ULTRAMERCIAL, INC., and Ultramercial, LLC, v. HULU, LLC, and Wildtangent, Inc.

A patent can embrace an abstract idea so long as it meaningfully limits the idea by restricting the patent to a concrete application of the idea.

Opinion (Rader): Ultramercial, Inc. (“Ultramercial”) sued Hulu, LLC (“Hulu”), Youtube, LLC (“YouTube”), and WildTangent, Inc. (“WildTangent”), alleging infringement of the #545 patent. The #545 patent claimed a detailed method to distribute copyrighted products to consumers for free over the Internet with the advertiser paying for the copyrighted material in exchange for the consumer viewing the advertiser’s ads. Hulu and YouTube were dismissed from the case, and WildTangent moved to dismiss Ultramercial’s suit for failure to state a claim. WildTangent argued the patent was an abstract concept and the district court granted the motion, holding that the #545 patent failed to claim patentable subject matter. Under 35 U.S.C.A. §101, patentable subject matter includes “[a]ny new and useful process, machine, manufacture, or composition of matter.” On appeal, the Court reviewed the case de novo and broadly interpreted §101. Supported by the legislative intent of patent law being to encourage innovation, the Court interpreted §101 only as a minimal threshold for patent eligibility. A patent can embrace an abstract idea so long as it meaningfully limits the idea by restricting the patent to a concrete application of the idea. The Court also reasoned that because a patent issues only after the Patent Office assesses and endorses it under §101, that every issued patent is presumed proper absent clear and convincing evidence otherwise. The Court found the district court erred in requiring Ultramercial to carry the burden of proving its #545 patent was eligible, and found that #545 was a sufficiently detailed enough application of an idea that #545 was not so abstract as to be patently unpatentable. Dismissal was REVERSED and REMANDED.