ULTRAMERCIAL, INC. v HULU, LLC 2010-1544 (Fed. Cir. 2015)

Determining if a computer implemented invention is patentable in the US  can be difficult. This heavily cited decision is clearer than most, and shows how a routine implementation of an "abstract idea" may be found to be patent ineligible.

ULTRAMERCIAL, INC. v HULU, LLC  2010-1544 (Fed. Cir. 2015)
US 7,346,545
Claims of US patent 7,346,545 in the name of Ultramercial, Inc. was found not to be patent eligible subject matter under 35 USC 101 because they are directed to an abstract idea implemented using routine and conventional activity.

Broad description of the invention
The ‘545 patent claims methods that are directed to a method for distributing copyrighted media products over the Internet where the consumer receives a copyrighted media product at no cost in exchange for viewing an advertisement, and the advertiser pays for the copyrighted content.
Characteristic Claim
1. 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.
This decision was a reversal of an earlier decision by the same court, in view of the added benefit of the US Supreme Court’s reasoning in Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014).
Their Honours applied the “framework for distinguishing patents that claim [patent ineligible] laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts” identified by Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. __, 132 S. Ct. 1289 (2012) and developed by Alice. In a first step, “we determine whether the claims at issue are directed to one of those patent ineligible concepts”.  If not the claims pass muster under 35 USC 101 of the US patents statute, “Inventions Patentable”. 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.”
Their Honours in applying the first step considered that the ordered combination of steps of claim 1 recite an abstract idea, that is an idea having no particular concrete or tangible form. 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. Certain additional limitations added a degree of particularity (e.g. the activity log), however the abstract idea remained unchanged, that is the concepts embodied with these additional limitations describe only the abstract idea of showing an advertisement before delivering fee content.  Their Honours declined to agree with Ultramercial that the addition of merely novel or non-routine components to the claimed idea necessarily turns an abstraction into something concrete.
Noting that at some level, all invention embody, use, reflect, reflect upon, or apply laws of nature, natural phenomena, or natural ideas, their honours did not purport to state that all claims in all software-based patents will necessarily be directed to an abstract idea.
Their Honours in applying the second step were not of the opinion that the claims do significantly more than simply describe the abstract method, quoting Mayo. The claims do not contain an “inventive concept” to “transform” the claimed abstract idea into patent-eligible subject matter, as set forth by Alice. The transformation of an abstract idea into patent-eligible subject matter requires more than simply stating the abstract idea in while adding the words apply it. A claim that recites an abstract idea must include additional features to ensure that the claim is more than a drafting effort designed to monopolise the abstract idea. Additional ideas in the claims must be more than well-understood, routine, conventional activity.  Their Honours were of the view that the claimed limitations were simply instructing the practitioner to implement the abstract idea with routine, conventional activity [emphasis added]. Adding routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet does not transform an otherwise abstract idea into patent-eligible subject matter. Instead, the claimed sequence of steps comprises only “conventional steps, specified at a high level of generality,” which is insufficient to supply an “inventive concept.” as described by Alice and Mayo. The steps of consulting and updating an activity log represent insignificant “data-gathering steps” Cybersource Corp c Retail Decisions, Inc, 654 F.3d 1366, 1370 (Fed/ Cir. 2011), and add nothing of practical significance to the underlying abstract idea. Restricting public access also represents only insignificant pre-solution activity which is also not sufficient to transform an otherwise patent-ineligible abstract idea into patent-eligible subject matter. The claims’ invocation of the Internet also adds no inventive concept Alice.  Narrowing the abstract idea of using advertising as a currency to the internet is an attempt to limit the use to a particular technological environment, which is insufficient to save a claim Alice. Given the prevalence of the Internet, implementation of an abstract idea on the Internet in this case is not sufficient to provide any “practical assurance that the process is more than a drafting effort designed to monopolize the [abstract idea] itself.” Mayo, 132 S. Ct. at 1297.

While the “machine or transformation test” set out in In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008) is not the sole test it can provide a useful cue for the second step.  The claims are not tied to any particular machine or apparatus, only a general purpose computer. Adding a computer to otherwise conventional steps does not make an invention patent-eligible. Manipulations of “public or private legal obligations or relationships, business risks, or other such abstractions cannot meet the test because they are not physical objects or substances, and they are not representative of physical objects or substances Bilski – consequently the claims do not transform any article to a different state or thing.