Federal Circuit gives software patents a boost in Ultramercial v. Hulu

[NOTE:  in a new decision issued on November 14, 2014, the Federal Circuit effectively reversed this decision and found the claims to be ineligible for patenting.  The new decision applied the test for patent eligibility established by the Supreme Court in Alice v. CLS Bank.  The text below was written before the court’s November 14, 2014 decision.]

After the Supreme Court directed the Federal Circuit to reconsider when and whether software patents cover mere “abstract ideas,” the Federal Circuit gave software patents a shot in the arm — and guidance for future patent applicants — in its June 21, 2013 opinion in Ultramercial v. Hulu.

The case involved a patent directed to a method of distributing copyrighted content online for free, in exchange for the viewer viewing an ad and the advertiser paying for the copyrighted content. In the decision, the Court reviewed previous Supreme Court decisions to explain why it did not consider the claims to cover a mere “abstract idea.” Key phrases from the Court’s patent-eligibility analysis include:

An abstract idea is one that has no reference to material objects or specific examples.

A claim can embrace an abstract idea and be patentable. . . . [A] claim is not patent eligible only if, instead of claiming an application of an abstract idea, the claim is instead directed to the abstract idea.

A court cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations of the invention the patentee actually claims.

A programmed computer contains circuitry unique to that computer. . . . [If the claims  tie the otherwise abstract idea to a specific way of doing something with a computer, or a specific computer for doing something [then] they will likely be patent eligible.

The Court also focused its analysis on whether the claims covered all possible applications of the abstract idea. Noting that the claims were directed to a method of advertising products to consumers over the Internet, and that there were “myriad ways” to monetize Internet advertising without infringing the claims, the Court held that the claims were patent-eligible.

In the Federal Circuit’s recent, highly fractured CLS Bank v. Alice decision, Judge Moore fretted that the plurality’s decision could spell “the death of hundreds of thousands of patents.” With this decision, Judges Rader, Lourie and O’Malley appear to be trying to lay that worry to rest. Although the decision only involves a panel of three judges, one of those judges (Lourie) is the author of the plurality opinion in CLS Bank. This suggests that the Court may be trying to provide a clearer road map for future cases and patent applications.

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