In Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014), the Federal Circuit applied the Supreme Court's reasoning in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347, 2355 (2014), to strike down software method claims under 35 U.S.C. § 101. The patent at issue claimed "a method for distributing copyrighted media products over the Internet where the consumer receives a copyrighted media product at no cost in exchange for viewing an advertisement," where "the advertiser pays for the copyrighted content." Ultramercial, 772 F.3d at 712. The Federal Circuit struck down the patent as being directed to the patent-ineligible abstract idea of using advertisements as currency. Id. at 714, 717.
The framework developed in Alice for evaluating a patent claim under 35 U.S.C. § 101 is a two-step test. Id. at 714 (citing Alice, 134 S. Ct. at 2355). First, the court determines whether the claims at issue are directed to one of the patent-ineligible concepts: laws of nature, natural phenomena, and abstract ideas. Id. If the patent does not claim one of the patent-ineligible concepts, the patent meets the requirements of § 101. If the claim is directed to a patent-ineligible concept, then the analysis requires determining whether the claims include "an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.'" Id. (alteration in original) (quoting Alice, 134 S. Ct. at 2355).
In applying the second step of the analysis, the Ultramercial court looked at each of the eleven limitations of the representative claim on its own. Id. at 715-16. After rejecting the steps of "receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad" as describing "an abstract idea, devoid of a concrete or tangible application," the court turned to the remaining claim limitations. Id. at 715.
The remaining claim limitations—updating an activity log, requiring a request from a consumer to view the ad, restricting public access, and using the Internet—are only conventional, routine steps that fail to transform the abstract idea of using an advertisement as an exchange or currency into patentable subject matter. Id. at 715-16. Specifically, the court found that consulting and updating an activity log constitute "insignificant 'data gathering steps.'" Id. at 716 (quoting CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011)). Restricting public access is "insignificant '[pre]-solution' activity," and the "invocation of the Internet" does not "save [the] otherwise abstract claim[]." Id. (alteration in original).
For patent drafters, Ultramercial is a good reminder that no matter how many claim limitations are present—the claim at issue had eleven steps—a claim can still fail to meet the requirements of § 101. This is true even if some of those limitations "were not previously employed" in the art. Id. If a drafter finds him- or herself adding limitations in the hopes of avoiding a § 101 rejection, the claims may deserve a second look to confirm that the claims are more than a "drafting effort designed to monopolize the [abstract idea] itself." Id. (alteration in original) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1297 (2012)).
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