In the wake of the U.S. Supreme Court’s decision in Alice Corp. v. CLS Bank Int’l, which outlines the steps for determining whether a patent claiming an abstract idea complies with the patentable subject matter requirements of 35 USC § 101, the Federal Circuit in Ultramercial, Inc. v. Hulu, et al., affirmed a district court’s granting of a 12(b)(6) motion to dismiss claims for patent infringement.

The claim at issue is directed to a method for viewing copyrighted media (e.g., a video) over the Internet by paid-for advertising.  In this method, the media is received from a content provider and offered for sale over the Internet, then an advertising sponsor offers the media to a consumer in exchange for watching a selected ad, and finally, if the consumer agrees to watch the ad, the sponsor pays for the media. The Federal Circuit held that these patent claims, directed to the abstract idea of “using advertising as an exchange or currency,” did not satisfy the two-part test for patent eligibility under the Alice test. As such, the patent failed to claim patentable subject matter under Section 101.

After determining that the patent claimed an abstract idea or method, which is part one of the Alice test, the Federal Circuit then asked, under part two of the Alice test, whether the claim did “significantly more than simply describe that abstract method.” It did not. Relying in-part on the “machine or transformation” test, the Federal Circuit found that the claim was not patent eligible because it was not tied to “a particular novel machine or apparatus, only a general purpose computer,” nor did the claimed method “transform any article to a different state or thing.” The claim instead describes transactions that are not “representative of physical objects or substances.”  Additionally, the Federal Circuit regarded certain steps of the method, alleged as novel in the field of content distribution over the Internet, as “not enough—standing alone—to confer patent eligibility upon the claims at issue.”

This decision seems to suggest that within the realm of abstract methods applied to the Internet, the parts of a claim relating to the abstract concept, even if novel over the prior art, carry little if any weight in part two of the Alice test, at least when the machine or transformation test is applied. A court’s focus hence may be only whether the technical aspect of the claim amounts to something more than so-called insignificant “data gathering” or “[pre]- solution activity.” With this in mind, patent applicants should consider making greater use of the alternative means-plus-function claim format provided for in 35 USC § 112. At least it may then be more difficult for the alleged infringer to have the case dismissed under a 12(b)(6) motion and prior to a formal claim construction.