Guest Post by Mark Lemley. Professor Lemley is the William H. Neukom Professor at Stanford Law School and a founding partner of the successful law firm of Durie Tangri where he litigates intellectual property cases.
In Ultramercial v. Hulu, decided on Friday, the Federal Circuit held that a series of steps for serving ads to customers over the Internet, phrased at a high level of abstraction, was patent-eligible subject matter under section 101. Chief Judge Rader wrote the opinion, which Judge O'Malley joined. Perhaps more surprising, Judge Lourie, who wrote the plurality opinion in CLS Bank, found the requirements of that test satisfied by these claims despite the lack of evident tie to any particular hardware device or limitation to any particular software algorithm.
Part of the explanation for the result in Ultramercial stems from the procedural posture of the case. The district court had granted a motion to dismiss, reasoning that patentable subject matter is a pure question of law and so not dependent on factual conclusions. The district court's position was defensible, given that every prior Federal Circuit opinion has called patentable subject matter a pure question of law. But the majority goes out of its way to suggest that factual questions are likely to predominate in a section 101 inquiry, though the court is a bit vague on just what those factual disputes might be. The court also suggests that claim construction will normally be required before resolving a 101 issue, but that here, the court was opting to construe the patent in the way most favorable to the patentee (that is, in the narrowest way possible) to evaluate 101 on a motion to dismiss. Curiously, however, the court never explicitly tells us what that narrow construction is.
Then the majority does something very odd: it proceeds to discuss in great detail the technology disclosed in the specification but not mentioned in the claims. The court clearly viewed Ultramercial's claims as patent-eligible because the specification contained detailed technical implementations and a complex flow-chart, even though none of those were included as limitations in the claim.
What is going on here? One possibility is that three of the most experienced patent judges in the country have forgotten the single most fundamental rule of patent law — that as Judge Rich put it, the name of the game is the claim. But I doubt it. If a lawyer arguing before the court tried to read in limitations from the specification in claim construction or for infringement or validity, these judges would (quite properly) tear that lawyer apart for violating this fundamental rule and ignoring the language of the claim. It seems unlikely that each of them simply forgot that it is the claims that define the invention.
A second possibility is that the court thinks that the rule that the claims define the invention simply doesn't apply to patentable subject matter: that as long as you have a specific idea somewhere in your specification we don't care what you claim. But that seems equally unlikely. To begin, it directly contradicts controlling Supreme Court precedent such as O'Reilly v. Morse, where the court held narrow claims patent-eligible but a broader claim ineligible. Beyond that, it simply makes no sense. The patentable subject matter rule is against patenting abstract ideas. A claim that covers only an abstract idea doesn't somehow become less abstract simply because the patentee could have claimed a narrower, more tangible invention.
There is a third possibility: that the court is implicitly construing the broad, functional elements of Ultramercial's method claim as means-plus-function claims under section 112(f), with the result that they are accordingly limited to the particular implementations in the specification. Doing so would be consistent with approach I suggested in my article "Software Patents and the Return of Functional Claiming". It would explain why the court said it was adopting the narrowest construction of Ultramercial's claims but then never told us what that narrow construction was. And it is the only reasonable explanation for why the Federal Circuit would suddenly drop its focus on the language of the claims and start to talk about whether the algorithms in the specification were patent-eligible subject matter.
The court didn't explicitly say what it was doing. I hope that its focus on the specification signals a narrowing construction that saved the claim from ineligibility. That would be a major step forward for both patentable subject matter law and for reining in overbroad software patents. And the alternative — that the court has decided that the scope of the claim doesn't matter anymore — would represent a major step backward.