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Court finally kills infamous patent for watching ads online

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A company called Ultramercial has for years claimed a monopoly over an “invention” for showing pre-roll ads on the internet, and sued the likes of Hulu and YouTube for royalty payments. Shockingly, the company — whose patent covers the basic idea of advertising — got a favorable reception at the country’s top patent court, the Federal Circuit, which repeatedly defied the Supreme Court and found the patent to be valid.

Now, the madness is finally over. The patent appeals court has at last heeded the Supreme Court’s instructions, and come to an obvious conclusion: advertising is an abstract idea that cannot be patented, and adding phrases like “on the internet” to a patent claim doesn’t change that fact:

The majority of those steps comprise the abstract concept of offering media content in exchange for viewing an advertisement. Adding 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 does not transform an otherwise abstract idea into patent-eligible subject matter.[…]

The claims’ invocation of the Internet also adds no inventive concept. As we have held, the use of the Internet is not sufficient to save otherwise abstract claims from ineligibility under § 101. [emphasis mine]

This outbreak of commonsense appears to be the latest fall-out from the Supreme Court’s seminal Alice ruling this summer, a 9-0 decision that seriously curtailed the times when a software-Ultramercial patentrelated “invention” can be eligible for a patent. The ruling (you can see a graphic from Ultramercial’s patent at right — note the floppy discs!) has not only led courts to declare more patents ineligible, but has also seen many software patents — a favorite weapon of patent trolls — get cut down at the Patent Office.

The Ultramercial ruling comes after the Supreme Court told the Federal Circuit to reconsider the case for a second time in June. The Federal Circuit also appears to be showing more deference to the top court since the departure of former Chief Justice Randall Rader, who quit following an ethics scandal earlier this year.

More broadly, despite the recent invalidation of certain software patents, the U.S. patent system as a whole remains a mess, following the failure of a popular reform bill last spring. As a result, patent trolls like Intellectual Ventures remain active and are even poised to bring their business model, which amounts to legal extortion, to new fields like wearable computing.

Here’s a copy of the Ultamercial ruling with some of the relevant parts underlined:

Fed Circuit Invalidates Ultramercial Patent

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2 Responses to “Court finally kills infamous patent for watching ads online”

  1. Mr. Roberts – You are clearly not a patent attorney. Your shockingly ignorant statement that Ultramercial claimed a monopoly on an “‘invention’ for showing pre-roll ads on the internet” says it all. Perhaps you should take time to understand what a patent is, what patent claims do, and, with respect to Ultramercial, what the claims at issue actually cover. Ignorant statements about the patent “madness,” which form the basis for equally ignorant drivel such as this article, are captivating to many who don’t understand much about patent law. However, as a journalist, you should make an effort to have a better understanding of the topic on which you are writing.

    Ultramercial’s invention is much more narrow than “showing pre-roll ads on the internet.” Had you read the claims and understood them, you’d certainly be aware of this fact. As an example, claim 1 of the ‘545 patent recites numerous elements, with eleven explicit steps, that make Ultramercial’s claimed invention significantly more narrow than “showing pre-roll ads.”

    Invalidating Ultramercial’s ‘545 patent is extremely concerning on numerous fronts. First, patent rights for small businesses and inventors are eroding, and only multi-billion dollar companies with deep lobbying pockets are able to avoid being labeled as “trolls” and enforcing their patent rights. Second, the value of patents has fallen dramatically in view of the Supreme Court’s inability to provide any clear guidance on patentable subject matter. And third, we will soon begin to see the disastrous economic impact of the recent efforts to “kill software patents” and “stop patent trolls.” These efforts have been led by large companies who would prefer to compete in a market where the “little guy” doesn’t stand a chance. Our patent system should not be reserved for billion dollar companies that are able to lobby for reform that characterizes any individual or small business that wishes to enforce its patent as a “troll.” Such a system will stifle innovation and cause significant job loss. This is the “madness” you should be writing about.

    Passing the bar certainly doesn’t qualify one to comment on, let alone understand, patents. Your article confirms this.

  2. You should have a look at Qualcomm and the consequences of the China investigation.
    Qualcomm gets payed a lot and in a rather weird way. They get a % of the selling price of the entire device (and a rather high %) when 3G/4G is such a small part of it while the modem and companion chips are rather cheap too. If every part in a device would double it’s cost on someone getting payed license where would we be? The way they operate also stops other from trying to get payed and helps them sell more chips.
    The QTL segment is licenses and it’s more or less 60% of their income. They report number of devices and device ASP so you can do the math and figure out how much they get payed per device.
    Lets say they get payed 3 to 6% of the price of the device and that’s rather insane. You got quad A7 with LTE SoCs selling for under 8$ in China and at the same time some devices using it are at 400$ or more before taxes in Europe or the US so the license costs more than the hardware in many cases. Maybe this way of paying made some sense with dumbphones but makes no sense with smartphones at all, their technology is a small part of the device.
    And apparently out regulators can’t be bothered to do anything about it but China can and will soon. Might create a bit of a mess and start a patent war but maybe we need that to force a sustainable solution.

    Do remember how little ARM gets payed and that most other technologies in a smartphone don’t get such treatment. Qulacomm gets payed an outrageous amount that’s not justifiable in any way.
    I like Qualcomm,they usually do a great job but here they are in the wrong and we should at least notice the situation..