Federal Circuit: Method of delivering ads an ‘abstract’ idea

By Jessica M. Karmasek | Nov 18, 2014

WASHINGTON (Legal Newsline) - In a ruling Friday, the U.S. Court of Appeals for the Federal Circuit reversed itself in a long-running patent infringement case over a company’s claim that it owns the method of delivering advertisements before free online videos.

The Federal Circuit, which handles all U.S. patent appeals, concluded that the method of providing advertising in connection with streaming media isn’t patent eligible.

The court’s decision is its latest in the Ultramercial Inc. v. Hulu LLC and WildTangent Inc. saga over U.S. Patent No. 7,346,545. Ultramercial -- referred to as the “advertiser troll” by some -- sued Hulu, YouTube and WildTangent in 2010; however, Hulu and YouTube were dismissed from the case soon after.

Since then, the litigation twice has made its way through the courts: first, the U.S. District Court for the Central District of California, which held that the ‘545 patent does not claim patent-eligible subject matter under Section 101 of the Patent Act.


Section 101, only a sentence or two long, describes the four categories of inventions that it declares eligible to be considered to be patented. They include: machines, compositions of matter (i.e. pharmaceuticals), articles of manufacturing (i.e. tools) and processes or methods.


On appeal, the Federal Circuit reversed and remanded. However, that decision was vacated by the U.S. Supreme Court.


The Federal Circuit -- including former Chief Judge Randall Rader and judges Kathleen O’Malley and Alan Lourie -- again reversed the district court.


WildTangent then petitioned the Supreme Court to review. In June, the nation’s high court granted the petition, vacating the Federal Circuit’s ruling and remanding the case back to the Federal Circuit for consideration in light of its much-maligned Alice Corporation Pty. Ltd. v. CLS Bank International and CLS Services Ltd. decision.


In Alice, the court ruled that some software method and system patents are invalid.


Specifically, the justices said the claims were drawn to an “abstract” idea and that implementing those claims on a computer was not enough to transform the idea to a patentable invention.


The ruling has drawn the ire of many within the patent community.


During that time, Rader stepped down and Judge Haldane Mayer took his place on the Federal Circuit -- which may explain, in part, the shift in the court’s decision.


“The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe an abstract idea, devoid of a concrete or tangible application,” Lourie wrote for the three-judge panel.


“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.”


The panel noted that -- as the Supreme Court stated in Alice -- at some level, all inventions embody, use or apply laws of nature, natural phenomena or abstract ideas.


“We acknowledge this reality, and we do not purport to state that all claims in all software-based patents will necessarily be directed to an abstract idea. Future cases may turn out differently,” Lourie wrote in the 14-page ruling. “But here, the ‘545 claims are indeed directed to an abstract idea, which is, as the district court found, a method of using advertising as an exchange or currency.


“We do not agree with Ultramercial that the addition of merely novel or non-routine components to the claimed idea necessarily turns an abstraction into something concrete.”


Mike Peronto, CEO of WildTangent, said Tuesday his company was more than pleased with the Federal Circuit's decision.


“This lawsuit has been a five-year process and we are thrilled with the court’s ruling,” he said.


“Our case bounced between the Federal Circuit and SCOTUS multiple times and we are grateful for the support of various amici who filed briefs with both courts.”


Ultramercial could not immediately be reached for comment.


From Legal Newsline: Reach Jessica Karmasek by email at patents@legalnewsline.com.

More News

The Record Network