On June 21, 2013, in Ultramercial v. Hulu, No. 2010-1544, the Federal Circuit (Rader, Lourie (concur), O’Malley) reversed the district court’s grant of a Rule 12(b)(6) motion to dismiss on grounds that the computer-implemented invention was not patent eligible under § 101.  This case provides incremental insight into the patent eligibility of computer-implemented inventions following the Federal Circuit’s recent en banc stalemate in CLS Bank.

The patent claims are at issue directed to a method that allows a consumer to receive a copyrighted product (e.g., song, movie, book) for free over the internet in exchange for viewing an advertisement where the advertiser pays for the copyrighted product.  The patent challenger (WildTangent) filed a Rule 12(b)(6) motion to dismiss based on the patent not claiming patent-eligible subject matter.  The district court granted the motion.

The majority opinion, written by Judge Rader, initially noted that it should be “rare” to dismiss a patent case at the pleading stage based on patent eligibility given the many factual issues that such an invalidity defense entails.  The majority then reviewed patent eligibility jurisprudence, concluding that Section 101 defined broad categories of patent subject matter, that the definition of “process” itself was intended to be broad, and that judicially-created exceptions (laws of nature, physical phenomena, and abstract ideas) must be narrowly applied.  The majority further stated that patent ineligibility must be proven under the high clear and convincing evidence standard.

The majority then reviewed several “guideposts” on patent eligibility given by the Supreme Court, which will be more readily reviewed in the attached annotated version of the decision.

This particular case involved the “abstract idea” exception—particularly, the “age-old idea that advertising can serve as currency.”  The majority ruled that the abstract idea exception did not apply in this case, because the claims are directed to “a particular internet and computer-based method for monetizing copyrighted products” consisting of ten steps where “may of these steps required intricate and complex computer programming.”

The majority also supported the patentability of computer programs generally, stating that “a programmed computer contains circuitry unique to that computer” and “could be claimed in terms of a complex array of hardware circuits, or more efficiently, in terms of the programming that facilitates a unique function.”

Judge Lourie concurred “in the result” but expressed concern that the majority opinion many not have “concisely and faithfully” followed the Supreme Court’s Prometheus decision and “track[ed] the plurality opinion of five judges” in the Federal Circuit’s recent en banc CLS Bank decision.