Cement Shoes for Abstract Patents

Web–based businesses, such as Internet retailers, are juicy targets for patent infringement claims. Web sales are one of the few strong points in a shaky economy, and many Internet retailers know more about what they sell than how their web sites work. Moreover, slippery patents on methods are easy to assert against web sites, and hard (and expensive) to fight off. They are, in a word, too abstract to get a grip on.

One baseline of patent law is that you aren’t supposed to be able to patent abstract ideas, just concrete ones. Many hoped that the Supreme Court would make that dividing line clear in its recent Bilski opinion, but the Court balked at announcing one rule to test them all, rejecting any true test of patentability. The most that the Supreme Court would offer, however, while not a litmus test, was the suggestion that the Federal Circuit’s “machine–or–transformation” test—is the invention tied to a particular machine, or does it transform an article into a different state or thing—is a useful gatekeeper.

Taking this cue from the Supreme Court, a federal district judge in Los Angeles found Ultramercial’s patent on the idea of using online advertising as an exchange or currency non–patentable. Ultramercial asserted its patent against Hulu, the online video site, and Wildtangent, arguing that their web sites infringed the patent because they required visitors to view advertisements before being able to view free online content. The judge granted the motion to dismiss the case because, “[n]ot only does the patent fail the machine or transformation test, it claims an abstract idea.” No patentable invention means no patent infringement case. Case dismissed.

No doubt this ruling will be challenged on appeal to the Federal Circuit, which can once again set itself to crafting a workable dividing line between what is and isn’t an invention worth protecting. As long as patentees have their sights set on Internet businesses, the struggle to keep abstract ideas from getting patent protection will be worth following, and sometimes even fighting.