Fed. Cir. Upholds Internet Business Method Patent

By Mark Wilson, Esq. on December 11, 2014 | Last updated on March 21, 2019

Over here at FindLaw's Federal Circuit blog, we're no fans of business method patents. Every chance we get, we write about, and celebrate, another Federal Circuit opinion using Alice v. CLS Bank to invalidate phony baloney "on a computer" method patents.

After a string of Alice success stories, in which the Federal Circuit struck patents for regular old, ordinary, analog things done on a computer, the court has upheld a business method patent because the problem the patent sought to solve actually was something unique to the Internet.

Whose Website Is It, Anyway?

DDR Holdings owns patents covering the process of combining a "host" website with third-party content. The novel idea is that, instead of sending a user to a third-party website, elements of the third party's website are merged with the existing website into a site that "gives the viewer of the page the impression that she is viewing pages served by the host."

In practice, and in this case, the system is used for travel booking. NLG and Digital River operate a travel agency that sells river cruises. A user goes to NLG's website and clicks an ad to book a particular cruise through a particular company. Instead of going straight to the cruise company's website, NLG's website creates a new page that looks like its own website, but with the cruise company's information embedded in it.

A jury found infringement, in favor of DDR. NLG moved for JMOL, claiming that the patented claims weren't eligible and that Digital River had prior art in the form of a Secure Sales System (SSS). (The Federal Circuit said the SSS was prior art, but that's not what's interesting.)

A Little Backlash

Addressing claim eligibility, the court applied the two-step process from Alice. First, is the claim a "patent-ineligible abstract idea"? Unlike Alice, the claims in DDR's patent don't recite a "fundamental economic or longstanding commercial practice idea" whose only novelty is that it's on a computer instead of in meat space. While retaining customers is a longstanding business problem, retaining website visitors, the court said, "is a challenge particular to the Internet."

Think of this as a sort of Alice backlash: After that case, everyone's going to claim that "on a computer" patents are per se invalid. Not so fast, said the Federal Circuit: You've got to actually look at what's being done on the computer. In this case, the "claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet."

Dissent: It's the Same as Alice

Judge Haldane Robert Mayer dissented on this very issue, claiming that DDR's patent does little more than describe an abstract concept -- "that an online merchant's sales can be increased if two web pages have the same 'look and feel' -- and apply that concept using a generic computer." The claim, he says, involves "duping" the customer into thinking he's on the original website, when, in fact, he's viewing content from a third party.

This "store within a store" concept, Mayer says, is a concept older than the Internet. All DDR has done is find a way to put it on the Internet. "The inventive concept, if any, embedded in DDR's claims is an idea for 'retaining control over the attention of the customer,'" he said -- a vague concept that can be analogized to the "paying for content by watching an ad" that the Federal Circuit found to be unpatentable just a few weeks ago in Ultramercial.

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