On Thursday, November 14, 2014, the United States Court of Appeals for the Federal Circuit issued its latest decision in Ultramercial v. Hulu, which deals with the patent eligibility of software related patent claims. The district court originally held that U.S. Patent 7,346,545 (the “’545 patent”), the basis for the complaint filed by Ultramercial, does not claim patent-eligible subject matter under 35 U.S.C. § 101. This decision was appealed to the Federal Circuit, which reversed, concluding that the district court erred in granting WildTangent’s motion to dismiss for failing to claim statutory subject matter. WildTangent filed a petition for certiorari with the Supreme Court, which was granted. The Supreme Court vacated the Federal Circuit decision, and remanded the case for further consideration in light of its decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc.
On remand the Federal Circuit once again found that the claims asserted by Ultramercial defined patent eligible subject matter. WildTangent again filed a petition for certiorari with the Supreme Court. While WildTangent’s petition was pending, the Supreme Court issued its decision in Alice Corp. v. CLS Bank International. Ultimately, the Supreme Court once again granted WildTangent’s petition for a writ of certiorari, vacated the Federal Circuit decision, and remanded the case for further consideration, this time in light of Alice.
Ultramercial’s Federal Circuit luck has now run out. Gone from the original panel was Chief Judge Rader who retired and was replaced by Judge Mayer, which does not bode well for any patent owner. This time in an opinion written by Judge Lourie the Ultramercial claims were found to be patent ineligible because they constitute nothing more than an abstract idea. If Judge Lourie were trying to predict what the Supreme Court would do when faces with patent claims that are clearly NOT abstract, his decision makes sense. Still, it is extraordinarily troubling that patent claims are being invalidated left and right based upon the so-called “abstract idea doctrine,” where the critical term “abstract idea” has never been defined by the Supreme Court or the Federal Circuit.
We continue to be left guess what “abstract idea” means, but can reliably predict that claims deemed to cover computer implemented inventions (i.e., software) will be proclaimed to cover nothing more than an abstract idea regardless of the factual reality to the contrary. It is in this bizarro way that we seem to have entered a variety show episode that pays homage in equal parts to the Twilight Zone and Monty Python. The lack of logic, or circular logic, would be even too much for an episode of Get Smart, although it does sometimes feel like pro-patent advocates are in some Cone of Silence hell. At the end of the day these and other similar claims are deemed abstract simply because! Court don’t even pretend to define the terms, which would only prevent them from doing whatever they want, which is invalid any and all patent claims in this genre whenever they appear. They are abstract because we know abstract when we see it, and these are abstract because we see it.
Claim 1 of the ’545 patent was deemed to be representative. It reads as follows:
A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:
a first step of receiving, from a content provider, media products that are covered by intellectual property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;
a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;
a third step of providing the media product for sale at an Internet website;
a fourth step of restricting general public access to said media product;
a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;
a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;
a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;
an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;
a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;
a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and
an eleventh step of receiving payment from the sponsor of the sponsor message displayed.
I’ve taken the liberty of placing emphasis on all of the items in the previous claim that are identifiable, defined, real and NOT abstract in any way, shape or form. You might notice that nearly half of the claim has emphasis added.
There is no intellectual honest way to conclude that this claim covers an abstract idea. Aside from all of the clearly identifiable items that clearly tether the claim to something that is tangible and limited, it is laughable that anyone could find this claim abstract regardless of predisposition. Those who are hopelessly ideologically compromised will try and argue that a media product, such as a video, isn’t real and is abstract. I’m sure any young child who wants to watch their favorite movie for the 50th time would disagree. While there can be disingenuous arguments made about the abstractness of a media product or a sponsor message, who in their right mind could ever even suggest that “an Internet website” is abstract?
Is “an Internet website” abstract? Is the “general public” abstract? Is a consumer abstract? Contemplate these questions as you, a member of the general public continues to read this article on this Internet website! We apparently have jumped the shark and turned the law of software patent claims into a useless, ridiculous philosophy assignment that asks whether something that clearly exists doesn’t exist. So are you, a consuming member of the general public who reads Internet websites real, or are you abstract?
The Abstract Idea Doctrine
The abstract idea doctrine, back when it actually made sense, meant that a claim to a computer implemented process could not be patented if the claim would prevent all uses of idea. In Diamond v. Diehr, the United States Supreme Court explained that the claim in question was not abstract and that there was nothing wrong with allowing a claim that utilized a particular mathematical equation. The Court explained that only a single use of the equation within the context of the specific, overall method was being patented. This understanding in part lead the Federal Circuit sitting en banc in Bilski to come up with the machine-or-transformation test, which explained that a computer implemented method would be patent eligible if the method was tethered to a machine in more than merely a tangential way.
Of course, the Supreme Court didn’t like the exclusivity of the machine-or-transformation test, later calling it an important clue to patent eligibility but not the sole test. Thus, after the Supreme Court’s decisions in Bilski and Alice we know that business methods are patent eligible, there is no specific requirement to have claims be tethered to a machine in order to be patent eligible, but that software patent claims that are unquestionably require a machine to perform the process steps are nothing more than an abstract idea. The irony is thick. By conflating 101 with 102 and 103 in Mayo the Supreme Court has walked us down a path where based on their own precedent it is possible to obtain a patent claim on a purely mental business method, but it is not possible to obtain a patent claim on a computer implemented process (i.e., software) if the software happens to run on equipment that is well known.
But what do you expect from a Supreme Court that doesn’t even use e-mail? Obviously the technophobic Judges on the Supreme Court don’t understand software at all. They exalt hardware over software and actually punish software because it can operate across platforms, across a variety of different machines, and because they can’t see it. One has to wonder whether the Justices on the Supreme Court understand that the modern device called an “automobile,” which they no doubt sometimes use to get from place to place, wouldn’t work without software. Sure, we can talk about the gears, wheels, hinges and other things that tangibly comprise an automobile, but without software all those pieces and parts simply won’t operate. In the modern world pieces and parts won’t work without software. It is ridiculous to pretend that the hardware is what makes modern technology and innovation special. What makes something different, new and extraordinarily desirable is the software.
But what do you expect from a Court where the Judges seem to believe that software is so easy to write that any second year engineering student could write it over a long weekend? That is what Justice Kennedy said during oral argument in Alice. Sadly, the attorney representing the patent owner agreed. So I guess in some ways we cannot really blame the Supreme Court if patent owners are going to refuse to explain the reality. But let’s clear one thing up right here and right now. Writing software takes a lot of time, money and energy. The fact that this even needs to be stated is depressing. It should be self evident to anyone and everyone who has ever used a computer, but sadly it isn’t.
Software Isn’t Abstract, and It Isn’t Trivial
The invention at issue in the ‘545 patent, in the words of the patent itself, “offers people a legitimate and cashless way to obtain copyrighted music or other forms of intellectual property, while still delivering a royalty to the intellectual property rights holder.” This type of content distribution over the Internet in a content producer world that requires digital rights management in order to prevent copying (i.e., stealing content) isn’t trivial. It also wasn’t cheap or easy to create, despite the popular mythology that wants to pretend that anyone can write software. If everyone can write software, and it is so easy, why doesn’t it every work? Why do you have to download fixes and patches on a weekly basis for practically every software product you use? If security is so easy to pull off in a convenient, consumer-friendly way then why couldn’t companies like Target and Home Depot figure it out? The answer is that none of this is easy.
Decision makers who think software is trivial to product are ignorant, and those who aren’t ignorant with respect to the key issues have an ideological agenda that drives their anti-patent positions. It may be easy enough to create a simple iPhone app that doesn’t do anything particularly taxing, or to create a simple WordPress plugin, but those things aren’t patented. The software that the Courts are killing isn’t trivial, it is time consuming and resource intense. What makes software unique and valuable it the fact that it can run across platforms and devices. Getting software to do that isn’t trivial given the plethora of devices and platforms, which themselves are constantly being updated, but one of the things that makes software so valuable and so tricky oddly contributes to it being patent ineligible. Courts want software patents to cover software that can only run on a specific purpose machine. What in god’s name is that? Distinguishing between specific purpose machines and general purpose machines is the tell tale sign of someone who doesn’t have a clue. They make the distinction purely because they want to exalt the hardware (i.e., specific purpose machine) over the software.
I’m not sure what hope innovators in the software space have. Sure, there are ways to attempt to draft patent claims that would test even the reluctance of the most ideological decision maker, but what about all those patent applications that were filed at a time when the Supreme Court and Federal Circuit were allowing software patent claims? There are fixes that can be employed for some of those patents that have already issued, particularly if there are parallel applications still pending, but an awful lot of assets are now simply worth less, if not worthless.
I am not optimistic over the short-term, but over the intermedia and long term I am optimistic. Eventually as jobs are lost and high-tech start-ups close their doors Congress will realize that the Supreme Court and the Federal Circuit have marched the U.S. economy straight off the cliff. It is hardly news that our policy makers have no desire to implement policies that would revitalize American manufacturing, so that means innovation is really our domestic industry. Making is impossible, or at least extremely expensive, to patent software will cause extraordinary damage, particularly given that upwards of 50% of all patents in one way or another relate to software according to the independent Government Accountability Office.
It will be a while before we see the pendulum swing back in favor of innovators and patent owners and job creators. Judge Mayer in his concurrence stated that patent claims are not presumed valid insofar as patent eligibility is concerned. That is, of course, wrong. The law is clear. Patents are presumed valid and the Supreme Court just reinforced that ruling in one of the few pro-patent rulings during the Roberts era. So regardless of what Judge Mayer thinks or says, patents are supposed to be presumed valid even though it doesn’t feel that way any more.