Internet advertising patent saga continues: Supreme Court orders Federal Circuit to reconsider decision in Ultramercial v. Hulu

In a brief, one paragraph order issued on May 21, 2012, the U.S. Supreme Court hinted that a recent decision covering patent-eligibility for medical testing methods is also relevant to Internet-based methods.

To provide some  background:  in 2008, Ultramercial LLC received U.S. patent 7,346,545 covering media distribution methods that allow users to view copyrighted material over the Internet free of charge in exchange for watching advertisements.  Ultramercial sued Hulu LLC and WildTangent, Inc.  for patent infringement.  However, in August 2011, the U.S. District Court for the Central District of California struck down the patent, finding that its claims covered an abstract idea and thus  were not eligible for patent protection.

Ultramercial appealed, and in September 2011 the U.S. Court of Appeals for the Federal Circuit reversed the decision.  The Federal Circuit explained that “[a]lthough abstract principles are not eligible for patent protection, an application of an abstract idea may well be deserving of patent protection” (emphasis added).  The Federal Circuit also found that the claimed processes  could not be performed by a human but rather “require, among other things, controlled interaction with a consumer via an Internet website, something far removed from purely mental steps.”   Noting that the patent covered the application of certain steps to “monetizing and distributing copyrighted products over the Internet,”  the Federal Circuit found the claims to be patent-eligible.

In the latest development, the Supreme Court may have swung the patent-eligibility pendulum back toward the district court’s conclusion.  The Supreme Court’s order contains no explanation, but merely requires that the Federal Circuit give the patent “further consideration in view of Mayo Collaborative Services v. Prometheus Laboratories, Inc. ” (U.S. 2012).   As explained in a previous IP Spotlight post, Mayo v. Prometheus involved a “personalized medicine” process, in which the patent covered a method of administering a drug and then testing the patient to determine whether to decrease the amount of the drug administered in subsequent doses.  In its Mayo decision, the Supreme Court found the personalized medicine patent to be invalid on the basis that it claimed “laws of nature” that were not patent-eligible.

In its petition for Supreme Court review, WildTangent asked the Court to consider “whether, or in what circumstances, a patent’s general and indeterminate references to ‘over the Internet’ or ‘at an Internet website’ are sufficient to transform an unpatentable abstract idea into a patentable process for purposes of 35 U.S.C. § 101.”  While it’s clear that an Internet advertising method is not a “law of nature,” the Supreme Court’s order may be a nod toward the Mayo opinion’s statement that “to transform a law of nature into a patent-eligible application of such law, one must do more than simply state the law of nature while adding the words ‘apply it.'”

It remains to be seen whether the Federal Circuit will change the outcome of Ultramercial v. Hulu or simply keep the result but elaborate on its reasoning.  Either way, the order suggests that the Supreme Court wants Mayo v. Prometheus to have a wide-ranging impact in software and business method cases.  In the meantime, companies who have or seek patents for Internet-based methods should carefully watch future developments relating to this case.

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