Opinion ID: 2757944
Heading Depth: 2
Heading Rank: 2

Heading: Patent-eligible subject matter

Text: NLG also contends that the district court erred by denying its motion for JMOL that the asserted claims of 3 Neither Digital River nor NLG ever argued that the ’399 patent is invalid as anticipated by or obvious over prior art. We decline to speculate whether Digital River’s prior art SSS, either alone or in combination with other prior art, invalidates the ’399 patent under 35 U.S.C. §§ 102 or 103. 16 DDR HOLDINGS, LLC v. HOTELS.COM, L.P. the ’572 and ’399 patents are invalid under 35 U.S.C. § 101. Since the ’572 patent is invalid as anticipated under 35 U.S.C. § 102(a), we focus on NLG’s § 101 challenge to claims 1, 3, and 19 of the ’399 patent. We conclude, as did the district court, that the asserted claims of the ’399 patent clear the § 101 hurdle. We review the district court’s determination of patent eligibility under 35 U.S.C. § 101 de novo. Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012). In Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1294 (2012), the Supreme Court set forth an analytical framework under § 101 to distinguish patents that claim patent-ineligible laws of nature, natural phenomena, and abstract ideas—or add too little to such underlying ineligible subject matter—from those that claim patent-eligible applications of those concepts. First, given the nature of the invention in this case, we determine whether the claims at issue are directed to a patentineligible abstract idea. Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014). If so, we then consider the elements of each claim—both individually and as an ordered combination—to determine whether the additional elements transform the nature of the claim into a patent-eligible application of that abstract idea. Id. This second step is the search for an “inventive concept,” or some element or combination of elements sufficient to ensure that the claim in practice amounts to “significantly more” than a patent on an ineligible concept. Id. Distinguishing between claims that recite a patenteligible invention and claims that add too little to a patent-ineligible abstract concept can be difficult, as the line separating the two is not always clear. At one time, a computer-implemented invention was considered patenteligible so long as it produced a “useful, concrete and tangible result.” State St. Bank & Trust Co. v. Signature Fin. Grp., Inc., 149 F.3d 1368, 1373 (Fed. Cir. 1998) (finding a machine that transformed data by a series of DDR HOLDINGS, LLC v. HOTELS.COM, L.P. 17 mathematical calculations to a final share price to be patent-eligible); see also In re Alappat, 33 F.3d 1526, 1544 (Fed. Cir. 1994) (en banc). This understanding rested, in large part, on the view that such inventions crossed the eligibility threshold by virtue of being in the technological realm, the historical arena for patented inventions. See, e.g., In re Bilski, 545 F.3d 943, 952, 954–56 (Fed. Cir. 2008) (en banc) (concluding that a patent-eligible process must either be “tied to a particular machine or apparatus” or transformed into a different state or thing, i.e., the “machine-or-transformation test”). While the Supreme Court in Bilski v. Kappos noted that the machine-or-transformation test is a “useful and important clue” for determining patent eligibility, 130 S. Ct. 3218, 3227 (2010), it is clear today that not all machine implementations are created equal. For example, in Mayo, the Supreme Court emphasized that satisfying the machine-or-transformation test, by itself, is not sufficient to render a claim patent-eligible, as not all transformations or machine implementations infuse an otherwise ineligible claim with an “inventive concept.” See 132 S. Ct. at 1301 (“[S]imply implementing a mathematical principle on a physical machine, namely a computer, [i]s not a patentable application of that principle.”) (describing Gottschalk v. Benson, 409 U.S. 63, 64 (1972)). And after Alice, there can remain no doubt: recitation of generic computer limitations does not make an otherwise ineligible claim patent-eligible. 134 S. Ct. at 2358. The bare fact that a computer exists in the physical rather than purely conceptual realm “is beside the point.” Id. Although the Supreme Court did not “delimit the precise contours of the ‘abstract ideas’ category” in resolving Alice, 134 S. Ct. at 2356–57, over the course of several cases the Court has provided some important principles. We know that mathematical algorithms, including those executed on a generic computer, are abstract ideas. See Benson, 409 U.S. at 64. We know that some fundamental 18 DDR HOLDINGS, LLC v. HOTELS.COM, L.P. economic and conventional business practices are also abstract ideas. See Bilski, 130 S. Ct. at 3231 (finding the “fundamental economic practice” of hedging to be patent ineligible); Alice, 134 S. Ct. at 2356 (same for intermediated settlement). In some instances, patent-ineligible abstract ideas are plainly identifiable and divisible from the generic computer limitations recited by the remainder of the claim. For example, the Supreme Court in Alice determined that the claims at issue “simply instruct[ed] the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” 134 S. Ct. at 2359. In Ultramercial, Inc. v. Hulu, LLC, ___ F.3d ___, 2014 WL 5904902, at  (Fed. Cir. Nov. 14, 2014), the claims merely recited the abstract idea of using advertising as a currency as applied to the particular technological environment of the Internet. In buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014), the claims recited no more than using a computer to send and receive information over a network in order to implement the abstract idea of creating a “transaction performance guaranty.” In Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1344–45 (Fed. Cir. 2013), the claims merely recited “generalized software components arranged to implement an abstract concept [of generating insurance-policy-related tasks based on rules to be completed upon the occurrence of an event] on a computer.” And in Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1278 (Fed. Cir. 2012), the claims recited no more than the use of a computer “employed only for its most basic function, the performance of repetitive calculations,” to implement the abstract idea of managing a stable-value protected life insurance policy. Under Supreme Court precedent, the above claims were recited too broadly and generically to be considered sufficiently specific and meaningful applications of their underlying abstract ideas. Although many of the claims recited various comDDR HOLDINGS, LLC v. HOTELS.COM, L.P. 19 puter hardware elements, these claims in substance were directed to nothing more than the performance of an abstract business practice on the Internet or using a conventional computer. Such claims are not patenteligible. Against this background, we turn to the ’399 patent’s asserted claims. We begin our § 101 analysis at Mayo/Alice step one: determining whether the computerimplemented claims at issue here are “directed to” a patent-ineligible abstract idea. 4 Here, we note that the ’399 patent’s asserted claims do not recite a mathematical algorithm. Nor do they recite a fundamental economic or longstanding commercial practice. Although the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet. Indeed, identifying the precise nature of the abstract idea is not as straightforward as in Alice or some of our other recent abstract idea cases. NLG’s own varying formulations of the underlying abstract idea illustrate this difficulty. NLG characterizes the allegedly abstract idea in numerous ways, including “making two web pages look the same,” “syndicated commerce on the computer using the Internet,” and “making two e-commerce web pages look alike by using licensed trademarks, logos, color schemes and layouts.” See, e.g., Appellant’s Br. 18–20. The dissent characterizes DDR’s patents as describing the entrepreneurial goal “that an online merchant’s sales can be increased if two web pages have the same ‘look and feel.’” Dissenting Op. 2. But as discussed below, under 4 The parties do not dispute that the asserted sys- tem and method claims of the ’399 patent, for the purposes of § 101, are no different in substance. See Appellee Br. 63; Appellant Br. 24. Thus, the form of the asserted claims (system or method) does not affect our analysis of their patent eligibility. See Alice, 134 S. Ct. at 2360. 20 DDR HOLDINGS, LLC v. HOTELS.COM, L.P. any of these characterizations of the abstract idea, the ’399 patent’s claims satisfy Mayo/Alice step two. As an initial matter, it is true that the claims here are similar to the claims in the cases discussed above in the sense that the claims involve both a computer and the Internet. But these 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. In particular, the ’399 patent’s claims address the problem of retaining website visitors that, if adhering to the routine, conventional functioning of Internet hyperlink protocol, would be instantly transported away from a host’s website after “clicking” on an advertisement and activating a hyperlink. For example, asserted claim 19 recites a system that, among other things, 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. See supra 5. In more plain language, upon the click of an adver- tisement for a third-party product displayed on a host’s website, the visitor is no longer transported to the third party’s website. Instead, the patent claims call for an “outsource provider” having a web server which directs the visitor to an automatically-generated hybrid web page DDR HOLDINGS, LLC v. HOTELS.COM, L.P. 21 that combines visual “look and feel” elements from the host website and product information from the third-party merchant’s website related to the clicked advertisement. 5 In this way, rather than instantly losing visitors to the third-party’s website, the host website can instead send its visitors to a web page on the outsource provider’s server that 1) incorporates “look and feel” elements from the host website, and 2) provides visitors with the opportunity to purchase products from the third-party merchant without actually entering that merchant’s website. The dissent suggests that the “store within a store” concept, such as a warehouse store that contains a kiosk for selling a third-party partner’s cruise vacation packages, is the pre-Internet analog of the ’399 patent’s asserted claims. Dissenting Op. 4. While that concept may have been well-known by the relevant timeframe, that practice did not have to account for the ephemeral nature of an Internet “location” or the near-instantaneous transport between these locations made possible by standard Internet communication protocols, which introduces a problem that does not arise in the “brick and mortar” context. In particular, once a customer enters a physical warehouse store, that customer may encounter a kiosk selling third- 5 On a fundamental level, the creation of new com- positions and products based on combining elements from different sources has long been a basis for patentable inventions. See, e.g., Parks v. Booth, 102 U.S. 96, 102 (1880) (“Modern inventions very often consist merely of a new combination of old elements or devices, where nothing is or can be claimed except the new combination.”); KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418–19 (2007) (“[I]nventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combinations of what, in some sense, is already known.”). 22 DDR HOLDINGS, LLC v. HOTELS.COM, L.P. party cruise vacation packages. There is, however, no possibility that by walking up to this kiosk, the customer will be suddenly and completely transported outside the warehouse store and relocated to a separate physical venue associated with the third-party—the analog of what ordinarily occurs in “cyberspace” after the simple click of a hyperlink—where that customer could purchase a cruise package without any indication that they were previously browsing the aisles of the warehouse store, and without any need to “return” to the aisles of the store after completing the purchase. It is this challenge of retaining control over the attention of the customer in the context of the Internet that the ’399 patent’s claims address. We caution, however, that not all claims purporting to address Internet-centric challenges are eligible for patent. For example, in our recently-decided Ultramercial opinion, the patentee argued that its claims were “directed to a specific method of advertising and content distribution that was previously unknown and never employed on the Internet before.” 2014 WL 5904902, at . But this alone could not render its claims patent-eligible. In particular, we found the claims to merely recite the abstract idea of “offering media content in exchange for viewing an advertisement,” along with “routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet.” Id. at . The ’399 patent’s claims are different enough in substance from those in Ultramercial because they do not broadly and generically claim “use of the Internet” to perform an abstract business practice (with insignificant added activity). Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink. Instead of the computer network operating in DDR HOLDINGS, LLC v. HOTELS.COM, L.P. 23 its normal, expected manner by sending the website visitor to the third-party website that appears to be connected with the clicked advertisement, the claimed system generates and directs the visitor to the abovedescribed hybrid web page that presents product information from the third-party and visual “look and feel” elements from the host website. When the limitations of the ’399 patent’s asserted claims are taken together as an ordered combination, the claims recite an invention that is not merely the routine or conventional use of the Internet. It is also clear that the claims at issue do not attempt to preempt every application of the idea of increasing sales by making two web pages look the same, or of any other variant suggested by NLG. Rather, they recite a specific way to automate the creation of a composite web page by an “outsource provider” that incorporates elements from multiple sources in order to solve a problem faced by websites on the Internet. As a result, the ’399 patent’s claims include “additional features” that ensure the claims are “more than a drafting effort designed to monopolize the [abstract idea].” Alice, 134 S. Ct. at 2357. In short, the claimed solution amounts to an inventive concept for resolving this particular Internet-centric problem, rendering the claims patent-eligible. In sum, the ’399 patent’s claims are unlike the claims in Alice, Ultramercial, buySAFE, Accenture, and Bancorp that were found to be “directed to” little more than an abstract concept. To be sure, the ’399 patent’s claims do not recite an invention as technologically complex as an improved, particularized method of digital data compression. But nor do they 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 24 DDR HOLDINGS, LLC v. HOTELS.COM, L.P. in Alice, Ultramercial, buySAFE, Accenture, and Bancorp. The claimed system, though used by businesses, is patenteligible under § 101. 6 The district court did not err in denying NLG’s motion for JMOL of invalidity under 35 U.S.C. § 101 as to these claims.