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Federal Circuit flips on Ultramercial v. WildTangent

After two trips to the Supreme Court and two remands, the Federal Circuit considered Ultramercial v. WildTangent for the third time—this time with Alice in hand—and ruled that the district court properly dismissed Ultramercial’s suit as failing to state a claim, since its patent (U.S. Pat. No. 7,346,545) does not claim patentable subject matter.

As you almost certainly recall, the patent was directed to a “method for distribution of products over the Internet” whereby a consumer was given access to “a media product” if the consumer viewed an ad. While the claim contained 11 steps, the court boiled it down to “showing an advertisement before delivering free content” or “using advertisement as an exchange or currency.” Under step (1) of the Mayo analysis, this was found to be an abstract idea.

Ultramercial fared no better when the court reviewed the claim for an “inventive concept” or “additional features” and found that the bells and whistles added to the abstract idea were no more than routine steps to implement the concept. The use of the internet was found to be no more than a “technical environment”. The court went on to evaluate the claim in view of the machine or transformation test and found it wanting. In the court’s view, the “Internet” did not even rise to the level of a “machine” and neither did simply adding a computer to otherwise conventional steps. The court viewed the claim as merely reciting a number of transactions that are not “physical objects or machines.”

The claim also failed the “technological arts test” of Alice: “Because the innovative aspect of the claimed invention is an entrepreneurial rather than a technological one, it is patent ineligible.” I predict that this test will become more prominent, and is close to a revival of the useful, concrete and tangible test of State Street Bank, so let’s take one more look at it from this decision:

 “To satisfy the technological arts test, claims must harness natural laws and scientific principles—those ‘truth[s] about the world that have always existed,” [citing Alice]—and use them to solve seemingly intractable problems. The must, moreover, not only describe a technological objective, but set out a precise set of instructions for achieving it. An idea is impermissibly ‘abstract’ if it is inchoate—unbounded and still at a nascent stage of development. It can escape the realm of the abstract only through concrete application. [Citing Mackay Radio]. This concrete application is new technology—taking a scientific principle or natural law and ‘tying it down’ by implementing it in a precisely defined manner.”[Citing the Mayo claims as ‘not confining their reach to particular applications’, then discussing Diehr as involving ‘a particular industrial application’]. At its core, the technological arts test prohibits claims which are ‘overly broad,’ in proportion to the technological dividends they yield.”



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