IP News

In 2010, Ultramercial sued Hulu, YouTube, and WildTangent, alleging infringement of all claims of its patent. The defendants moved to dismiss, arguing that the claims were not drawn to patent-eligible subject matter. The district court granted the motion to dismiss without formally construing the claims, and Ultramercial appealed. On appeal, the Federal Circuit reversed the district court, and WildTangent filed a petition for certiorari to the Supreme Court. The Supreme Court granted review, vacated the Federal Circuit Opinion, and remanded for further consideration in light of its decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. __, 132 S. Ct. 1289 (2012). On remand, the Federal Circuit again reversed the district court, and WildTangent again sought certiorari, which the Supreme Court again granted. The Supreme Court vacated the Federal Circuit's decision, and remanded for further consideration, this time in light of its decision in Alice Corp. v. CLS Bank Int'l , 573 U.S. __, 124 S. Ct. 2347 (2014). (For more on the Alice decision, see, “Patentability of Computer- Implemented Inventions,” in our August 2014 issue.)

On remand, the Federal Circuit affirmed the district court's finding that the patent-in-suit was not directed to patent eligible subject matter. The panel applied the two-step test for determining whether claimed subject matter is patent eligible outlined in Alice, at 2355: “First, we determine whether the claims at issue are directed to [laws of nature, natural phenomena, and abstract ideas]. If not, the claims pass muster under '101. Then, in the second step, if we determine that the claims at issue are directed to one of those patent-ineligible concepts, we must determine whether the claims contain an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” Slip op. at 7'8 (quoting Alice, at 2355). Turning to the claims of the patent-in-suit, the Federal Circuit found that they recited an abstract idea, devoid of concrete or tangible application. Id . at 9. For the second step of the test, the panel examined whether the claims contained additional features that are more than routine, conventional activity. Id. at 10. The panel found that none was present ' most of the steps comprise the abstract concept of offering media content in exchange for viewing advertisement, and the others (e.g., updating an activity log) were conventional steps insufficient to supply an inventive concept. Id. at 11. The fact that some of the claims of the patent-in-suit were tied to the internet was also insufficient to make them patent eligible, because “it is a ubiquitous information-transmitting medium, not a novel machine.” Id. at 13. For these reasons, the panel affirmed the district court's grant of summary judgment.

Judge Mayer wrote separately to concur in judgment, and to emphasize three points: 1) that the requirements of 35 U.S.C. '101 should be addressed as a threshold matter at the outset of litigation; 2) that given the Patent Office's long use of an incorrect standard of patentable subject matter, no presumption of validity should attend the section 101 inquiry; and 3) that Alice sets out a “technological arts” test for patent eligibility, and Ultramercial's asserted claims are directed to the entrepreneurial arts rather than the technical. See, Concurrence at 1.

Judge Mayer analogized the section 101 inquiry to a jurisdictional inquiry. Id. at 3. “If a patent is not directed to the kind of discovery that the patent laws were intended to protect, there is no predicate for any inquiry as to whether particular claims are invalid or infringed. Indeed, if claimed subject matter does not fall within the ambit of section 101, any determination on validity or infringement constitutes an impermissible advisory opinion.” Id. Judge Mayer posited that this would also allow district courts to dismiss claims on the pleadings, and would thus help to prevent vexatious litigation. See, id. at 4.

Judge Mayer next turned to the presumption of validity as applied to section 101. Id. at 6'7. Judge Mayer argued that the prior “expansionist approach to section 101 is predicated upon a misapprehension of the legislative history of the 1952 Patent Act,” and thus the presumption is unwarranted. Id. at 7.

Finally, Judge Mayer argued that the distinction drawn in Alice was between patentable technological inventions, and unpatentable entrepreneurial ones. See, id. at 8. For purposes of patent eligibility, “advances in non-technical disciplines ' such as business, law, or the social sciences ' simply do not count.” Id. This rule, according to Judge Mayer, would comport with Alice, as well as the Supreme Court's guidance in Bilski v. Kappos, 561 U.S. 593, 608'09 (2010), in which the Court invited the Federal Circuit to fashion a rule defining a narrower category of patent-ineligible subject matter for claims directed to the conduct of business. See, Concurrence at 9.

Federal Circuit: No Collateral Estoppel For Similar, But Unrelated, Patent

On Nov. 19, 2014, a unanimous Federal Circuit panel issued an opinion, authored by Judge Moore, in e.Digitial Corp. v. Futurewei Techs., Inc., Case No. 2014-1019. In it, the panel reviewed the district court's judgment of non-infringement based on a determination that e.Digital was collaterally estopped from seeking a new construction of a claim limitation in two asserted patents, because the same limitation had been previously construed in a litigation involving one of the patents. The Federal Circuit affirmed-in-part, reversed-in-part, and remanded.

In a prior litigation, e.Digital asserted two claims of the '774 patent, each of which contained a limitation of the type of memory that the claimed invention could employ (“the sole memory limitation”). At trial, the district court construed the sole memory limitation, and the parties stipulated to dismiss the case with prejudice. The '774 patent was subsequently reexamined by the Patent and Trademark Office, which canceled the asserted claims and issued a reexamined claim that recited the limitations of the canceled claims, including the sole memory limitation. e.Digital then brought suit against several defendants for infringement of the '774 patent as well as the '108 patent. The '108 patent covers an improvement to the invention claimed in the '774 patent. All of the asserted claims contained the sole memory limitation.

At the second trial, the defendants moved to apply collateral estoppel to the construction of the sole memory limitation in both the '774 and '108 patents. The district court granted the motion and adopted the previous construction, because the '774 reexamination never addressed the sole memory limitation, and the '108 patent is closely related to the '774 patent. See, Slip op. at 4. The parties subsequently stipulated to judgments of non-infringement and e.Digital appealed.

On appeal, the Federal Circuit agreed with the district court that collateral estoppel prevented e.Digital from seeking a new construction of the sole memory limitation in the '774 patent, because the limitation was not addressed during the reexamination. Id. at 5. Turning to the '108 patent, the panel reversed the district court's holding. The panel found that because the '108 patent was unrelated to the '774 patent, with a separate specification and prosecution history, its claims must be construed separately. Id. at 6. Therefore collateral estoppel did not apply. The panel went on to caution that this did not imply that merely because two patents were related, that collateral estoppel automatically applied, pointing to the example of a continuation-in-part, which disclosed new mater that could materially impact the interpretation of a claim, would require a new claim construction inquiry. Id. at 6'7.

Jeff Ginsberg is a Partner in the New York office of Kenyon & Kenyon LLP. Wyatt Delfino is an Associate with the firm.

Federal Circuit Finds Internet Method Unpatentable Under Alice

On Nov. 14, 2014, a unanimous Federal Circuit panel of Judges Lourie, Mayer, and O'Malley, issued an opinion, authored by Judge Lourie, in Ultramercial, Inc. v. Hulu, LLC, Case No. 2010-1544. The panel upheld the lower court's dismissal of Ultramerical's infringement action and finding that the patent-in-suit does not claim patent-eligible subject matter. Judge O'Malley wrote a separate concurrence.

Ultramercial owns a patent directed to a method for distributing copyrighted media products over the internet, where the customer receives a copyrighted media product at no cost in exchange for viewing an advertisement, and the advertiser pays for the copyrighted content. Specifically, representative claim one includes 11 steps: 1) receiving copyrighted media from a content provider; 2) selecting an ad after consulting an activity log to determine whether the ad has been played less than a certain number of times; 3) offering the media for sale on the Internet; 4) restricting public access to the media; 5) offering the media to the consumer in exchange for watching the selected ad; 6) receiving a request to view the ad from the consumer; 7) facilitating display of the ad; 8) allowing the consumer access to the media; 9) allowing the consumer access to the media if the ad is interactive; 10) updating the activity log; and 11) receiving payment from the sponsor of the ad. See, Slip op at 9.

In 2010, Ultramercial sued Hulu, YouTube, and WildTangent, alleging infringement of all claims of its patent. The defendants moved to dismiss, arguing that the claims were not drawn to patent-eligible subject matter. The district court granted the motion to dismiss without formally construing the claims, and Ultramercial appealed. On appeal, the Federal Circuit reversed the district court, and WildTangent filed a petition for certiorari to the Supreme Court. The Supreme Court granted review, vacated the Federal Circuit Opinion, and remanded for further consideration in light of its decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. __, 132 S. Ct. 1289 (2012). On remand, the Federal Circuit again reversed the district court, and WildTangent again sought certiorari, which the Supreme Court again granted. The Supreme Court vacated the Federal Circuit's decision, and remanded for further consideration, this time in light of its decision in Alice Corp. v. CLS Bank Int'l , 573 U.S. __, 124 S. Ct. 2347 (2014). (For more on the Alice decision, see, “Patentability of Computer- Implemented Inventions,” in our August 2014 issue.)

On remand, the Federal Circuit affirmed the district court's finding that the patent-in-suit was not directed to patent eligible subject matter. The panel applied the two-step test for determining whether claimed subject matter is patent eligible outlined in Alice, at 2355: “First, we determine whether the claims at issue are directed to [laws of nature, natural phenomena, and abstract ideas]. If not, the claims pass muster under '101. Then, in the second step, if we determine that the claims at issue are directed to one of those patent-ineligible concepts, we must determine whether the claims contain an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” Slip op. at 7'8 (quoting Alice, at 2355). Turning to the claims of the patent-in-suit, the Federal Circuit found that they recited an abstract idea, devoid of concrete or tangible application. Id . at 9. For the second step of the test, the panel examined whether the claims contained additional features that are more than routine, conventional activity. Id. at 10. The panel found that none was present ' most of the steps comprise the abstract concept of offering media content in exchange for viewing advertisement, and the others (e.g., updating an activity log) were conventional steps insufficient to supply an inventive concept. Id. at 11. The fact that some of the claims of the patent-in-suit were tied to the internet was also insufficient to make them patent eligible, because “it is a ubiquitous information-transmitting medium, not a novel machine.” Id. at 13. For these reasons, the panel affirmed the district court's grant of summary judgment.

Judge Mayer wrote separately to concur in judgment, and to emphasize three points: 1) that the requirements of 35 U.S.C. '101 should be addressed as a threshold matter at the outset of litigation; 2) that given the Patent Office's long use of an incorrect standard of patentable subject matter, no presumption of validity should attend the section 101 inquiry; and 3) that Alice sets out a “technological arts” test for patent eligibility, and Ultramercial's asserted claims are directed to the entrepreneurial arts rather than the technical. See, Concurrence at 1.

Judge Mayer analogized the section 101 inquiry to a jurisdictional inquiry. Id. at 3. “If a patent is not directed to the kind of discovery that the patent laws were intended to protect, there is no predicate for any inquiry as to whether particular claims are invalid or infringed. Indeed, if claimed subject matter does not fall within the ambit of section 101, any determination on validity or infringement constitutes an impermissible advisory opinion.” Id. Judge Mayer posited that this would also allow district courts to dismiss claims on the pleadings, and would thus help to prevent vexatious litigation. See, id. at 4.

Judge Mayer next turned to the presumption of validity as applied to section 101. Id. at 6'7. Judge Mayer argued that the prior “expansionist approach to section 101 is predicated upon a misapprehension of the legislative history of the 1952 Patent Act,” and thus the presumption is unwarranted. Id. at 7.

Finally, Judge Mayer argued that the distinction drawn in Alice was between patentable technological inventions, and unpatentable entrepreneurial ones. See, id. at 8. For purposes of patent eligibility, “advances in non-technical disciplines ' such as business, law, or the social sciences ' simply do not count.” Id. This rule, according to Judge Mayer, would comport with Alice, as well as the Supreme Court's guidance in Bilski v. Kappos, 561 U.S. 593, 608'09 (2010), in which the Court invited the Federal Circuit to fashion a rule defining a narrower category of patent-ineligible subject matter for claims directed to the conduct of business. See, Concurrence at 9.

Federal Circuit: No Collateral Estoppel For Similar, But Unrelated, Patent

On Nov. 19, 2014, a unanimous Federal Circuit panel issued an opinion, authored by Judge Moore, in e.Digitial Corp. v. Futurewei Techs., Inc., Case No. 2014-1019. In it, the panel reviewed the district court's judgment of non-infringement based on a determination that e.Digital was collaterally estopped from seeking a new construction of a claim limitation in two asserted patents, because the same limitation had been previously construed in a litigation involving one of the patents. The Federal Circuit affirmed-in-part, reversed-in-part, and remanded.

In a prior litigation, e.Digital asserted two claims of the '774 patent, each of which contained a limitation of the type of memory that the claimed invention could employ (“the sole memory limitation”). At trial, the district court construed the sole memory limitation, and the parties stipulated to dismiss the case with prejudice. The '774 patent was subsequently reexamined by the Patent and Trademark Office, which canceled the asserted claims and issued a reexamined claim that recited the limitations of the canceled claims, including the sole memory limitation. e.Digital then brought suit against several defendants for infringement of the '774 patent as well as the '108 patent. The '108 patent covers an improvement to the invention claimed in the '774 patent. All of the asserted claims contained the sole memory limitation.

At the second trial, the defendants moved to apply collateral estoppel to the construction of the sole memory limitation in both the '774 and '108 patents. The district court granted the motion and adopted the previous construction, because the '774 reexamination never addressed the sole memory limitation, and the '108 patent is closely related to the '774 patent. See, Slip op. at 4. The parties subsequently stipulated to judgments of non-infringement and e.Digital appealed.

On appeal, the Federal Circuit agreed with the district court that collateral estoppel prevented e.Digital from seeking a new construction of the sole memory limitation in the '774 patent, because the limitation was not addressed during the reexamination. Id. at 5. Turning to the '108 patent, the panel reversed the district court's holding. The panel found that because the '108 patent was unrelated to the '774 patent, with a separate specification and prosecution history, its claims must be construed separately. Id. at 6. Therefore collateral estoppel did not apply. The panel went on to caution that this did not imply that merely because two patents were related, that collateral estoppel automatically applied, pointing to the example of a continuation-in-part, which disclosed new mater that could materially impact the interpretation of a claim, would require a new claim construction inquiry. Id. at 6'7.

Jeff Ginsberg is a Partner in the New York office of Kenyon & Kenyon LLP. Wyatt Delfino is an Associate with the firm.