On March 1, 2018, United States District Judge Paul A. Engelmayer (S.D.N.Y.) granted defendants’—Charter Communications, Inc. and Spectrum Management Holding Company, LLC (together, “Charter”)—motion to dismiss a patent infringement action brought by plaintiff Quantum Stream Inc. (“Quantum”).

Charter provides “digital entertainment services” to customers of Time Warner and Spectrum in New York and elsewhere. On March 7, 2017, Quantum sued Charter alleging infringement of U.S. Patent Nos. 9,047,626, 9,117,228, and 9,349,136. Each of the patents-in-suit disclose “a system for distributing digital content associated with a container based on a relationship between attributes associated with the digital content and attributes associated with a defined region of the container.” “Containers” include digital transmissions, such as television or radio programming and web pages, and have “vacancies,” which are reserved to be filled with secondary advertising content to be determined by reference to “attributes.” According to the patents’ specifications, attributes “correspond to both the vacancies themselves and the content units that could be selected to occupy them.” Together, the patents teach that these concepts result in a “customized presentation of content to the user, with selection of the secondary content and the attributes of the vacancies contained within the primary content the user has selected or upon other attributes, such as attributes relating to the user."

Charter moved to dismiss on May 26, 2017, arguing that the patents-in-suit are invalid under § 101 of the Patent Act because their claims are drawn to patent-ineligible subject matter. Applying the two-step Alice/Mayo framework, the court first found the patents-in-suit to broadly claim the abstract idea of “computerized methods of pairing secondary content with a user’s selection of primary content,” an idea which courts have often held to be abstract. The court rejected Quantum’s argument that the patents presented a “paradigm shift” by providing real-time insertion of advertisements, instead of “preinserted” ads. Instead, the court found that the patents “describe the familiar and unremarkable process of matching secondary advertising content with primary content so as to provide a unified (tailored) presentation to the particular user.”

Moving to the second step of the Mayo/Alice inquiry, the court considered whether the claims, though directed at an abstract idea, nonetheless claim an “inventive concept,” transforming them into a patent-eligible application of that idea. Quantum argued that the claims of the patents-in-suit set forth specific implementations of the abstract idea, resulting in “delivery of video ads to a consumer device that are targeted to a particular consumer and inserted and displayed by the consumer device at a moment in time when the consumer is likely to be interested in the ads.” The court found that this was merely a straightforward implementation of the benefits of an abstract idea, and insufficient to constitute an inventive concept. That the claims contemplated “real-time” insertion of customizable advertising content and that it happen via generic computer functionality were likewise insufficient to constitute inventive concepts.

Finally, the court agreed with Charter that claim construction was unnecessary, because “under any reasonable construction of the[] claims,” the patents-in-suit “claim as their invention the abstract idea of customizing a selection of secondary content based upon the selection of primary content or other qualities.”

Case: Quantum Stream Inc. v. Charter Commc’ns, Inc., 17-CV-1696 (PAE), Dkt. No. 50 (S.D.N.Y. Mar. 1, 2018).