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Ultramercial Effect

Federal circuit
Offers clarification
On software patents

The Federal Circuit has sent a software patent case back to the District Court for the Central District of California, holding that the lower court erred in holding that the subject matter of the patent is not a “process” within the meaning of 35 U.S.C. § 101.

The case is Ultramercial, LLC v. Hulu, LLC, and in an earlier incarnation the Federal Circuit also reversed the District Court’s holding and remanded, but the decision was vacated by the US Supreme Court.

The case involves U.S. Patent No. 7,346,545, which claims a method for distributing copyrighted products (such as songs, movies and books) over the Internet. Consumers gain access to the content for free after viewing ads, and the advertisers pay for the copyrighted content.

Ultramercial, the patent holder, sued Hulu, YouTube, and WildTangent for infringement. Hulu and YouTube were dismissed from the case, and WildTangent moved to dismiss for failure to state a claim, on the basis that the patent did not claim patent-eligible subject matter. The district court granted WildTangent’s motion and Ultramercial appealed.

Some of the highlights of the Federal Circuit’s opinion are:

  • Courts should presume that a granted patent is patent-eligible under 35 U.S.C. § 101 unless proven otherwise under the “clear and convincing” standard. Thus, it will be rare that an invention can be deemed patent-ineligible at the pleading stage or on a motion for summary judgment.
  • “Process” (aka “method”) should be defined broadly.
  • A claim including an “abstract idea” can be patent-eligible if there is a practical application for that abstract idea.
  • Computer-implemented technology is presumptively patent-eligible.

Did you see that last point? Let me reiterate: Computer-implemented technology is presumptively patent-eligible.

The decision is another yank in a tug-of-war between the Federal Circuit and the US Supreme Court over who gets the final say on patent jurisprudence.

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