DDR Holdings, LLC, v. Hotels.com, L.P.

In another decision sculpting the contours of what is patent-eligible subject matter under 35 U.S.C. § 101, the U.S. Court of Appeals for the Federal Circuit determined that an invention that combined one webpage with a third-party merchant’s webpage into a hybrid webpage was patent-eligible. This decision, taken together with the Supreme Court’s 2014 ruling in Alice Corp. (IP Update, Vol. 17, No. 7) and the subsequent Federal Circuit outcome in Ultramercial (IP Update, Vol. 17, No. 11), provide insight into where a claimed invention is more than an abstract idea.  DDR Holdings, LLC, v. Hotels.com, L.P., Case No. 2013-1505 (Fed. Cir., Dec. 5, 2014) (Chen, J.) (Mayer, J., dissenting).

DDR is owner of a patent directed to systems and methods for e-commerce outsourcing.  As explained in the patent, when a user visits a host website that contains links to a third-party website (e.g., a webpage having an advertisement) and selects one of the links, the host generates a new webpage that combines the visual elements of the host webpage with content from the selected link.  Thus, the visitor will not be whisked way to the third-party website (from which it may never return to the original webpage). The solution claimed in the patent,i.e., the creation of a hybrid webpage that combined elements of both the original webpage and the advertiser’s webpage, allows visitors to stay on the original webpage while also being able to buy the advertised product.

To determine whether, in a post-Alice Corp. world, the patent was directed to patent-eligible subject matter under § 101, the Federal Circuit was of course constrained to apply the Supreme Court test set forth in Alice Corp., which clarified that implementing an abstract idea on a generic computer does not make that abstract idea patent-eligible. To be patent-eligible under Alice Corp., or the Federal Circuit’s post-Alice Corp. decision in Ultramercial, an abstract idea must include an “inventive concept” that is embodied by something more than a generic computer.

Applying those legal principles, the Federal Circuit upheld DDR’s patent as directed to patent-eligible subject matter, explaining that although the patent was directed to something that could be implemented on a generic computer, the claims did not simply take an abstract business method from the pre-internet world and implement it on a computer. Instead, the claims addressed a problem unique to the internet, which gave the patent an “inventive concept” and made the claims patent-eligible.

Practice Note:  Of course, not every invention related to the internet is patent-eligible. The Federal Circuit distinguished the present case from its decision in Ultramercial, explaining that the patent in that case “offer[ed] media content in exchange for viewing an advertisement.” The difference was that the Ultramercial patent broadly claimed a conventional and routine use of the internet. It was simply an abstract idea with a pro forma recitation of “the internet” grafted on top.  As the Court cautioned, a disclosure of a "generic computer,” coupled with a recitation of “the internet” does not render an abstract idea patent-eligible.