By Henry Thomas
Ads For Content Scheme Held To Be Abstract Idea, Not Patentable Process
In 2001, Ultramercial filed a patent for a method whereby consumers could receive copyrighted products for free after viewing an advertisement and later targeted several technology companies – including Hulu, YouTube, and WildTangent – with infringement claims. Ultramercial v. Hulu has taken a looping route through the justice system, with the infringement claim being dismissed by the district court, reversed by the circuit court, and vacated and remanded by the Supreme Court twice. The third time around, the district court again found the patent to be invalid, and this time the circuit court agreed, citing the Supreme Court decision in Alice v. CLS Bank and using the two-step test outlined in it. Following the first step in Alice, the court held that the patent covered a patent-ineligible concept; even though Ultramercial described an “ordered combination of steps,” they amounted to nothing more than an abstract idea. In addressing the second Alice prong, the court held that the claims do not “do significantly more than simply describe an abstract method” and that, while no longer dispositive, the machine-or-transformation test could still give guidance to the second Alice prong. Applying that test, the court claimed that the Internet and a general-purpose computer were not novel machines, and transferring money, content, or other intangibles was not a transformation.
Federal Circuit Limits Application of Collateral Estoppel in Patent Litigation
E.Digital held patents (‘774 and ‘108) for an audio recording device that used flash memory to store the recording, and sued Futurwei over alleged infringement. In a different case, decided by the District of Colorado, the ‘774 patent was constructed narrowly to include only devices that exclusively used flash memory and not RAM. In e.Digital v. Futurwei (Huawei), the district court held that e.Digital could not re-litigate the construction of either patent, because the doctrine of collateral estoppel forced the court to rely on the earlier construction. While the Fed. Cir. Agreed that e.Digital was estopped from arguing the construction of the ‘774 patent (and glossed over an argument that the inclusion of a RAM-based microprocessor fundamentally altered the construction) the court held that the ‘108 patent could be argued because, though it incorporated the ‘774 patent, it was fundamentally unrelated. Further limiting the doctrine of collateral estoppel, dicta from the decision indicated that the relatedness (or not) of the two patents was not dispositive, and “[e]ach case requires a determination that . . . the issue previously decided is identical.”
Electronics Company Avoids Patent Enforcement By Directing Sales Outside U.S.
Halo Electronics, a maker of electronic components, sued Pulse Electronics over alleged infringement. Though it was found that Halo’s patent was non-obvious and valid, the Federal Circuit affirmed in Halo Electronics, Inc. v. Pulse Electronics, Inc. that no direct infringement had occurred. Although Pulse made business negotiations in America, contracted with American companies like Cisco, and incorporated their circuit components into products destined for sale in the states, all sales took place in foreign countries, outside the reach of U.S. patent law. The court held that under 35 U.S.C. § 271(a), “offers to sell . . . within the United States” were limited to offers made anywhere in the world for a sale in the U.S., and not for offers made in the U.S. for sale elsewhere.