12/08/14

Title	Ultramercial, Inc. v. Hulu, LLC, No. 2010-1544 (Fed. Cir. Nov. 14, 2014).
Issue	Ultramercial argues that the ’545 claims are not directed to the type of abstract idea at issue in Alice—one that was “routine,” “long prevalent,” or “conventional”— and are, instead, directed to a specific method of advertising and content distribution that was previously unknown and never employed on the Internet before. Ultramercial, Inc., at *8.
Holding	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. Id., at *9.

Legal Reasoning (LOURIE, Mayer, O’Malley)
Background
Claim 1 of the ’545 patent:	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 mes- sage 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 consum- er 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 al- lowing 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 pre- sented; and an eleventh step of receiving payment from the sponsor of the sponsor message displayed. Ultramercial, Inc., at *3-5.
Alice 101 Standard	In Alice, the Supreme Court identified a “framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.” [Alice v. CLS Bank,] at 2355 (citing Mayo, 132 S. Ct. at 1296–97). “First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.” Id. 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.’” Id. (quoting Mayo, 132 S. Ct. at 1294) (alteration in original). Id. at *7-8 (text added).
Step 1: Abstract Idea?
Generic Advertising Steps are Ineligible	[T]he claims of the ’545 patent are not directed to patent-eligible subject matter. Following the framework set out in Alice, we first “determine whether the claims at issue are directed to one of those patent-ineligible concepts.” Id. at 2355 (citing Mayo, 132 S. Ct. at 1296–97). […] We first examine the claims because claims are the definition of what a patent is intended to cover. An examination of the claim limitations of the ’545 patent shows that claim 1 includes eleven steps for displaying an advertisement in exchange for access to copyrighted media.[…] his ordered combination of steps recites an abstraction—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. 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. Ultramercial, Inc., at *8-10.
Step 2: Abstract Idea 'Transformed' into Patent-Elegible Subject matter?
Broad Claim Language Does Not transform Claims	The second step in the analysis requires us to deter- mine whether the claims do significantly more than simply describe that abstract method. Mayo, 132 S. Ct. at 1297. We must examine the limitations of the claims to determine whether the claims contain an “inventive concept” to “transform” the claimed abstract idea into patent-eligible subject matter. Alice, 134 S. Ct. at 2357 (quoting Mayo, 132 S. Ct. at 1294, 1298). […] We conclude that the limitations of the ’545 claims do not transform the abstract idea that they recite into patent-eligible subject matter because the claims simply instruct the practitioner to implement the abstract idea with routine, conventional activity. None of these eleven individual steps, viewed “both individually and ‘as an ordered combination,’” transform the nature of the claim into patent-eligible subject matter. See Alice, 134 S. Ct. at 2355 (quoting Mayo, 132 S. Ct. at 1297, 1298). The majority of those steps comprise the abstract concept of offering media content in exchange for viewing an advertisement. Adding routine additional steps such as updat- ing 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.” Id. at 2357 (quoting Mayo, 132 S. Ct. at 1294, 1297, 1300). Indeed, the steps of consulting and updating an activity log represent insignificant “data-gathering steps,” CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011), and thus add nothing of practical significance to the underlying abstract idea. Ultramercial, Inc., at *10-11.
Internet language does not add inventive concept	The claims’ invocation of the Internet also adds no inventive concept. As we have held, the use of the Internet is not sufficient to save otherwise abstract claims from ineligibility under § 101. See CyberSource, 654 F.3d at 1370 (reasoning that the use of the Internet to verify credit card transaction does not meaningfully add to the abstract idea of verifying the transaction). Narrowing the abstract idea of using advertising as a currency to the Internet is an “attempt[] to limit the use” of the abstract idea “to a particular technological environment,” which is insufficient to save a claim. Alice, 134 S. Ct. at 2358 (citing Bilski v. Kappos, 561 U.S. 593, 610–11, 130 S. Ct. 3218, 3230 (2010)). Id. at *11-12.
Effect of Preamble	Although the preamble of claim 1 also requires a facilitator, ’545 patent col 8, l. 6, the specification makes clear that the facilitator can be a person and not a machine, id. col. 3, ll. 47–50. Thus, nowhere does the ’545 patent tie the claims to a novel machine. Id. at *13.
Conclusion
	Because the ’545 patent claims are directed to no more than a patent-ineligible abstract idea, we conclude that the district court did not err in holding that the ’545 patent does not claim patent-eligible subject matter. Accordingly, the decision of the district court granting WildTangent’s motion to dismiss is affirmed. Ultramercial Inc., at *13-14.

MAYER, Circuit Judge, concurring. Ultramercial, Mayer Op., at *1.
General Grounds for Concurrence	I agree that the claims asserted by Ultramercial, Inc. and Ultramercial, LLC (together, “Ultramercial”) are ineligible for a patent, but write separately to emphasize three points. First, whether claims meet the demands of 35 U.S.C. § 101 is a threshold question, one that must be addressed at the outset of litigation. Second, no presumption of eligibility attends the section 101 inquiry. Third, Alice Corporation v. CLS Bank International, 134 S. Ct. 2347, 2356–59 (2014), for all intents and purposes, set out a technological arts test for patent eligibility. Because the purported inventive concept in Ultramercial’s asserted claims is an entrepreneurial rather than a technological one, they fall outside section 101. Ultramercial Inc., Mayer Op., at *1.
No presumption of validity should apply for 101	PTO and 101	The rationale for the presumption of validity is that the United States Patent and Trademark Office (“PTO”), “in its expertise, has approved the claim.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 426 (2007). That rationale, however, is “much diminished” in situations in which the PTO has not properly considered an issue. Id. Because the PTO has for many years applied an insufficiently rigorous subject matter eligibility standard, no presumption of eligibility should attach when assessing whether claims meet the demands of section 101. Id. at *6-7.
	Rebutting ‘anything under the sun’	Those who support a “coarse filter” approach to section 101 often argue that the Act’s legislative history demonstrates that Congress intended statutory subject matter to “include anything under the sun that is made by man.” See, e.g., AT&T Corp. v. Excel Commc’ns, Inc., 172 F.3d 1352, 1355 (Fed. Cir. 1999). Read in context, however, the legislative history says no such thing. See Mayo, 132 S. Ct. at 1303–04. The full statement from the committee report reads: “A person may have ‘invented’ a machine or a manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.” H.R. Rep. No. 1923, 82d Cong., 2d Sess., at 6 (1952) (emphasis added). Thus, far from supporting an expansive approach to section 101, the relevant legislative history makes clear that while a person may have “invented” something under the sun, it does not qualify for patent protection unless the Patent Act’s statutory requirements have been satisfied. Id. at *7.
	SCOTUS on 101 presumption	Although the Supreme Court has taken up several section 101 cases in recent years, it has never mentioned—much less applied—any presumption of eligibility. The reasonable inference, therefore, is that while a presumption of validity attaches in many contexts, see Microsoft Corp. v. i4i Ltd. P’ship, 131 S. Ct. 2238, 2243–47 (2011), no equivalent presumption of eligibility applies in the section 101 calculus. Id. at *7.
Extrapolating a ‘technological arts test’	A rule holding that claims are impermissibly abstract if they are directed to an entrepreneurial objective, such as methods for increasing revenue, minimizing economic risk, or structuring commercial transactions, rather than a technological one, would comport with the guidance provided in both Alice and Bilski. To satisfy the technological arts test, claims must harness natural laws and scientific principles—those “truth[s] about the natural world that ha[ve] always existed,” Alice, 134 S. Ct. at 2356 (citations and internal quotation marks omitted)—and use them to solve seemingly intractable problems. They must, moreover, not only describe a technological objective, but set out a precise set of instructions for achieving it.2 An idea is impermissibly “abstract” if it is inchoate—unbounded and still at a nascent stage of development. Id. at *9-10.

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