Academic journal article American University Law Review

The Federal Circuit and Ultramercial: Software and Business Method Patents Tumble Further Down the Rabbit Hole

Academic journal article American University Law Review

The Federal Circuit and Ultramercial: Software and Business Method Patents Tumble Further Down the Rabbit Hole

Article excerpt


During World War II, work began at the University of Pennsylvania's Moore School of Engineering on the Electronic Numerical Integrator and Computer (ENIAC)-a machine commissioned by the U.S. military and designed to calculate munitions trajectories.1 Once completed, the ENIAC weighed thirty tons and was seen by many as the world's first general purpose electronic digital computer.2 While advancements in computing power prompted the evolution of the ENIAC into the computers of today, it is the software that runs on modern computers that make them so crucial to our everyday lives. "Software" consists of the programs that run on a computer and enable it to perform certain functions.3 However, as far as the United States Patent and Trademark Office (USPTO) is concerned, both software and business methods fall under the umbrella of "computer-implemented inventions."4 Patent applications to software and business methods are grouped together because both are often claimed as abstract processes implemented on computer hardware, and as such, they both frequently fall victim to the abstract idea exception-one of the three judicially created exceptions to patent eligibility.5

Patent eligibility is governed by 35 U.S.C. § 101, and the Supreme Court has recognized that in drafting § 101 Congress intended to provide patent protection to "anything under the sun that is made by man."6 Section 101 has been the subject of heated discussion in recent years as the courts have repeatedly attempted to define its boundaries.7 Since 2011, the Supreme Court and the U.S. Court of Appeals for the Federal Circuit have been engaged in one specific back-and-forth over Ultramercial's patented method for providing free media content to an Internet user in exchange for viewing a third-party advertisement, which highlights the recent developments in this field of law.8 This journey begins with the Supreme Court's decision in Bilski v. Kappos9 and the Federal Circuit's subsequent decision in Ultramercial, LLC v. Hulu, LLC10 ("Ultramercial I"), in which the court upheld Ultramercial's patented method.11 Since Ultramercial I, the Federal Circuit has weighed in on Ultramercial's patent twice more. The court once again upheld the patent in its second review of Ultramercial, Inc. v. Hulu, LLC12 ("Ultramercial II"), which was reconsidered in light of the Supreme Court's 2012 decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc.13 Less than one year later, the Federal Circuit invalidated the patent in its third review of Ultramercial, Inc. v. Hulu, LLC14 ("Ultramercial III"), which was reconsidered in light of the Supreme Court's 2014 decision in Alice Corp. v. CLS Bank International.15 This Note concentrates on these cases, paying close attention to how the intervening Supreme Court decisions affected the Federal Circuit's analysis of Ultramercial's patent.

This Note begins by addressing the patent eligibility of computer-implemented inventions and the state of the abstract idea exception after the Supreme Court's decision in Bilski. Second, this Note traces the path carved out by the Federal Circuit in Ultramercial I, Ultramercial II, and Ultramercial III in its attempt to reconcile the Supreme Court's decisions addressing subject matter eligibility in Mayo and Alice Corp.. Finally, this Note concludes that Alice Corp. and the cases since represent significant movement towards a narrower interpretation of 35 U.S.C. § 101, but the USPTO's most recent guidance presents a real opportunity for stability in the interpretation of subject matter eligibility.


Courts have consistently grappled with the patentability of software and business methods, or computer-related processes,16 since the early 1970s.17 The threshold step in determining patentability is presented by 35 U.S.C. § 101, which states, "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. …

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