding the Sequenom claims invalid. For example, the court could find that method steps that “instruct the practitioner to [detect the natural phenomenon] with ’routine, conventional activities’ … is insufficient” to confer patent-eligibility. I also wonder if the court will discount the physical transformations that underlie the detection and amplification of specific DNA sequences by characterizing DNA a ”a ubiquitous information-transmitting medium.”