By Jason Rantanen
Ultramercial, LLC v. Hulu, LLC (Fed. Cir. 2011)
Panel: Rader (author), Lourie, O'Malley
The line between patentable processes and unpatentable abstract ideas continues to trouble the Federal Circuit even as the Supreme Court prepares to address the issue for the second time in four years in Mayo v. Prometheus. In Ultramercial, the court—led in this instance by Judge Rader, whose views on patentable subject matter are clear and well known—rejected a challenge based on lack of patentable subject matter in an opinion that draws the line between steps that can be performed in the human mind or by a human using pencil and paper (unpatentable) as opposed to those that require a computer (patentable).
Patent No. 7,346,545 claims a method for distributing copyrighted products over the Internet where the consumer receives a copyrighted product for free in exchange for viewing an advertisement and the advertiser pays for the copyrighted content. The district court granted the accused infringer's motion to dismiss on the ground that the '545 patent does not claim patentable subject matter.
Patentable application not an abstract idea
On appeal, the CAFC reversed. After noting the broadly permissive nature of Section 101, and placing the '545 invention in the "process" category, the court looked to the abstractness of the invention claimed by the '545 patent. Eschewing the "machine or transformation test," the court focused instead on the programming complexity required to carry out the claimed elements. The claimed invention, the court determined, constituted a patentable application rather than an unpatentable abstract idea. While "the mere idea that advertising can be used as a form of currency is abstract, just as the vague, unapplied concept of hedging proved patent-ineligible in Bilski,...the '545 patent does not simply claim the age-old idea that advertising can serve as a currency. Instead, the '545 patent discloses a practical application of this idea." Slip Op. at 10. This statement is followed by identification of the specific steps for monetizing copyrighted products set out in the claims, many of which involve complex computer programming. "Viewing the subject matter as a whole, the invention involves an extensive computer interface." Slip Op. at 11.
Software is patentable
Layered on top of this finding is the court's rejection of the argument that software programming amounts to abstract subject matter. "The digital computer may be considered by some the greatest invention of the twentieth century, and both this court and the Patent Office have long acknowledged that "improvements thereof" through interchangeble software or hardware enhancements deserve patent protection. Far from abstract, advances in computer technology—both hardware and software—drive innovation in every area of scientific and technical endeavor." Slip Op. at 12.
This holding is in tension with the Federal Circuit's recent opinion in Cyber Source Corp. v. Retail Decisions, Inc., No. 2009-1358 (Fed. Cir. Aug. 16, 2011), in which a panel consisting of Judges Bryson, Dyk and Prost concluded that a method of verifying a credit card transaction over the Internet constituted an unpatentable process. While the panel in Ultramercial recognized this tension, it distinguished Cyber Source as an instance of "purely mental steps." Ultramercial Slip Op. at 13 (emphasis in original). The line, at least from the point of view of this panel, thus lies somewhere between logical steps that humans can perform without the aid of a computer versus those that require a computer to carry out.
