Ultramercial sued HULU Television in California for patent infringement. A federal district court recently declared that Ultramercial’s patent is invalid.   In ULTRAMERCIAL, LLC et al. v. HULU, LLC, et al., Ultramercial claimed that it patented the business process of allowing a user to view television content for free after forcing the user to watch a short advertisement.  In essence, Ultramercial claims it patented the process of displaying advertisement in exchange for access to copyrighted media. 

The court applied the “machine or transformation test,” because the U.S. Supreme Court stated that this is the sole test for patentability of processes, including business method and software patents.  Bilski v. Kappos, __ U.S. __, 130 S.Ct. 3218, 3225 (2010).  In addition, the Supreme Court emphasized again that excluded from the patentable subject matter are “laws of nature, natural phenomena, and abstract ideas.”

The federal district court concluded that Ultramercial’s patent is invalid because Ultramercial’s process does not involve a machine or a transformation of an article to a different thing.  The court goes even further to declare that Ultramercial’s claim involves an abstract idea, which is not patentable.  The court reasoned that the basic idea behind Ultramercial’s claim is that one can use advertisement as a means of exchange.

What can you, the business owner, learn from this case? First, understand that this decision, along with Bilski, makes it harder to enforce a business process patent.  This is true particularly if your process involves intangible objects like the internet or copyrighted material.  Thus, if you receive a cease and desist letter from a company claiming that your business infringes on their patent, then discuss with your attorney the value of asking a court to invalidate that company’s patent.  In light of these two cases, this may be a winning strategy.

Do you have a legal question about your business? Contact us for a free consultation at 215-242-5260 or info@mckeeoffice.com