Background
Ultramercial held U.S. Patent No. 7,346,545, which claimed a method for distributing copyrighted media products over the internet where consumers could receive content (such as songs, movies, or games) for free in exchange for watching advertisements, with advertisers paying for the content on consumers’ behalf. The patent described a specific, multi-step process involving steps like: locking the content, presenting an advertisement, receiving a user’s interaction with the advertisement, unlocking the content, and crediting the media sponsor.
WildTangent (which distributed games online using an ad-supported free model) moved to dismiss Ultramercial’s infringement claims, arguing that the patent did not claim patent-eligible subject matter under § 101. The Central District of California granted the motion, finding the claims were directed to the abstract idea of “using advertising as a form of currency.” Ultramercial appealed.
The Court’s Holding
The Federal Circuit reversed and remanded. Chief Judge Rader wrote that the patent’s multi-step process — spanning eleven specific claimed steps tied to interactions with a specific website interface, specific technical controls on content, and specific interactions with a paying sponsor — was more than a mere abstract idea. Unlike the fraud-detection method in CyberSource, the claims required controlled interaction with a consumer via an internet website: physical, real-world steps that a human cannot perform purely mentally.
The court emphasized that § 101 is designed to be broad, noting that the line between unpatentable abstract ideas and patentable concrete applications is not sharp. Inventions that provide a practical application of a general concept — here, the concept that advertising can serve as currency — are not “so manifestly abstract” as to warrant invalidation under § 101 at the pleading stage. The court suggested that § 101 invalidity challenges based on abstract ideas are often better resolved with a full record developed through discovery, not at the motion-to-dismiss stage.
Key Takeaways
- A multi-step patent claim involving specific technical interactions on a website and controlled content delivery may be patent-eligible under § 101 even if based on an abstract concept, as long as it provides a concrete practical application.
- Section 101 invalidity arguments based on the abstract idea exception are not automatically appropriate for resolution at the motion-to-dismiss stage — the full factual record may be needed.
- The court’s pro-eligibility holding in Ultramercial I was later vacated and reversed after Alice Corp. v. CLS Bank (2014), with the Federal Circuit on remand in 2014 ultimately holding the claims invalid under the Alice framework.
- The case illustrates how dramatically § 101 law evolved between 2011 and 2014, with the same patent going from “patent-eligible” to “invalid” as the doctrinal framework shifted.
Why It Matters
Ultramercial v. Hulu (2011) is notable as a snapshot of the Federal Circuit’s pre-Alice approach to internet and business method patents — a more permissive standard that focused on whether the claims provided a practical, non-manifestly-abstract application of an underlying concept, rather than the more demanding two-step Alice/Mayo framework that followed.
The case’s trajectory — patent-eligible in 2011, vacated and remanded by the Supreme Court in 2012 after Mayo, upheld again by a different panel in 2013, then finally invalidated under Alice in 2014 — illustrates better than almost any other case the turbulence in § 101 law during this period. For practitioners navigating software and internet patent eligibility today, the multiple Ultramercial opinions serve as a vivid timeline of how the law changed under the influence of Supreme Court decisions, reshaping the patentability of an entire class of digital-economy inventions.