The Internet-enabled business method patent just clutched its chest and fell over dead.The cause of its demise is theUltramercial v Hulu (Fed. Cir. 2014) case in the Court of Appeals for the Federal Circuit. The Ultramercial patents address a typical Internet-enabled business method. Under the patents, a consumer agrees to view an advertisement and then is allowed to see or hear copyrighted text, audio or video for free over the Internet. The provider tracks the number of times the advertisement is displayed and receives payment from the advertiser.Bah, you say – how could that invention ever be considered patentable?Well you might ask, but this is the third time that the Federal Circuit Court has considered the same case. In the first two iterations, the Federal Circuit found the Internet-enabled invention to be patentable subject matter. Both prior cases were reversed by the Supreme Court and sent back for further consideration. This time, the Federal Circuit bowed to the inevitable and followed the Supreme Court’s decision in Alice v CLS Bank and determined that the invention is abstract (and hence not patentable on its face) and that none of the technological steps in implementing the invention ‘transformed’ the non-patentable abstract idea into a patentable invention.The patent owner argued that the Internet-based advertising system was patentable subject matter because it was new – no one had ever delivered content in this manner before.
You, astute reader, are squirming in your chair and pointing out that patentable subject matter (controlled by §101 of the patent statute) is a completely different issue from whether an invention is new; that is, whether the invention is ‘novel’ under §102 of the statute or ‘obvious’ under §103. You are correct; however, we may forgive the patent owner on this point. The Supreme Court, in its usual ham-fisted approach to patents, blended patentable subject matter, novelty and obviousness in its recent decisions, finding that inventions were not patentable subject matter apparently because they were not new. The Federal Circuit in Ultramercial considered that novelty was a factor to be considered, but did not convert the abstract idea into a patentable invention.A concurring opinion by Judge Mayer would go further. He believes that the Supreme Court has imposed a ‘technological arts’ test for patentable subject matter. He would exclude ‘entrepreneurial’ inventions directed to business, law and the social sciences.
The bottom line: don’t count on patent protection for that Internet-enabled business idea that you’re eager to launch.