Federal Circuit No. 2013-1505

DDR Holdings was the first Federal Circuit determination that  subject matter was patent eligible under 35 U.S.C. § 101 since the Supreme Court’s decision in Alice v. CLS Bank.  In DDR Holdings, Hotels.com appealed from a final judgement of the U.S. District Court for the Eastern District of Texas finding that Hotels.com infringed claims of U.S. Patent Nos. 6,993,572 and 7,818,399 (the '399 patent), and that these claims were not invalid.

The '399 patent addresses the problem of a prior art host website including an advertising link to a third-party merchant website that, when clicked, takes a visitor away from the host website to the third-party merchant website.  In representative claim 19 of the '399 patent, when an advertising link of a host website  is clicked, instead of taking a visitor to a third-party merchant website, a system generates and directs the visitor to a composite web page displaying product information from a third-party merchant but retaining the host website's "look and feel."

Using the two-part analysis from Alice, the Federal Circuit had to decide whether the representative claim is directed to a patent ineligible abstract idea, and if so, whether the elements of the claim transform the nature of the claim into a patent-eligible application of the abstract idea.  The Federal Circuit held that the representative claim is not directed to an abstract idea and is patent-eligible for at least the following three reasons:

  1. "[T]he asserted claims do not recite a mathematical algorithm.  Nor do they recite a fundamental economic or longstanding commercial practice."
  2. "Although the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet."
  3. "[T]hese claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet.  Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.  … For example, asserted claim 19 recites a system that … 1) stores 'visually perceptible elements' corresponding to numerous host websites in a database, with each of the host websites displaying at least one link associated with a product or service of a third-party merchant, 2) on activation of this link by a website visitor, automatically identifies the host, and 3) instructs an Internet web server of an 'outsource provider' to construct and serve to the visitor a new, hybrid web page that merges content associated with the products of the third-party merchant with the stored 'visually perceptible elements' from the identified host website."

This rationale of DDR Holdings may provide a blueprint for avoiding some claim rejections under § 101.  For example, while drafting and prosecuting patent applications, the following three tips should be kept in mind: 

  1. Avoid claiming only mathematical, mental, and business concepts, and instead, claim computer-related elements performing a real-world action (e.g., controlling, by a processor, x based on the determined data).
  2. Describe a technical (e.g., computer-related, non-business-related) problem.
  3. Describe how the claimed invention is a technical solution to the technical problem.