Ultramercial v. Hulu
In Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014), the Federal Circuit addressed claims covering a method for Internet distribution of copyrighted media where advertisers pay for the media and users receive it for free in exchange for seeing an advertisement. The court considered the following representative claim:
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.
Id. at 712. As to the first Alice step, the court found that the claims covered the ineligible abstract idea "that one can use [an] advertisement as an exchange or currency." Id. at 714. Though the court found there were a multitude of steps described, they each "describe an abstract idea, devoid of a concrete or tangible application. Although certain additional limitations, such as consulting an activity log, add a degree of particularity, the concept embodied by the majority of the limitations describes only the abstract idea of showing an advertisement before delivering free content." Id. at 715. Importantly, the court also found that even if there were novel or nonroutine components added to the steps of the abstract idea, that could not be considered under the first step and so it did not transform something from an abstraction into a concrete idea. As to the second step, the court found that the "claims do not transform the abstract idea that they recite into patent-eligible subject matter because the claims simply instruct the practitioner to implement the abstract idea with routine, conventional activity." Id. at 715. Invoking the Internet and adding "conventional steps, specified at a high level of generality" do not add any inventive concept. Id. at 716. Though not explicitly stated, it appears limiting application to the Internet may be enough to avoid preemption, but not to add an inventive concept.
OIP Technologies v. Amazon
In OIP Technologies, Inc. v. Amazon.com, Inc., 788 F.3d 1359 (Fed. Cir. 2015), the Federal Circuit addressed claims aimed at making better pricing decisions. The court analyzed the following representative claim:
A method of pricing a product for sale, the method comprising:
testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices;
wherein said electronic messages include offers of said product;
wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers;
wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices;
wherein the devices are programmed to receive offers for the product based on the offer terms;
wherein the devices are not configured to fulfill orders by providing the product;
wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages;
gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices;
using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product;
selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and
sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price.
Id. at 1361. As to the first step, the court found that the claims only addressed the abstract idea of price optimization. Id. at 1362–63. The court found that this was simply "offer based pricing" which was no different than the many other "fundamental economic concepts" found to be ineligible by the Supreme Court. Id. at 1362.As to the second step, the court found that "the claims merely recite well-understood, routine conventional activities, either by requiring conventional computer activities or routine data-gathering steps. Id. at 1363 (alteration and internal quotation marks omitted). The court also found that the prosecution history and the specification "emphasize that the key distinguishing feature of the claims is the ability to automate or otherwise make more efficient traditional price-optimization methods." Id. It appears likely that if the patentee had made an effort in the specification or during prosecution to find a different point of novelty other than speed and efficiency added by generic computer automation, the court may have found that persuasive.
Internet Patents v. Active Network
In Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343 (Fed. Cir. 2015), the Federal Circuit addressed claims that related to retaining lost information from online forms. The court analyzed the following representative claim:
A method of providing an intelligent user interface to an online application comprising the steps of:
furnishing a plurality of icons on a web page displayed to a user of a web browser, wherein each of said icons is a hyperlink to a dynamically generated online application form set, and wherein said web browser comprises Back and Forward navigation functionalities;
displaying said dynamically generated online application form set in response to the activation of said hyperlink, wherein said dynamically generated online application form set comprises a state determined by at least one user input; and
maintaining said state upon the activation of another of said icons, wherein said maintaining allows use of said Back and Forward navigation functionalities without loss of said state.
Id. at 1344–45. In brief analysis, the court found that the claims only addressed the abstract idea "of retaining information in the navigation of online forms." Id. at 1348. The court also found that the claim "contains no restriction on how the result is accomplished." Id. As to the second step, the court found that the claims did not contain any additional steps or disclosures that were not conventional or known activities.
Intellectual Ventures v. Capital One Bank
In Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1367 (Fed. Cir. 2015), the Federal Circuit addressed claims directed toward "utiliz[ing] user-selected pre-set limits on spending that are stored in a database that, when reached, communicates a notification to the user via a device." The court analyzed representative claims 5 and 1:
5. A method comprising:
storing, in a database, a profile keyed to a user identity and containing one or more user-selected categories to track transactions associated with said user identity, wherein individual user-selected categories include a user pre-set limit; and
causing communication, over a communication medium and to a receiving device, of transaction summary data in the database for at least one of the one or more user-selected categories, said transaction summary data containing said at least one user-selected category's user pre-set limit.
. . . .
1. A system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user, comprising:
an interactive interface configured to provide dynamic web site navigation data to the user, the interactive interface comprising:
a display depicting portions of the web site visited by the user as a function of the web site navigation data; and
a display depicting portions of the web site visited by the user as a function of the user's personal characteristics.
Id. at 1367, 1369. For the first representative claim (claim 5), the court found that the claims "are directed to an abstract idea: tracking financial transactions to determine whether they exceed a pre-set spending limit (i.e., budgeting)." Id. at 1367. The court was heavily influenced by the precedent of earlier cases involving financial transactions. In addressing the second Alice step, the court held to its precedent that "[i]nstructing one to 'apply' an abstract idea and reciting no more than generic computer elements performing generic computer tasks does not make an abstract idea patent-eligible." Id. at 1368. The generic elements here were "a database, a user profile . . . , and a communication medium." Id. For the second representative claim (claim 1), the court found that the claims relate only to "customizing information based on (1) information known about the user and (2) navigation data." Id. at 1369. The court found that these ideas were abstract ideas done with earlier methods such as newspapers or television commercials shown at different times of day. As to the second step of Alice, the court found that these claims also merely added generic "computer functionality to increase the speed or efficiency of the process." Id. at 1370.
Versata v. SAP
In Versata Development Group, Inc. v. SAP America, Inc., No. 2014-1194, 2015 WL 4113722, at *3 (Fed. Cir. July 9, 2015), the Federal Circuit addressed claims aimed at price determination. The court analyzed the following representative claim:
A method for determining a price of a product offered to a purchasing organization comprising: arranging a hierarchy of organizational groups comprising a plurality of branches such that an organizational group below a higher organizational group in each of the branches is a subset of the higher organizational group; arranging a hierarchy of product groups comprising a plurality of branches such that a product group below a higher product group in each of the branches [is] a subset of the higher product group; storing pricing information in a data source, wherein the pricing information is associated, with (i) a pricing type, (ii) the organizational groups, and (iii) the product groups; retrieving applicable pricing information corresponding to the product, the purchasing organization, each product group above the product group in each branch of the hierarchy of product groups in which the product is a member, and each organizational group above the purchasing organization in each branch of the hierarchy of organizational groups in which the purchasing organization is a member; sorting the pricing information according to the pricing types, the product, the purchasing organization, the hierarchy of product groups, and the hierarchy of organizational groups; eliminating any of the pricing information that is less restrictive; and determining the product price using the sorted pricing information.
Id. As to the first step, the court determined that the claims "are directed to the abstract idea of determining a price, using organizational and product group hierarchies." Id. at *24. Again the court relied on its prior precedents regarding financial concepts and building blocks in finding the idea here to be abstract. Regarding the second step of Alice, the court found "none of the claims have sufficient additional limitations to transform the nature of any claim into a patent-eligible application of an abstract idea. Taking the claim limitations separately, the function performed by the computer at each step is purely conventional." Id. at *25.
Ariosa Diagnostics v. Sequenom
Another case worth briefly discussing is Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015). In Ariosa, the court made clear "[w]hile preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility." Id. at 1379.
DDR Holdings v. Hotels.com
Finally, the Federal Circuit has found claims patentable in only case brought before it using the Alice framework. In DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), the court addressed the patentability of claims directed at managing the look and feel of e-commerce webpages to retain viewers from the host site rather than taking them to a different website after clicking on an advertising hyperlink. The court analyzed the following representative claim:
A system useful in an outsource provider serving web pages offering commercial opportunities, the system comprising:
(a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of visually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages;
(i) wherein each of the first web pages belongs to one of a plurality of web page owners;
(ii) wherein each of the first web pages displays at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and
(iii) wherein the selected merchant, the out-source provider, and the owner of the first web page displaying the associated link are each third parties with respect to one other;
(b) a computer server at the outsource provider, which computer server is coupled to the computer store and programmed to:
(i) receive from the web browser of a computer user a signal indicating activation of one of the links displayed by one of the first web pages;
(ii) automatically identify as the source page the one of the first web pages on which the link has been activated;
(iii) in response to identification of the source page, automatically retrieve the stored data corresponding to the source page; and
(iv) using the data retrieved, automatically generate and transmit to the web browser a second web page that displays: (A) information associated with the commerce object associated with the link that has been activated, and (B) the plurality of visually perceptible elements visually corresponding to the source page.
Id. at 1249–50. As opposed to the other cases discussed above, here the court found that "[a]lthough the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet. Indeed, identifying the precise nature of the abstract idea is not as straightforward as in Alice or some of our other recent abstract idea cases." Id. at 1257. The court went on to say that
the claims here are similar to the claims in the cases discussed above in the sense that the claims involve both a computer and the Internet. But these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.
Id. The court distinguished the claims here from Ultramerical (which also had an Internet-centric invention): "Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink." Id. at 1258–59. The court went on to say that because a very specific method was claimed, the claims did not "preempt every application of the idea of increasing sales by making two web pages look the same." Id. at 1259.
Overall, it seems that patentees faced with a section 101 challenge must first show that the claims do not preempt. Pursuant to Ariosa, preemption is only dispositive negatively against patentees and cannot be used to show claims are valid. Therefore, even claims that do not preempt must still comply with the rest of Alice. Using the guidance of DDR Holdings, the patentee must attempt to redefine the problem to be solved; defining it away from abstract ideas that were commonly solved without technology. This approach is easier said than done. The court in both Intellectual Ventures and Versata faced that exact argument and still defined the problem as a common abstract idea not rooted in solving a unique technological problem. Curiously, the court in Internet Patents did not address DDR Holdings at all. The problem posed in that case would seem to be the closest to an Internet-centric problem, as the loss of information contained in online forms as users hit the forward or back buttons in browsers does not have as clear of a pre-Internet analog as found in other cases. The likely difference is the level of detail contained in the DDR Holdings claim that was not present in the Internet Patents claim and the fact that the court specifically found that how the invention was accomplished was not disclosed in the Internet Patents claim. However, this was not discussed and seems to implicate functional claiming as much as section 101.
Moving forward, the large number of district court cases relying on Alice, but not yet considered by the Federal Circuit, will provide numerous opportunities for the Federal Circuit to further clarify what is patent eligible under Alice. It seems likely that for claims involving issues that are financially related, the Federal Circuit will continue its pattern of citing to precedent in finding all of those issues abstract ideas. It is also clear that if the only point of novelty in the invention is the addition of known computer elements without any improvement or change in their function, the court will continue to hold those claims invalid. It remains to be seen if any additional patents will find the safe harbor of DDR Holdings at the Federal Circuit.
Keywords: litigation, intellectual property, patent eligibility, abstract idea, inventive concept