For the first time since the Supreme Court’s Alice Corp. v. CLS Bank Int’l decision this past summer, the United States Court of Appeals for the Federal Circuit has found that a patent claiming a software-related invention was patentable subject matter under 35 U.S.C. § 101 (with Judge Chen writing the majority opinion). DDR Holdings, LLC v. Hotels.com, L.P., 2014 U.S. App. LEXIS 22902 at *1 (Fed. Cir. Dec. 5, 2014) (available at http://www.cafc.uscourts.gov/images/stories/opinions-orders/13-1505.Opinion.12-3-2014.1.PDF). The Federal Circuit affirmed the Eastern District of Texas’s denial of defendant-appellant’s motion for JMOL on invalidity of United States Patent No. 7,818,399 (the ‘399 patent).

The ‘399 patent is directed to systems and methods of generating a new composite web page that combines certain visual elements of a host website, along with content of various third-party merchants. Id. at *2. For example, as the Court explained, the new generated web page may combine the logo, background color, and fonts of the host website with certain product information from a third-party merchant. Id. This invention thus allows a website visitor to “be in two places at the same time,” taking the visitor to the merchant’s website while retaining the host site’s “look and feel.” Id. at *3.

According to the Alice framework, invalidity questions under § 101 proceed under two stages. First, the court determines whether the claims at issue are directed to a patent-ineligible concept, such as an “abstract idea.” Id. at *21. Second, if the claims are directed to an abstract idea, the court then determines whether the claims nevertheless amount to an “inventive concept.” Id.

In this case, the Federal Circuit distinguished the ‘399 patent from examples of patents that have been previously invalidated under § 101, stating that “the ’399 patent’s claims do not … recite a commonplace business method aimed at processing business information, applying a known business process to the particular technological environment of the Internet, or creating or altering contractual relations using generic computer functions and conventional network operations, such as the claims in Alice, Ultramercial, buySAFE, Accenture, and Bancorp.” Id. at *32. Here, the Court found that the claims of the ‘399 patent were “necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks,” and noted that the claims specified more than the “routine and conventional sequence of events ordinarily triggered by the click of a hyperlink.” Id. at *26, *30. At the same time, the Court was careful to note that not all claims purporting to address “Internet-centric” problems are patent-eligible, especially if they only claim the use of the internet to perform an abstract business practice. Id. at *29-30.

The Federal Circuit also employed an interesting analysis on how the patented concept in this case was characterized, listing several different characterizations from the defendant-appellant and the dissent. Id. at *25-26 (“making two web pages look the same,” “syndicated commerce on the computer using the Internet,” “making two e-commerce web pages look alike by using licensed trademarks, logos, color schemes and layouts[,]” …and the “goal ‘that an online merchant’s sales can be increased if two web pages have the same ‘look and feel.’”). Even considering these multiple interpretations on the patented idea, the Court said that “under any of these characterizations of the abstract idea, the ‘399 patent’s claims satisfy May/Alice step two [as having an inventive concept].” Stay tuned for an article coming soon that goes in-depth on the discretion federal courts have in determining whether the claims are directed to an “abstract idea,” and just how important this determination has become.