Ultramercial, Inc. et al. v. Hulu, LLC et al.

Docket No. 2010-1544

June 21, 2013

Brief summary: Issued patents are presumed to encompass patentable subject matter; a challenger must show the contrary by clear and convincing evidence. And “the relevant [patentability] inquiry is whether a claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea”.

Summary: Ultramercial appealed dismissal of its case, holding that its US 7,346,545 relating to a method for distributing copyrighted products over the internet does not claim patent-eligible subject matter. The FC’s earlier 2011 decision reversing the DC holding was vacated by the USSC in 2012. This opinion again reverses and remands the DC decision because it dismissed Ultramercial’s claims without construing the claims and requiring the defendants to file answers. It noted that it is rare that an infringement suit would be dismissed at the pleading stage for lack of patentable subject matter because “every issued patent is presumed to have been issued properly, absent clear and convincing evidence to the contrary” (citing CLS Bank, FC 2013 (“statutory presumption of validity applies when § 101 is raised as a basis for invalidity in district court proceedings”). In addition, “the analysis under § 101, while ultimately a legal determination, is rife with underlying factual issues” (e.g., “inquiry requires a search for limitations in the claims that narrow or tie to the claims to specific applications of an otherwise abstract concept”, “whether the patent embraces a scientific principle or abstract idea”, and / or “whether ‘genuine human contribution’ is required” (citing CLS Bank, FC 2013). Regarding the question regarding whether the patent encompassed patentable subject matter, the panel reviewed 35 U.S.C. § 101 and precedent (e.g., Bilski, US 2010; Classen, FC 2011; Mayo, US 2012), explaining that “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” but that “this court must not read § 101 so restrictively as to exclude ‘unanticipated inventions’ because the most beneficial inventions are ‘often unforseeable'” (citing Chakrabarty, US 1980). “In sum”, the panel also wrote, “the high level of proof applies to eligibility as it does to the separate patentability determinations” (clear and convincing evidence, citing Microsoft, US 2011). The opinion also explained that “[a] claim can embrace an abstract idea and be patentable” if it “come[s] from the application of the law of nature to a new and useful end” (“the relevant inquiry is whether a claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea”, citing Mayo (US 2012) (additional claimed step must limit abstract idea to practical application) and O’Reilly (US 1854) (impermissible beacuse it covered “an effect produced by the use of electro-magnetism, distinct from the process or machinery necessary to produce it”)). With respect to “computer-implemented inventions”, the panel wrote that while tying a method claim to a computer “moves it farther away from a claim to the abstract idea itself”, it must be linked “to a specific way of doing something with a computer, or a specific computer for doing something” to be patent eligible. The opinion also explained that “[t]he ‘coarse eligibility filter’ of § 101 is not the statutory tool to address concerns about vagueness, indefinite disclosure, or lack of enablement, as these infirmities are expressly addressed by § 112.” Thus, the panel reversed the DC decision and remanded the case. Judge Lourie concurred with the decision but wrote that the reasoning did not follow the specific guidelines of Mayo (US 2012) and CLS Bank (US 2013).

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