In 'On The Internet' Patent Case, SCOTUS Gives CAFC 3rd Chance To Get It Right

from the try,-try-again dept

You may recall the important WildTangent v. Ultramercial case that has been going on for some time. This is the case in which the courts basically need to decide if merely adding an "on the internet' turns a basic idea into a patentable idea. In 2010 a court rejected Ultramercial's patent (7,346,545) on a process requiring people to watch an ad before getting access to content. However, the CAFC (court of appeals for the Federal Circuit) overturned that ruling, finding that taking a basic concept and adding "on the internet" to it made it patentable.

In 2012, following the Supreme Court's ruling in the Prometheus Labs v. Mayo case, that found medical diagnostics unpatentable, the Supreme Court told CAFC to try again on the Ultramercial case. Given another chance to get it right, CAFC again whiffed and insisted that this was patentable subject matter. In light of the recent ruling in CLS Bank v. Alice (which relied heavily on that Mayo ruling), the Supreme Court has told CAFC to maybe try one more time to see if it might actually get it right this time around, given the new guidance in the CLS Bank ruling.

In short, the Supreme Court seems to be telling CAFC: do we really need to draw a map for you here? Adding "on the internet" doesn't make something patentable. Now, the remaining question is whether or not CAFC will finally get that message.

Separately, it's also perhaps notable that the Supreme Court declined to hear the appeal in a different ruling, the Accenture v. Guidewire patent case, in which CAFC found the patent invalid based, in large part, on the Mayo ruling and the earlier CLS Bank CAFC ruling. Basically, here was a case where CAFC (properly) rejected a patent for being ridiculously overbroad, and now the Supreme Court doesn't have any concerns with that ruling. But in the Ultramercial case, where CAFC has twice upheld an overly broad patent, the Supreme Court is telling CAFC to try, try again.

Filed Under: cafc, on the internet, patentable subject matter, patents, supreme court
Companies: alice, cls bank, ultramercial, wildtangent

Patent Court Stands By Its Claim That Adding 'On The Internet' Can Make An Abstract Idea Patentable

from the oh-come-on dept

We've been following the Ultramercial case quite closely over the past few years. If you're not aware, this involved a company that more or less patented the idea of "you must watch this ad to get this content" (US Patent 7,346,545) and then sued pretty much everyone. Most of the companies it sued settled rather than fight (which happens all the time), including YouTube and Hulu, but one company, WildTangent, has continued the fight. Eventually, though, the case reached the Supreme Court with the key question being does taking an abstract idea like "watch this before getting that" and adding "on the internet" to it make it patentable? It's well established that you can't patent an abstract idea, but for some reason many seem to think that if you say "on the internet" it's no longer abstract. The Supreme Court did not do a full hearing on the case, but asked the appeals court of the federal circuit (CAFC -- known as the patent appeals court) to reconsider its original ruling in light of the Supreme Court's ruling in the Prometheus case, where it said that you can't patent broad medical diagnostics. The rule there was that you "could not simply recite a law of nature and then add the instruction 'apply the law.'" So, is the same true for "abstract idea" plus "on the internet"?

Apparently, for CAFC, the answer is that there is a difference, and that merely adding "on the internet" to an abstract idea makes it patentable. The ruling is quite incredible, not just for the fact that it sets up a ridiculous standard, but also for its technical naivete. CAFC basically says, gee, there are a lot of steps and graphs and charts in the patent, so, it's probably not abstract.

Viewing the subject matter as a whole, the invention involves an extensive computer interface. Unlike Morse, the claims are not made without regard to a particular process. Likewise, it does not say “sell advertising using a computer,” and so there is no risk of preempting all forms of advertising, let alone advertising on the Internet. Further, the record at this stage shows no evidence that the recited steps are all token pre- or post-solution steps. Finally, the claim appears far from over generalized, with eleven separate and specific steps with many limitations and sub-steps in each category. The district court improperly made a subjective evaluation that these limitations did not meaningfully limit the “abstract idea at the core” of the claims.

Part of the issue is that it needs to show something new here, and the court seems to argue that any software effectively creates a "new machine" based on some really wacky logic. It states "as computer scientists understand":

a programmed computer contains circuitry unique to that computer. That “new machine” could be claimed in terms of a complex array of hardware circuits, or more efficiently, in terms of the programming that facilitates a unique function.

Read that again. They're saying every software program creates "unique circuitry." That's how they claim this is a "new machine" making the idea patent eligible. However, as computer scientist, Tim Lee points out, this claim is "nonsense."

It seems that, once again, CAFC is not getting the Supreme Court's message clearly. We've already gone through this with Myriad and Mayo cases. In Mayo, CAFC twice ruled that diagnostic tests were patentable, even after the Supreme Court gave it an extra chance to correct that. That resulted in the Supreme Court slapping down CAFC and rejecting medical diagnostic patents. Then, CAFC, similarly did the same thing with gene patents, only to be smacked down just last week.

This is a nearly identical situation. CAFC rules one way ("yes, of course this abstract idea/thing of nature is patentable"), the Supreme Court says "are you sure?!? please look at this other ruling," and CAFC comes back with "yes, we're sure! patent patent patent!" The last few times that's happened the Supreme Court has had to smack CAFC down, and it looks like it may need to do so again.

Filed Under: abstract ideas, advertising, cafc, content, drm, on the internet, patent eligibility, patents, software patents, supreme court
Companies: hulu, ultramercial, wildtangent, youtube

Supreme Court Orders Reconsideration Of 'On The Internet' Software Patents

from the getting-warmer... dept

We've been following the "Ultramercial" case for a while. This was about a company that got a patent (7,346,545 that is basically about requiring you to watch an ad before you can watch some content). Ultramercial sued Hulu, YouTube and WildTangent. The case bounced around the court system for a while, with some using the Bilski ruling to reject the patent as an "abstract idea." However, CAFC (the appeals court that handles patent appeals and always seems to have a soft spot for patents) said the concept was perfectly fine. In reading through the details, CAFC's explanation was basically that since the patent described doing this abstract idea "on the internet," suddenly it became patentable. Back in March, we wrote about WildTangent's appeal to the Supreme Court, which pointed out the ridiculousness of saying that as long as you add "on the internet" to an abstract idea that it suddenly becomes patentable.

While it felt like there was a good chance that the Supreme Court would hear the case, there was one other interesting development that happened a week later: the Supreme Court smartly rejected broad patents on medical diagnostics in the Prometheus Laboratories v. Mayo Labs case, noting that such patents are on unpatentable subject matter. Specifically, the ruling held that "A patent, for example, could not simply recite a law of nature and then add the instruction 'apply the law.'"

Many people expected the Supreme Court to use this ruling to get CAFC to reconsider its Myriad ruling that allowed gene patents -- which it did. But the big news coming out this week was that the Supreme Court has accepted the appeal of the Ultramercial case by vacating CAFC's ruling and asking it to reconsider the Ultramercial case in light of the Prometheus ruling:

The petition for a writ of certiorari is granted [G]. The judgment is vacated [V], and the case is remanded [R] to the United States Court of Appeals for the Federal Circuit for further consideration in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___ (2012).

This actually makes a lot of sense. The Prometheus ruling makes clear that saying "general idea + apply this idea" is not patentable subject matter. And yet, CAFC's ruling in the Ultramercial case basically said the opposite, noting that "general idea + apply this idea on the internet" is patentable subject matter. So, once again, it appears that CAFC's completely out of touch view of the patent system is getting smacked down by the Supreme Court. CAFC now has these two more chances to get it right and to stop slobbering all over ridiculous expansions of the patent system. Hopefully CAFC gets it right the second time around, and the ruling in Ultramercial is useful in limiting ridiculously overbroad software patents.

Filed Under: bilski, cafc, scotus, software patents
Companies: hulu, ultramercial, wildtangent, youtube

Why Does An Unpatentable 'Abstract Idea' Become Patentable If You Add 'On The Internet'?

from the good-question dept

Back in 2009, we wrote about a case involving a company called Ultramercial, which held a broad and ridiculous patent (7,346,545) that effectively covered the process of watching an ad before you could download content (seriously). Ultramercial sued Hulu, YouTube and WildTangent over this. The case went back and forth with an initial ruling that rejected the patent, by noting that it was just an "abstract idea" and abstract ideas are not patentable. As that court ruling noted:

At the core of the '545 patent is the basic idea that one can use advertisement as an exchange or currency. An Internet user can pay for copyrighted media by sitting through a sponsored message instead of paying money to download the media. This core principle, similar to the core of the Bilski patent, is an abstract idea. Indeed, public television channels have used the same basic idea for years to provide free (or offset the cost of) media to their viewers. At its heart, therefore, the patent does no more than disclose an abstract idea.

Tragically, CAFC, the appeals court that handles patent matters and has a long history of expanding patent law, reversed the lower court's ruling and deemed the patent valid. While it didn't put it in these words specifically, it certainly appeared that the court was saying that any abstract idea can still be patentable if you just make it happen "on the internet."

In that ruling, the court discusses the fact that "abstract ideas" are not patentable, and notes that it used to use its machine-or-transformation test to determine if something was or was not an abstract idea. However, after the Supreme Court ruled in the Bilski case that this test might not always be appropriate, while failing to say what test would be appropriate, it's left CAFC with the freedom to make up totally arbitrary rules. And in this case, the arbitrary rule was effectively "we don't apply the machine-or-transformation test to 'information age' inventions." Why? Because if the inventions aren't physical, the machine or transformation test no longer applies:

While machine-or-transformation logic served well as a tool to evaluate the subject matter of Industrial Age processes, that test has far less application to the inventions of the Information Age.... Technology without anchors in physical structures and mechanical steps simply defy easy classification under the machine-or-transformation categories.

Shorter version: what would be considered unpatentable abstract ideas in the offline world suddenly become patentable if you add "on the internet" to them.

That doesn't sound right to lots of people, and thankfully WildTangent is appealing the case and hoping the Supreme Court will hear it. As the petition to the Supreme Court notes, the question presented is:

Whether, or in what circumstances, a patent's general and indeterminate references to "over the Internet" or at "an Internet website" are sufficient to transform an unpatentable abstract idea into a patentable process for purposes of 35 U.S.C.

Along with the petition, there were also two interesting filings in support, urging the Supreme Court to hear the case. One from Redhat, CCIA and EFF, which goes into great detail about how such broad patentability would seriously harm the open source world, and a strongly worded brief from Google and Verizon (yes, together) about how such a ruling would do serious harm to innovation by allowing all sorts of abstract ideas to be locked up via patent. Hopefully the Supreme Court is willing to listen -- and will push back (yet again) on a bad CAFC ruling.

Filed Under: abstract ideas, ads, cafc, downloads, software patents, supreme court
Companies: ccia, eff, google, hulu, ultramercial, verizon, wildtangent, youtube

Court Rejects Patent On 'Watch An Ad To Get Content'

from the bilski-ftw dept

Last fall we wrote about how a company named Ultramercial had sued Hulu, YouTube and WildTangent over patent 7,346,545 for requiring people to watch an ad before being able to access content. It resulted in an interesting discussion in our comments, where some patent system defenders insisted that the patent was perfectly legit. Unfortunately, the court disagrees with those folks. It has ruled that the patent is not valid (the ruling covers Hulu and WildTangent -- YouTube was dismissed from the case). Perhaps most interesting is the fact that the court chose to use the "machine or transformation test" for judging the patent. While some have read the Bilski ruling to "reject" the "machine or transformation" test, that's not quite true. It just said that's not the only test. The court in this case went through an explanation for why it felt this was still an appropriate test:

It is important to note, however, that even after the Supreme Court's decision in Bilski, the machine or transformation test appears to have a major screening function--albeit not perfect-- that separates unpatentable ideas from patentable ones. Indeed, four of the Justices, listed on Justice Stevens's concurring opinion, would have taken the machine or transformation test to its logical limit to hold that business methods are categorically unpatentable. Id. at 3257 (Stevens, J., concurring). Joining a concurring opinion, Justice Scalia, who signed on to parts of the plurality opinion as well, would not hold all business methods unpatentable, but would agree with Justice Breyer that "not [] many patentable processes lie beyond [the] reach [of the machine or transformation test]." Id. at 3258 (Breyer, J., concurring). In sum, at least five (and maybe all) Justices seem to agree that the machine or transformation test should retain much of its utility after the Supreme Court's decision in Bilski. Therefore, even though the machine or transformation is no longer the litmus test for patentability, the Court will use it here as a key indicator of patentability.

And, using that test, the court finds this particular invention not patentable subject matter. It also points out that the patent is really just covering an abstract idea (the reasoning used by the Supreme Court to reject the Bilski patent):

At the core of the '545 patent is the basic idea that one can use advertisement as an exchange or currency. An Internet user can pay for copyrighted media by sitting through a sponsored message instead of paying money to download the media. This core principle, similar to the core of the Bilski patent, is an abstract idea. Indeed, public television channels have used the same basic idea for years to provide free (or offset the cost of) media to their viewers. At its heart, therefore, the patent does no more than disclose an abstract idea.

I'm guessing this will likely be appealed, so it should be an interesting case to follow. You can read the full (quite clear) decision below:

Filed Under: ads, bilski, machine or transformation, patents
Companies: hulu, ultramercial, wildtangent

That Whole Watch An Ad To Get Content Thing? Patented... And The Patent Holder Has Been Suing

from the watch-out dept

So we were just talking about some new company called Free All Music, which has a plan to let people download free mp3s if they agree to watch a video ad first. I have my doubts about how well it would work... but apparently the company may also need to watch out for another issue: a bogus patent. You see, there's some company called Ultramercial, who not only holds a US patent 7,346,545 on the concept of distributing content where the user can get it for free after watching an ad, but Ultramercial recently went legal. Just a few days ago, it sued Hulu, YouTube and WildTangent for infringement over that very patent. Seriously, USPTO? A patent on watching an ad before getting free content? This is why patent examiners get such a bad rap.

Filed Under: ad supported music, free, patents
Companies: hulu, ultramercial, wildtangent, youtube