After a series of cases holding software patents invalid in the wake of Alice v. CLS, the Federal Circuit, in DDR Holdings v. Hotels.com, encountered a set of software patents that it held to meet subject matter eligibility requirements. The patents in question were directed toward both systems and methods of generating composite websites by combining certain elements of a host website with content from a third party merchant. Essentially, when an individual selected a link, a processor would generate a composite webpage containing the look and feel of the host website and the product information of the third party. The system claim contained elements such as a data store, containing the information as to the look and feel of the host page, and a computer processor, used to serve the composite webpage to the consumer when the website link was selected by the user. A second patent under consideration referred to a system including a scalable computer architecture used for the same purpose. In trial, a jury found direct infringement, but the defendants renewed motions for judgment as a matter of law claiming that the patents were directed to patent-ineligible subject matter among other reasons. The district court denied the motion and entered final judgment, but the defendants appealed to the Federal Circuit. The Federal Circuit found the claims of the first patent invalid as they were anticipated by prior art. It then proceeded to inquire as to whether the claim for the scalable computer architecture system was directed toward patent eligible subject matter. Its decision to first analyze the claims under §102(a) instead of §101 seems to indicate that, at least for the panel deciding this case, §101 is to be viewed as a last resort rather than a gatekeeper for the patent system.

In analyzing the claims the Federal Circuit once again applied the framework established by the Supreme Court in Alice Corp. v. CLS Bank Int’l. The Federal Circuit began by outlining a number of cases that revolved around the idea that mere implementation of an abstract idea by a generic computer is insufficient to induce patent eligibility. Such claims are too broad and generic to be specific and meaningful applications of the underlying abstract idea. The Federal Circuit then proceeded to determine whether the claims were directed to a patent-ineligible abstract idea. The claims in this case did not recite a mathematical formula, a fundamental economic concept, or a longstanding commercial practice. They did address a business challenge, but the challenge was one particular to the technological environment of the Internet. The court had difficulty determining what exactly the abstract idea involved in this case was. The idea was characterized in several ways including “making two web pages look the same,” “syndicated commerce on the computer using the Internet,” “making two e-commerce web pages look alike by using licensed trademarks, logos, color schemes and layouts,” and “the entrepreneurial goal that an online merchant’s sales can be increased if two web pages have the same look and feel.” The variety of the ways in which the idea underlying the patent in this case was characterized outlines the difficulties courts may encounter in applying the first step of the test. The court saw no need to resolve this issue, however, because, regardless of what the underlying abstract idea was, it was clear that the invention involved sufficient inventive concept, thereby passing the second step and inducing patent-eligibility.

The claimed invention in this case differed from those of previous cases because, while it did involve both a computer and the Internet, the solution claimed was necessarily rooted in computer technology. The problem solved here was one “specifically arising in the realm of computer networks.” The concept of the creation of a webpage with the look and feel of the host’s webpage but the information of the third party in order to avoid losing web traffic is one that is unique to the environment of the Internet. The combining of existing elements from different sources has long been a basis for patentable inventions. The creation of a new webpage with the information of a third party but the look and feel of the host’s site is not a “routine or conventional use of the Internet.” Therefore, the Federal Circuit found the claims patent eligible under §101.

Judge Mayer dissented, arguing that the claims were clearly directed to a patent-ineligible abstract idea and lacked sufficient inventive concept to induce patent eligibility. He styled the concept as the idea that sales of an online merchant can be increased if two web pages have the same look and feel. Because this idea was merely applied using a generic computer, the invention was not patent-eligible. Mayer opined that Alice articulated a technological arts test requiring that a method improve the functioning of the computer itself or effect an improvement in another technology or technical field. He found that the invention in this case failed to satisfy either of those tests because the system simply took conventional information and used conventional technology to organize the information into a new form. The invention was merely taking well understood processes and applying them in a way that was already known. From a policy perspective, the scope of the patents in this case was far too broad, Mayer argued, and would cover “vast swaths of Internet commerce.” The disclosure received, according to Judge Mayer, was disproportionate to the broad and sweeping reach of the claims.

The Federal Circuit’s decisions in this and other post-Alice cases highlights the lack of clarity provided in Alice v. CLS. The majority found it difficult to determine what exactly the abstract idea involved in this series of patents was, as the Supreme Court chose not to delimit the exact contours of the abstract idea exception in Alice. In addition, the question still remains to be answered as to what exactly constitutes sufficient inventive concept to induce patentability in an invention involving an abstract idea. The answer to this question was a source of disagreement between the majority and the dissent with the majority finding a novel combination of existing elements providing a solution particular to the technological environment at hand to be sufficient and the dissent finding such a combination insufficient. The court’s decision, however, does provide some hope to software patent holders as it confirms that software patents are not dead.

Peter McLellan

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