Federal Circuit Ultramercial Do-Over: Software Claims With Meaningful Limitations Are Patent Eligible

The Federal Circuit Finally Gets It Right, For The Most Part

• The relevant inquiry is whether a patent claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea

• A Markman Hearing may be a good thing to have after all; analysis under § 101, while ultimately a legal determination, is rife with underlying factual issues and “if there are factual disputes, claim construction should be required”

• The court’s measurement of a “meaningful limitation” remains abstract in terms of “complex computation”

• A better measure would be the “physical and virtual links” test

On June 21, 2013, the Federal Circuit decided Ultramercial v. Hulu (“Ultramercial II”), once again holding software patent claims to be patent eligible. The software claims before the court recited a method for distributing copyrighted products over the Internet.

This was the second time for this case before the Federal Circuit. In Ultramercial I, decided September 15, 2011, in a unanimous decision written by Chief Judge Rader, the court reversed the lower court in finding the 7,346,545 patent “process” claims to be patent-eligible subject matter within the meaning of 35 U.S.C. 101 because they required “complex programming” to implement and they recited a “specific application to the Internet and a cyber-market environment.” Slip Op. 11 “Complex computer programming” provides that measure of subject matter patentability the Federal Circuit impliedly explained when stating that “[t]his court does not define the level of programming complexity required before a computer-implemented method can be patent-eligible.”  Id. (“Viewing the subject matter as a whole, the invention involves an extensive computer interface.” Id.)

The Supreme Court did not buy it, vacated and remanded that decision to the Federal Circuit for a do-over in view of the Court’s decision in Prometheus.

In its Ultramercial II do-over, the court again reversed the lower court in finding the 7,346,545 patent “process” claims to be patent-eligible subject matter within the meaning of 35 U.S.C. 101, – but this time, the Federal Circuit finally got it right – for the most part.

“The relevant inquiry is whether a patent claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea.” Id. 16. “The inquiry focuses on whether the claims tie the otherwise abstract idea to a  specific way of doing something with a computer, or a specific computer for doing something; if so, they likely will be patent eligible. On the other hand, claims directed to nothing more than the idea of doing that thing on a computer are likely to face larger problems. While no particular type of limitation is necessary, meaningful limitations may include the computer being part of the solution, being integral to the performance of the method, or containing an improvement in computer technology. Id. 23, 24.  As the court correctly notes “with a claim tied to a computer in a specific way, such that the computer plays a meaningful role in the performance of the claimed invention, it is as a matter of fact not likely to preempt virtually all uses of an underlying abstract idea, leaving the invention patent eligible. Id. 24

It is at this point where the court’s analysis breaks down.

Instead of demonstrating how the limitations in the claims are meaningful, the court reverts to the analysis it employed in Ultramercial I finding meaningful limitations because of the “complexity of the programming.”  This analysis was found wanting by the Supreme Court when it remanded Ultramercial I  and in our view it remains a wanting analysis in Ultramercial II.  This is not to say that the Supreme Court will hear Ultramercial II on certiorari because it likely won’t; the finding of the Federal Circuit is the correct one. There are meaningful limitations in the claims that should make them eligible subject matter for a patent.

In our view, the claims are not meaningful because of “complex programming” as the Federal Circuit has opined; indeed the concept of “complex programming” which the court nowhere defines is itself abstract in concept. Nor, in our view, are the claims meaningful because of Figure 1 and the other detailed written description contained in the patent as Chief Judge Rader seems to imply. Not one of the claims can be said to be limited in the way that the court’s analysis suggests. Indeed, the court’s extensive use of detailed description in recent § 101 cases to import limitations nowhere to be found in the claims, solely for the purpose of saving the patent, is a disturbing trend that in time will or should end.

In our view, the reason the Ultramercial II limitations are meaningful are because one or more limitations provide a “virtual link” to something real or tangible. One example, found in the first step, “receiv[es]” from a content provider “media products.”  Media products are digital representations of physical or tangible things, e.g., a video stream that has captured the depictions and/or movements of real people, things, etc. or tangible things. The claims recite the “manipulation” of this representation of physical or tangible things by the recitation “receiv[es]” in this example. The recitation of a virtual link to something real provides a compelling explanation missing from the Federal Circuit’s decision of why the claims recite a meaningful application of an abstract idea which does not preempt the abstract idea itself. For more, read the Physical and Virtual Links Test.

Just as important as the jurisprudence of the court that employs a “meaningful limitation” analytic framework consistent with Supreme Court jurisprudence is the realization by the Federal Circuit that a Markman Hearing may be a good thing to have after all.

While the court continues to hold out its earlier precedent of Research Corp., also authored by Chief Judge Rader, for the proposition that claim construction may not always be necessary for a § 101 analysis and citing Bilski and CLS Bank, neither of which arguably really supports that proposition; the court has finally called a spade a spade – “the analysis under § 101, while ultimately a legal determination, is rife with underlying factual issues” and “if there are factual disputes, claim construction should be required.” Id. 6, 7

Hence, after all is said and done by this court, another important take-away for patent practitioners from the court’s decision in Ultramercial II  is this. Unless the plain reading of your claims include meaningful limitations, it is better to seek to have your claims construed to have meaningful limitations by Markman Hearing then to leave your claims naked of meaningful limitations and ripe for a § 101 challenge.

About The Juhasz Burge PC Firm

The Juhasz Burge PC Firm is a patent and intellectual property (IP) protection, counseling, licensing and litigation firm. Combining deep patent/IP experience, broad capabilities across a wide spectrum of industries and technologies, and extensive expertise in strategic counseling, The Juhasz Burge PC Firm collaborates with clients to help them better see, understand and realize the potential strategic value from their patents and intellectual property.

Paul R. Juhasz has written extensively on matters of software patents, including the Bilski software patent decision and including an amicus brief filed in the CLS Bank case.