Federal Circuit Holds Internet Monetization Method is Patent-Eligible

The Federal Circuit ruled today that the claimed method of monetizing and distributing copyrighted products over the Internet is a patent eligible process in Ultramercial, LLC v. Hulu, LLC.

At issue in the case was claim 1 of U.S. Patent No. 7,346,545:

A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:

a first step of receiving, from a content provider, media products that are covered by intellectual property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;

a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;

a third step of providing the media product for sale at an Internet website;

a fourth step of restricting general public access to said media product;

a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;

a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;

a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;

an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;

a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;

a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and

an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

The district court had dismissed the infringement action holding that the claim was not directed to patent-eligible subject matter.  The Federal Circuit acknowledged that it has not provided a definitive rule that a claim be construed by the court prior to the patent eligibility determination, but strongly suggested that it may be helpful for courts to do so.

After once again reviewing the case law on patent eligibility from the Federal Circuit and Supreme Court, Chief Judge Rader, writing for the panel, easily found the claim to be a “process” within the meaning of the Patent Act and thus falls within a § 101 eligibility category.  The only issue is whether the claim falls within the abstract idea exception.

In its analysis of whether the claim is directed to an abstract idea, the court gave weight to the patent’s purported improvement of existing technology and that it invokes computers and applications of computer technology.  The claim does not merely recite the abstract idea that advertisement can be used as a form of currency, but relates to a practical application of this idea.  The various steps likely require intricate and complex computer programming, and specific application of the Internet and cyber-market environment.

Although the claim may not meet the other requirements for patentability under the Patent Act (novelty, non-obviousness, enablement, written description, etc.), it is not ineligible for patenting under § 101.

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7 Responses to “Federal Circuit Holds Internet Monetization Method is Patent-Eligible”

  1. Online Global Week in Review 16 September 2011 from IP Think Tank Says:

    [...] holds internet monetization method is patent-eligible: Ultramercial v. Hulu (Inventive Step) (IPBiz) (State of [...]

  2. R Says:

    This court’s staggering ignorance of the basic principles of computer programming is destroying the computer industry.

  3. trademarkapplication2011 Says:

    After rebounding 4.6% in July, China Internet stocks plunged 11.9% on average in August (Table 1), underperforming the monthly returns of NASDAQ Composite (QQQ) (-6.4%), the BNY Mellon China ADR Index (-7.6%), and the Halter USX China Index (-8.5%). Such performance resumed the industry’s latest downtrend, which started from May (-11.6%) and June (-9.3%). During the U.S. market turmoil in August, as investors became more risk-averse, China Internet’s emerging sub-industries became the worst performers: social media, online video, and e-commerce stocks plunged 21.1%, 16.7%, and 15.0% on average, respectively. By contrast, traditional cash-cow sub-industries performed relatively better: Online advertising and online games stocks declined 11.7% and 12.6%, respectively. The most resilient sub-industries for the month were the less famous segments such as enterprise email and content delivery networks.

  4. International Patent (@PatentOffice) Says:

    monetization of an Internet service will be increasingly more difficult as its growth gradually slows down. For investors, this trend means they should shorten their investment horizons and start monitoring the companies’ near-term monetization efforts very closely.

  5. David Postolski Says:

    Great Post! “The claim does not merely recite the abstract idea that advertisement can be used as a form of currency, but relates to a practical application of this idea. The various steps likely require intricate and complex computer programming, and specific application of the Internet and cyber-market environment.” And the Court Trend continues so soon after Cybersource v. Retail. I will be adding your analysis as an addendum to my recent post at How Do I Get My Business Method Patent Issued with No Issues, http://tinyurl.com/67vadhn

  6. Supreme Court Sends Internet Monetization Method Back to Federal Circuit « INVENTIVE STEP Says:

    [...] that the claimed method of monetizing and distributing copyrighted products over the Internet is a patent eligible process.  Given the Supreme Court’s convoluted reasoning in Mayo v. Prometheus, there are many [...]

  7. Federal Circuit Again Holds Internet Monitezation Method is Patent Eligible Subject Matter | INVENTIVE STEP Says:

    […] 2011, the Federal Circuit reversed a district court dismissal at the pleading stage of a patent infringement claim for failure to state a claim.  The district […]

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