Ultramercial, Inc. v. Hulu, LLC: § 101 Abstractness During a Motion to Dismiss

Category: 101
By: Eric Paul Smith, Contributor   
TitleUltramercial, Inc. v. Hulu, LLC, No. 2010-1544 (Fed. Cir. Jun. 21, 2013).
Issues[In response to a motion to dismiss, the] district court dismissed Ultramercial’s claims [1] for failure to claim statutory subject matter [and 2] without formally construing the claims and, further, without requiring defendants to file answers.
Ultramercial at *5 (text added).
[1] [A]s a practical application of the general concept of advertising as currency and an improvement to prior art technology, the claimed invention is not “so manifestly abstract as to override the statutory language of section 101[,]” [because the disclosure need not detail the particular instrumentalities for each step in the claims and the steps likely require complex computer programming.]
Ultramercial at *33 (text added).
[2] In this procedural posture, the district court should either have construed the claims in accordance with Markman, required the defendant to establish that the only plausible construction was one that, by clear and convincing evidence rendered the subject matter ineligible (with no factual inquiries), or adopted a construction most favorable to the patentee.
Id. at *25.

Procedural HistoryUltramercial sued Hulu, LLC (“Hulu”), YouTube, LLC (“YouTube”), and WildTangent, Inc. (“WildTangent”), alleging infringement of the ’545 patent. Hulu and YouTube have been dismissed from the case. WildTangent moved to dismiss for failure to state a claim, arguing that the ’545 patent did not claim patent-eligible subject matter. The district court granted WildTangent’s pre-answer motion to dismiss under Rule 12(b)(6). Ultramercial appeals. This court has jurisdiction under 28 U.S.C. § 1295(a)(1).
Ultramercial at *4 (text added).
Legal Reasoning (Rader, C.J.; Lourie, J.; O’Malley, J.)
Claim Language“[T]he ’545 patent claims a particular internet and computer-based method for monetizing copyrighted products, consisting of the following steps: (1) receiving media products from a copyright holder, (2) selecting an advertisement to be associated with each media product, (3) providing said media products for sale on an Internet website, (4) restricting general public access to the media products, (5) offering free access to said media products on the condition that the consumer view the advertising, (6) receiving a request from a consumer to view the advertising, (7) facilitating the display of advertising and any required interaction with the advertising, (8) allowing the consumer access to the associated media product after such display and interaction, if any, (9) recording this transaction in an activity log, and (10) receiving payment from the advertiser.” Ultramercial at *27 (citing the ’545 patent col. 8, ll. 5-48).
Preliminary Issues
§101 Analysis during a Motion to Dismiss
“It will be rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter. This is so because every issued patent is presumed to have been issued properly, absent clear and convincing evidence to the contrary. . . . [T]he only plausible reading of the patent must be that there is clear and convincing evidence of ineligibility. For those reasons, Rule 12(b)(6) dismissal for lack of eligible subject matter will be the exception, not the rule.” Ultramercial at *5-6 (citations omitted).
“[T]he analysis under §101, while ultimately a legal determination, is rife with underlying factual issues[, such as (1)] a search for limitations in the claims that narrow or tie the claims to specific applications of an otherwise abstract concept . . .[; (2)] determining whether the patent embraces a scientific principle or abstract idea[; (3) determining] whether ‘genuine human contribution’ is required[; (4)] analyzing whether something was ‘conventional’ or ‘routine’[; and (5)] any inquiry into the scope of preemption . . . .” Id. at *6.
“[C]laim construction normally will be required . . . [, but] may not always be necessary . . . .” Id. at *6-7. However, “[c]onstruing every asserted claim and then conducting a §101 analysis may not be a wise use of judicial resources.” Id. at 8.
The Abstractness Exception and the Process Category
Scope of “process” category“The pertinent, expansive definition of ‘process’ in §100(b) confirms the statute’s intended breadth. Ultramercial at *8.  Congress “broadened the statute and certainly did not place any specific limits on it.” Id. at 9. “The plain language of the statue provides that any new, non-obvious, and fully disclosed technical advance is eligible for protection.” Id. at 10.
Judicial Exceptions“In line with the broadly permissive nature of §101’s subject matter eligibility principles and the structure of the Patent Act, case law has recognized only three narrow categories of subject matter outside the eligibility bounds of §101—laws of nature, physical phenomena, and abstract ideas. . . . [However, ]because eligibility requires assessing judicially recognized exceptions against a broad and deliberately expanded statutory grant, one of the principles that must guide our inquiry is these exceptions should apply narrowly.” Id. at *11-12.
Presumption of Validity“[C]onsistent with the Supreme Court’s admonition to cabin exceptions to §101 . . .[,] any attack on an issued patent based on a challenge to the eligibility of the subject matter must be proven by clear and convincing evidence.” Id. at *12.
“Abstractness” Inquiry Applied to the “Process” Category“In an effort to grapple with this non-statutory ‘abstractness’ exception to ‘processes,’ the dictionary provides some help. An abstract idea is one that has no reference to material objects or specific examples—i.e., it is not concrete. . . . Because technology is ever-changing and evolves in unforeseeable ways, this court gives substantial weight to the statutory reluctance to list any new, non-obvious, and fully disclosed subject matter as beyond the reach of Title 35.” Ultramercial at *13-14 (citations omitted). “A claim can embrace an abstract idea and be patentable. Instead, a claim is not patent eligible only if, instead of claiming an application of an abstract idea, the claim is instead to the abstract idea itself. . . . [D]oes the claim cover only an abstract idea, or instead does the claim cover an application of an abstract idea?” Id. at 14. This analysis “must focus on the claim as a whole,” id. at 15, but must not “read out . . . all the steps in the claimed process which . . . were not novel or ‘inventive,’” id. “A court cannot go hunting for abstractions by ignoring the concrete, palpable, tangible limitations or the invention the patentee actually claims. Instead, the relevant inquiry is whether a claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea.” Id. at *16.
Scope of the Abstractness ExceptionWith respect to computer-implemented inventions, “while the mere reference to a general purpose computer will not save a method claim from being deemed too abstract to be patent eligible,” id. at 23, “a claim tied to a computer in a specific way, such that the computer plays a meaningful role in the performance of the claimed invention, it is as a matter of fact not likely to pre-empt virtually all uses of an underlying abstract idea, leaving the invention patent eligible,” id. at 24.
Claim at Issue Held Patent Eligible“Even at [a] general level, it wrenches meaning from the word to label the claimed invention ‘abstract.’ The claim does not cover the use of advertising as currency disassociated with any specific application of that activity. It was error for the district court to strip away these limitations and instead imagine some ‘core’ of the invention.” Ultramercial at *27. “[I]t is clear that several steps plainly require that the method be performed through computers, on the internet, and in a cyber-market environment.” Id. “Viewing the subject matter as a whole, the invention involves an extensive computer interface. . . . [T]here is no risk of preempting all forms of advertising, let alone advertising on the Internet. [T]he record at this stages 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.” Id. at *30.  However, note that “this court does not define the level of programming complexity required before a computer-implemented method can be patent-eligible. Nor does this court hold that use of an Internet website to practice such a method is either necessary or sufficient in every case to satisfy §101.” Id.
Accordingly, this court reverses the district court’s dismissal of Ultramercial’s patent claims for lack of subject matter eligibility and remands for further proceedings.
Ultramercial at *33.
LOURIE, Circuit Judge, concurring. Ultramercial, Lourie Op., at *1.
While a computer or complex computer program, as discussed by the majority opinion, may be necessary to perform the method, it is not what the claim specifically requires and thus should not be the focus of the analysis. Likewise, although the number of claim limitations is also not an indication of patent-eligibility […] in my view, the added limitations in these claims represent significantly more than the underlying abstract idea of using advertising as an exchange or currency and, as a consequence, do not preempt the use of that idea in all fields.
Ultramercial, Lourie Op., at *3.

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