The Supreme Court’s decision in Alice Corp. v. CLS Bank Int’l
, 134 S.
Ct. 2347 (2014) created perplexing issues for those hoping to patent
computer-implemented processes and associated systems. The Court described a
potentially broad (but effectively undefined) notion of “abstract ideas,” and
held that a patent that implicates an abstract idea is eligible for patenting
under 35 U.S.C. §
101 only if the claims recite an “inventive concept” that restricts the claimed
subject matter to something significantly different from the abstract idea per se
. Routine and conventional computer
hardware and functions are insufficient to provide this inventive concept.
series of cases have invalidated patents covering computer-implemented
inventions as ineligible abstract ideas. Ultramercial,
Inc. v. Hulu, LLC
, ___ F.3d ___, 2014 WL 5904902 (Fed. Cir. Nov. 14,
2014)(process for using advertising as a currency for accessing media content
over internet); buySAFE, Inc. v. Google,
, 765 F.3d 1350 (Fed. Cir. 2014)(use of computer to create a
transaction performance guaranty); Accenture
Global Servs., GmbH v. Guidewire Software, Inc.
, 728 F.3d 1336 (Fed. Cir.
2013)(system to perform insurance-policy-related tasks on a computer); Bancorp Servs. LLC v. Sun Life Assur. Co. of
, 687 F.3d 1266 (Fed. Cir. 2012)(use of computer to perform
repetitive insurance value computations). In light of those decisions, the
outlook for internet-related computer patents appeared bleak.
On December 5, however, the Federal Circuit signaled that
some hope still exists by affirming the eligibility of a software patent
involving commerce on the internet. DDR
Holdings, LLC v. Hotels.com, LP
, No. 2013-1505 (Fed. Cir. Dec. 5, 2014).
Slip opinion HERE
. In a 2-1 decision written by Circuit Judge Chen, the Federal
Circuit ruled that an invention directed to merchandising on the internet was
DDR concerned U.S. Patent No. 7,818,399 (entitled “Methods
of expanding commercial opportunities for internet websites through coordinated
offsite marketing”). The ‘399 patent addressed the problem facing internet
stores with websites that include ads for third-party merchants. In prior art systems,
a customer clicking on an ad on a host website would be directed to a third-party
site, often being lost to the host site forever. The ‘399 patent claims a process
involving stored data concerning the visual elements responsible for the “look
and feel” of the host website, so that upon clicking an ad the customer is
directed to a webpage on the host website that is a composite of the
third-party merchant’s product information and the look and feel elements of
the host website.
The Federal Circuit applied the two-step test for
patentability set forth in Alice
First, it considered whether the ‘399 patent claims were directed to a patent-ineligible
abstract idea. It noted that distinguishing between a patentable invention and
an abstract idea “can be difficult, as the line separating the two is not
always clear.” Slip op.
at 16. After
reviewing Supreme Court cases characterizing (without defining) abstractness, the
Federal Circuit side-stepped the issue by noting that, even if the ‘399 patent
claims included abstract ideas, they nonetheless were saved by step two of the Alice
In step two, the court must “consider the elements of each
claim—both individually and as an ordered combination — to determine whether
the additional elements transform the nature of the claim into a patent-eligible
application of that abstract idea. This second step is the search for an ‘inventive
concept,’ or some element or combination of elements sufficient to ensure that
the claim in practice amounts to ‘significantly more’ than a patent on an
ineligible concept.” Id
. 16, quoting Alice
, 134 S. Ct. at 2355.
The Federal Circuit ruled that, although the ‘399 patent was
directed to internet commerce, it was limited to a particular application of
any broad, abstract concept:
As an initial matter, it is true that the claims here are similar
to the claims in [earlier cases finding patents ineligible] in the sense that
the claims involve both a computer and the Internet. But these claims stand
apart because they do not merely recite the performance of some business
practice known from the pre-Internet world along with the requirement to
perform it on the Internet. Instead, the claimed solution is necessarily rooted
in computer technology in order to overcome a problem specifically arising in
the realm of computer networks.
In particular, the ’399 patent’s claims address the problem
of retaining website visitors that, if adhering to the routine, conventional
functioning of Internet hyperlink protocol, would be instantly transported away
from a host’s website after “clicking” on an advertisement and activating a
hyperlink. For example, asserted claim 19 recites a system that, among other
things, 1) stores “visually perceptible elements” corresponding to numerous host
websites in a database, with each of the host websites displaying at least one
link associated with a product or service of a third-party merchant, 2) on
activation of this link by a website visitor, automatically identifies the host,
and 3) instructs an Internet web server of an “outsource provider” to construct
and serve to the visitor a new, hybrid web page that merges content associated with
the products of the third-party merchant with the stored “visually perceptible
elements” from the identified host website.
Slip op. at 20.
The court distinguished Ultramercial,
a recent case holding that an-Internet based process was ineligible:
Unlike the claims in Ultramercial,
the claims at issue here specify how interactions with the Internet are
manipulated to yield a desired result—a result that overrides the routine and
conventional sequence of events ordinarily triggered by the click of a hyperlink.
Instead of the computer network operating in its normal, expected manner by
sending the website visitor to the third-party website that appears to be connected
with the clicked advertisement, the claimed system generates and directs the
visitor to the above-described hybrid web page that presents product
information from the third-party and visual “look and feel” elements from the
host website. When the limitations of the ’399 patent’s asserted claims are
taken together as an ordered combination, the claims recite an invention that is
not merely the routine or conventional use of the Internet.
. at 22-23. As a
result, the court ruled that the process was eligible under §101. Circuit Judge Mayer
dissented, arguing that the ‘399 patent was “long on obfuscation but short on
substance[,]” and that the invention disclosed was “so rudimentary that it
borders on the comical.” He interpreted Alice
to create a “technological arts” test for eligibility, which was not met
because the ‘399 patent was not rooted in any new computer technology.