By Vijay Kumar

The Federal Circuit recently issued its opinion for the Ultramercial v. Hulu case, further closing the door on patentees for what business methods qualify as being patent eligible under 35 § U.S.C. 101. Using the two-prong test outlined by the Supreme Court’s 2014 decision in Alice Corp. v. CLS Bank International, the Federal Circuit held that Ultramercial’s ‘545 patent did not claim patent-eligible subject matter. (The ‘545 patent covered a method for distributing copyrighted content over the Internet where the consumer receives the content for free in exchange for viewing an advertisement, and the advertiser pays for the content.) While not completely unexpected, the Ultramercial decision is important because it continues to stir up debate as to what software and Internet related methods are still eligible for patent protection. Following the decision, inventors, patent attorneys, and even patent examiners are still unsure of what type of claim limitations are required to overcome the §101 threshold.

Section 101 has enjoyed substantial debate over the last four years. Including the Bilski decision in 2010, the Supreme Court has taken up four subject matter eligibility challenges, “endeavoring to right the ship and return the nation’s patent system to its constitutional moorings.” Alice, 134 S. Ct. at 2357. The Court’s most recent patent-eligible decision, Alice, used a two-prong test to distinguish business method patents that claim abstract ideas from those that claim patent-eligible applications of those concepts. (We covered the Alice decision last summer.) The first prong of the test determines whether the claims at issue are indeed directed to an abstract idea. If they are, the second prong of the test then asks whether the claims do significantly more than simply describe that abstract idea. In other words, the additional features for the second prong’s analysis must be more than “well-understood, routine, conventional activity.” Alice clearly took away some of the patent-eligible grounds that were previously available to applicants. But more importantly, it also led to some confusion among patent practitioners and examiners at the U.S. Patent and Trademark Office (PTO) as to the patent-eligibility of certain business method patents for software and Internet-based patents. Continue reading →