Ultramercial Revisited: Rader Throws Down the Gauntlet on Patent-Eligibility of Computer-Implemented Inventions*
|Written by Eric W. Guttag
Eric W. Guttag IP Law Office
Posted: June 26, 2013 @ 4:11 pm
In Ultramercial I and II, the patentee (Ultramercial) asserted that U.S. Pat. No. 7,346,545 (the ‘545 patent) was infringed by Hulu, LLC (“Hulu”), YouTube, LLC (“YouTube”), and WildTangent, Inc. (“WildTangent”). The ‘545 patent relates to a method for distributing copyrighted products (e.g., songs, movies, books, etc.) over the Internet for free in exchange for viewing an advertisement with the advertiser paying for the copyrighted content. WildTangent’s motion to dismiss for failure to state a claim was granted by the district court based on the claimed method being patent-ineligible under 35 U.S.C. § 101. (Hulu and YouTube were dismissed from the case apparently for other reasons.)
In Ultramercial I, Rader’s opinion ruled that the claimed method for monetizing and distributing copyrighted products over the Internet was, in fact, patent-eligible, noting that 35 U.S.C. § 101 is only a “coarse gauge,” and citing to his opinion in Research Corp. Technologies v. Microsoft Corp. Citing again to his opinion in Research Corp. Technologies, Rader further observed that the broad statutory categories in 35 U.S.C. § 101 “are certainly not substitutes for the substantive patentability requirements set forth in [35 U.S.C.] § 102, § 103, and § 112.”
Following the Supreme Court’s decision in Mayo Collaborative Services. Inc. v. Prometheus Laboratories, Inc. (claimed drug dosage calibration method deemed patent-ineligible under ), Ultramercial I was a GVR’d (certiorari granted, ruling vacated, and decision remanded to the Federal Circuit) for further consideration in view of this Supreme Court decision. Meanwhile, and at polar opposite ends of the patent-eligibility spectrum, out came in sequence the Federal Circuit panel decisions in CLS Bank International (computerized trading platform for exchanging obligations deemed patent-eligible) and Bancorp Services v. Sun Life Assurance Co. of Canada (seven-step method for “managing a life insurance policy on behalf of a policy holder” ruled patent-ineligible) which further fractured the landscape for judging the patent-eligibility of business methods and systems. See CLS Bank International: A Fractured Landscape of Patent Eligibility for Business Methods and Systems and Bancorp Services: Further Fracturing of the Patent Eligibility Landscape for Business Methods and Systems*. That then led to the en banc ruling in CLS Bank International which held (by a bare per curiam majority) that the asserted method and software media claims were patent-ineligible under 35 U.S.C. § 101, but divided equally on the patent-eligibility of the asserted system claims. What a jurisprudential mess!
Accordingly, it was a pleasant surprise when Ultramercial II came out last week with the original Federal Circuit panel (albeit with a reluctant concurrence by Judge Lourie), essentially reaffirming the rationales for patent-eligibility previously stated in Ultramercial II. So here are my “seven pearls of wisdom” that can be gleaned from the Ultramercial II opinion on the patenting of computer-implemented (e.g., software) inventions:
- Rarely will you be able to decide that the claimed invention is patent-ineligible under 35 USC 101 early in the law suit (e.g., at the pleading stage or during a motion for summary judgments). That’s because (something the Supreme Court unfortunately chooses to ignore) there will be often factual issues in dispute as to what, exactly, the claimed invention covers, and especially whether it covers merely an “abstract idea.” In fact, the presumption in Ultramercial II is that claims in the granted patent are patent-eligible under 35 U.S.C. § 101 unless shown/proven otherwise under the higher “clear and convincing” standard.
- The term “process” (synonymous with the term “method”) used in 35 U.S.C. §100(b) should be defined broadly to cover patent-eligible subject matter under 35 U.S.C. § 101. That’s another point that the Supreme Court unfortunately gets wrong repeatedly because they choose to ignore what the patent statutes (as enacted by Congress) actually say, including their so-called exceptions (i.e., “abstract idea,” “law of nature,” and “natural phenomena”) to the specific enumerated statutory classes (like “process”) which, by the way, appear nowhere in 35 U.S.C. § 101. In fact, Rader’s opinion in Ultramercial II astutely notes that these “exceptions” could completely “eviscerate” the patent-eligibility of “processes” under 35 U.S.C. § 101.
- 35 U.S.C. § 101 shouldn’t be read restrictively to exclude “unanticipated inventions” that are “unforeseeable.” That’s a “no brainer” (but effectively lost upon the technologically-challenged Supreme Court Justices), given that granting patents is for the purpose of “promoting the useful arts.”
- Defining what is an “abstract idea” is difficult. As described in Rader’s opinion, an “abstract idea” is one that “has no reference to material objects or specific objects,” i.e., isn’t “concrete” enough to qualify as a patent-eligible claimed invention. In addition, a claim embracing an “abstract idea” can still be patent-eligible as long as it involves an application of that “abstract idea” which includes “meaningful limitations” restricting that “application,” i.e., is a “practical application” of that “abstract idea.”
- Determining patent-eligibility under 35 U.S.C. § 101 requires that the claim be “considered as a whole,” i.e., without “dissecting the claims into old and new elements and then [ignoring] the presence of the old elements in the analysis” That’s an important adherence to a fundamental standard for evaluating patent-eligibility under 35 U.S.C. § 101 that comes out of the Supreme Court’s Diamond v. Diehr decision which the later Mayo Collaborative Services ruling unfortunately pays only “lip service” to. Frankly, despite on the “hemming and hawing” to the contrary, the ruling in Mayo Collaborative Services cannot be squared with this “fundamental standard” from Diehr which has caused utter “chaos” in the patent bar, as well as the Federal Circuit, on how to determine patent-eligibility of computer-implemented inventions under 35 U.S.C. § 101 going forward.
- Patent-ineligible “preemption” must preempt “all practical uses of the abstract idea.” Just because the claim covers a broad range of subject matter doesn’t make it “preemptive” under 35 U.S.C. § 101.
- Most importantly, a claim is “meaningful limited if it requires a particular machine implementing a process or a particular transformation of matter.” What that essentially says is that machine-implemented (e.g., computer-implemented) technology is presumptively patent-eligible under 35 U.S.C. § 101. That includes computer software. In other words, tying a “process/method” to computer-implementation, especially with one or more steps of the “process/method” being specifically implemented by a computer (or implicitly by computer-based technology, such as the Internet) is a clear path to the patent-eligibility “zone” under this Ultramercial II decision.
As is also pretty clear from the Ultramercial II decision, what we have here is a serious power struggle between the Supreme Court and the Federal Circuit (especially its Chief Judge) over who will be the primary arbiter of patent law jurisprudence, including patent-eligibility under 35 U.S.C. § 101. In Ultramercial II, Chief Judge Rader has definitely thrown the “gauntlet” down before the Supreme Court. It remains to be seen whether the Supreme Court will take up the “gauntlet” thrown down by Rader.
*© 2013 Eric W. Guttag. Posted June 26, 2013 on IPWatchdog.comBefore I finally waded through the 135-page monstrosity called the en banc decision in
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