Federal Circuit Review | December 2014
Patent Claims on Media Distribution Over Internet Not Patentable
In ULTRAMERCIAL, INC. v. HULU, LLC, Appeal No. 2010-1544, the Federal Circuit affirmed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) because a patent did not contain patent-eligible subject matter under 35 U.S.C. § 101.
The case has a long history of appeals to the Supreme Court, where it was vacated and remanded to be reconsidered under Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012) and then more recently under Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014). The patent claims a method of distributing copyrighted media products over the Internet, in which the consumer receives the copyrighted material at no cost in return for viewing an advertisement. On remand from the Supreme Court, the Federal Circuit held that the claims recited patent-ineligible subject matter on the abstract idea of showing an advertisement before delivering free content. The claims added nothing to transform the claims to patent-eligible subject matter and only implemented the abstract idea with routine, conventional activity.
Judge Mayer agreed with the majority’s finding, but wrote a concurring opinion to emphasize the following points: (1) questions under § 101 should be addressed at the beginning of litigation; (2) there is no presumption of eligibility under § 101; and (3) Alice sets forth a technological-arts test for patent eligibility. Judge Mayer applied the technological-arts test to the present claims and found the claims were directed to an entrepreneurial objective rather than a technical objective. Implementing an abstract idea on a generic computer does not create patent-eligible subject matter.
All four amicus briefs supported the defendant and argued that the claims recited patent-ineligible subject matter.
Claim Term “Module” Not Means-Plus-Function Limitation
In WILLIAMSON v. CITRIX ONLINE, LLC, Appeal No. 2013-1130, the Federal Circuit vacated and remanded a stipulated judgment of non-infringement and invalidity due to an incorrect claim construction.
The patent concerned a virtual classroom environment. The district court construed the term “graphical display” to require a “pictorial map.” The Federal Circuit disagreed, reasoning that the actual claim language did not require a pictorial map and the embodiments in the specification only “preferably” provided a pictorial map. Therefore, the construction requiring a pictorial map improperly imported a limitation from the specification into the claim.
The Federal Circuit also disagreed with the district court’s construction of the term “distributed learning control module” as a means-plus-function limitation for three reasons. First, dictionary definitions showed that the term “module” connotes either hardware or software structure to those skilled in the art. Second, the district court should have analyzed the phrase as a whole instead of inappropriately focusing on the single claim term “module,” without its modifiers. Third, the surrounding context of the claim term supported the conclusion that the term connotes structure.
Judge Reyna dissented and disagreed with of the majority’s means-plus-function analysis because the claim used the traditional means-plus-function format, substituting the term “module” for “means.” The dictionary definitions of the term “module” only recited function, and the context of the claim term provided no structural significance.
Court Required to Enter Stay Pending CBM
In VERSATA SOFTWARE, INC. v. CALLIDUS SOFTWARE, INC., Appeal No. 2014-1468, the Federal Circuit reversed the denial of a stay pending CBM (covered business method) review of the patents-in-suit.
Shortly after initiation of suit, Callidus filed CBM petitions with the PTO challenging every asserted independent claim and some of the asserted dependent claims. The PTO instituted CBM review for each asserted patent. Callidus moved to stay the case in the district court pending the PTO’s resolution of each CBM review. The district court granted the motion to stay as to one asserted patent, but denied the motion regarding two patents whose asserted claims were not entirely challenged in the CBM review. Callidus appealed.
The Federal Circuit reversed the partial denial of the stay. Analyzing the factors provided in section 18(b) of AIA, the Federal Circuit determined that each favored the stay. The Federal Circuit rejected a categorical rule that disfavors a stay if any asserted claims are not also challenged in the CBM proceeding, noting that a CBM review can simplify the issues even when only some of the asserted claims are challenged. Further, that the case was in an early stage favored the stay, as did a finding that neither party would gain an unfair advantage from the stay. Finally, the Federal Circuit concluded that resolution of the CBM petitions would reduce the prospective burden of litigation on the parties and on the court.
