Business Method Patents Live! - Federal Circuit Finds First Patent That Survives Post-Alice Analysis
Since the Supreme Court issued its June 2014 decision in Alice Corp. v. CLS Bank International, federal district courts, the Court of Appeals for the Federal Circuit, and the United States Patent & Trademark Office have been invalidating patent claims under 35 U.S.C. § 101 at an unprecedented rate. But on December 5, 2014, the Federal Circuit bucked the recent trend, ruling for the first time that a challenged claim is patent-eligible under the analysis set forth in Alice.
The patentee, DDR Holdings, LLC ("DDR"), is the assignee of U.S. Patent Nos. 6,993,572 ("the '572 patent") and 7,818,399 ("the '399 patent"), which relate to generating a composite web page that combines a host website with content of a third-party merchant. Many web pages include advertisements from third-party merchants that, when clicked on by a customer, re-direct the customer to the merchant's website, and away from the host website. In order to eliminate the host website's lost web traffic, DDR's patents disclose a system that generates a composite webpage that displays product information from the third-party merchant but retains the host website's "look and feel." Slip Op. at 3-4. At the trial court, the defendants argued that DDR's patents are invalid for, among other reasons, claiming patent-ineligible subject matter under 35 U.S.C. § 101. The lower court denied the motion, and a split panel of the Federal Circuit affirmed.
Writing for the majority, Judge Chen applied the two-step analysis set forth in Alice to determine that DDR's claims are patent-eligible. Under the first step-whether the claims are directed to a patent-ineligible abstract idea-the majority did not explicitly answer the question, but instead noted that under any of the alleged underlying abstract ideas proposed by the defendants and the dissent, the claims are patent-eligible because they satisfy the second step of the test. In particular, the defendants argued that the claims were directed to the abstract ideas of "making two web pages look the same," "syndicated commerce on the computer using the Internet," and "making two e-commerce web pages look alike by using licensed trademarks, logos, color schemes, and layouts." Slip Op. at 19. Dissenting Judge Mayer described the claims as directed to the business goal "that an online merchant's sales can be increased if two web pages have the same 'look and feel.'" Dissenting Op. at 2. The majority found that regardless of which definition of the abstract idea is adopted, the claims are patent-eligible under the second step of the analysis.
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