Federal Circuit Invalidates Mobile Device Targeted Ad Claims on Section 101 Cross-Appeal

On May 11, the U.S. Court of Appeals for the Federal Circuit issued a precedential decision in Free Stream Media Corp. v. Alphonso Inc. in which the appellate court reversed-in-part a ruling from the Northern District of California that had denied Alphonso’s motion to dismiss the case. In overturning the district court, the Federal Circuit panel found that patent claims covering a system of presenting targeted advertising to mobile phone users based on data gathered from the user’s television were directed to an unpatentable abstract idea under 35 U.S.C. § 101.

Alphonso Renews Section 101 Challenges on Appeal After District Court Upholds Validity

Free Stream Media d/b/a Samba TV (Samba) first filed this patent infringement suit in November 2015 in Northern California, which was later consolidated with a second patent suit against Alphonso filed in the Eastern District of Texas. Claim construction in the Eastern Texas case, which was adopted by the Northern California court, led Samba Media to stipulate to Alphonso’s noninfringement of one of the two asserted patents in the case. The Northern California court denied Alphonso’s motion to dismiss the case for Section 101 invalidity and Alphonso raised Section 101 as grounds for cross-appeal after Samba Media, which does business as Samba TV, appealed Northern California’s summary judgment ruling adopting the Eastern Texas claim construction and finding noninfringement for Alphonso.

The patent at issue in Alphonso’s Section 101 appeal is U.S. Patent No. 9386356, Targeting With Television Audience Data Across Multiple Screens. The patent claims a system related to relevancy improvement through targeting of information based on data gathered from a networked device associated with a security sandbox of a client device. The system includes a television generating fingerprint data, a relevancy-matching server matching primary data generated from the fingerprint data with targeted data, a mobile device associated with the television that executes a sandboxed application, and a content identification server communicating the primary data to associated devices. The invention covered by the ‘356 patent is designed to create a revenue opportunity for advertisers by presenting relevant information to mobile device users based upon data collected by a networked television device, including movies viewed, geolocation information or user behavioral characteristics.

Although the Northern California court ruled that the ‘356 patent was not ineligible under Section 101 at step one of the Alice/Mayo framework, the Federal Circuit agreed with Alphonso on appeal that the ‘356 patent was directed to the abstract idea of targeted advertising, specifically the abstract ideas of (1) gathering information about TV user viewing habits; (2) matching that information with targeted ads based on relevancy to the user; and (3) sending that content to a second device.

Judge Reyna: Sandbox Bypass Adds No Improvement to Computer Functionality

On appeal, Samba Media had argued that the patent claimed an improvement in computing capabilities over conventional televisions and mobile devices, specifically by creating a system for intermediating televisions and mobile devices associated with a user so that a sandboxed mobile device can receive content from the television despite communication barriers imposed by the sandbox. However, the Federal Circuit opinion authored by Circuit Judge Jimmie Reyna found that Samba Media’s patent claims were distinguishable from the line of cases under Enfish v. Microsoft, in which patent claims were upheld as valid under Section 101 because they claimed a specific improvement in computer functionality rather than economic or other tasks that a computer ordinarily performs.

There is nothing in claims 1 or 10 that demonstrates an improvement to computer functionality. And, even assuming, as [Samba Media] argues, that the claimed advance is in the ability to pierce the sandbox of a mobile device, [Samba Media] has not demonstrated that this is something more than a mere use of a computer as a tool. The sandboxed application here is breached unbeknownst to the user through a “vulnerability” or “relaxation of the rules” that are conventionally in place to effectively prevent such a communication. In fact, Samba readily admits that the “problem” solved by the invention is “to provide relevant information across a sandboxed environment without requiring “installation, configuration, login, and/or user registration.”

Having determined at step one of Alice/Mayo that the challenged claims of the ‘356 patent were directed to the abstract idea of targeted advertising, Judge Reyna’s opinion then struck down Samba Media’s step two argument that the ordered combination of claim elements produced an unconventional operation involving the use of fingerprinting, servers for content identification and relevancy matching, and bypassing the mobile device security sandbox. The Federal Circuit found nothing inventive about bypassing sandbox security and that the claims recited no elements that enabled a new type of communication that previously was not possible. This distinguished Samba Media’s patent claims from those upheld as valid in DDR Holdings v. Hotels.com, which solved the issue of allowing a website visitor to view a hyperlinked advertisement without leaving the website when the hyperlink was clicked, and BASCOM Global Internet Services v. AT&T Mobility, where the unconventional arrangement of conventional elements, including a filtering tool with customizable filtering features specific to each end user, produced an inventive concept.

After ruling for Alphonso on its Section 101 cross-appeal, the Federal Circuit turned to Samba Media’s appeal of the summary judgment of noninfringement of the other patent in suit, U.S. Patent No. 9026668, Real-Time and Retargeted Advertising on Multiple Screens of a User Watching Television. The appellate court affirmed the claim construction order originally issued by the Eastern District of Texas, which defined “communication session” to mean a “period of time during which information is sent and received either directly or indirectly,” the definition the district court adopted instead of either Samba Media’s or Alphonso’s proposed constructions. On appeal, Samba Media argued that the ordinary meaning of “communication session” would include one-way communication as disclosed by the ‘668 patent. However, the Federal Circuit panel found that the portion of the specification referenced by Samba Media did not refer to the same type of “communication session” as covered by the claims, and that reading a one-way communication would improperly read “session” out of the claim because the resulting construction would cover any communication.