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`42 a Lexis Nexis"
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`ULTRAMERCIAL, INC., AND ULTRAMERCIAL, LLC, Plaintiffs-Appellants, v.
`HULU, LLC, Defendant, AND WILDTANGENT, INC., Defendant-Appellee.
`
`UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT
`
`2010-1544
`
`2013 U.S. App. LEXlS 12 715
`
`June 21,2013, Decided
`
`PRIOR HISTORY: [*I]
`Appeal from the United States District Court for the
`Central District of California in No. 09-CV-69 18, Judge
`R.Gary Klausner.
`WildTangent, Inc. v. Ultramercial, LLC, 132 S. Ct. 2431,
`182 L. Ed. 2d 1059,2012 US. LEXIS 3890 (U.S., 2012)
`Vltramercial LLC v. Hulu, U C , 413 Fed. Appx. 276,
`2011 US. App. LEXZT 5470 (Fed. Cir., 2011)
`
`COUNSEL: LAWRENCE M. HADLEY, Hennigan,
`Bennett & Dorman LLP, of Los Angeles, California,
`argued for plaintiffs-appellants. With him on the brief
`were HAZIM ANSARI and MIEKE K. MALMBERG.
`
`GREGORY G. GARRE, Latham & Watkins, LLP, of
`Washington, DC, argued for defendant-appellee. On the
`brief were RICHARD G. FRENKEL and LISA K.
`NGUYEN, of Palo Alto, California. Of counsel were
`RICHARD P. BRESS, GABREL BELL and KATHE-
`RINE TWOMEY, of Washington, DC.
`
`JUDGES: Before RADER, Chief Judge, LOURIE, and
`O'MALLEY, Circuit Judges. Opinion for the court filed
`by Chief Judge RADER. Concurring opinion filed by
`Circuit Judge LOURIE.
`
`OPINION BY: RADER
`
`OPINION
`
`The United States District Court for the Central Dis-
`trict of Califomia dismissed this patent suit, filed by LJI-
`tramercial, LLC and Ultramercial, Inc. (collectively,
`"Ultramercial"), by holding
`that US. Patent No.
`7,346,545 (?he
`'545 patent3 does not claim pa-
`
`tent-eligible subject matter. In an earlier decision, later
`vacated by the United States Supreme Court, this court
`reversed the district court's holding and remanded. UI-
`tramercial, LLC v. Hulu, LLC, 657 F.3d 1323 (Fed. Cir.
`2011), [*2] vacated sub nom. WildTangent, Inc. v. Ul-
`tramercial, LLC, 132 S.Ct. 2431, 182 L. Ed. 2d 1059
`(20I2). Because this court again holds that the district
`court erred in holding that the subject matter of the '545
`patent is not a "process" within the language and mean-
`ing of 35 US.C. § 101, this court again reverses and re-
`mands.
`
`The '545 patent claims a method for distributing
`copyrighted products (e.g., songs, movies, books) over
`the Internet where the consumer receives a copyrighted
`product for free in exchange for viewing an advertise-
`ment, and the advertiser pays for the copyrighted con-
`tent. Claim 1 of the '545patent reads:
`
`A method for distribution of products
`over the Internet via a facilitator, said
`method comprising the steps of:
`
`a first step of receiving,
`from a content provider,
`media products that are
`covered by
`intellectual
`property rights protection
`and are available for pur-
`chase, wherein each said
`media product being com-
`prised of at least one of
`text data, music data, and
`video data;
`
`VERSATA EXHIBIT 2002
`VOLUSION v. VERSATA
`CASE CBM2013-00017
`
`

`

`2013 U.S. App. LEXIS 12715, *
`
`Page 2
`
`a second step of se-
`lecting a sponsor message
`to be associated with the
`media product, said spon-
`sor message being selected
`from a plurality of sponsor
`messages, said second step
`including accessing an ac-
`tivity log to [*3] verify
`that the total number of
`times which the sponsor
`message has been previ-
`ously presented is less than
`the number of transaction
`cycles contracted by the
`sponsor of
`the sponsor
`message;
`a third step of provid-
`ing the media product for
`sale at an Internet website;
`a fourth step of re-
`stricting general public ac-
`cess to said media product;
`a fifth step of offering
`to a consumer access to the
`media product without
`charge to the consumer on
`the precondition that the
`consumer views the spon-
`sor message;
`a sixth step of receiv-
`ing from the consumer a
`request to view the sponsor
`message, wherein the con-
`sumer submits said request
`in response to being of-
`fered access to the media
`product;
`a seventh step of, in
`response to receiving the
`request from the consumer,
`facilitating the display of a
`sponsor message
`to
`the
`consumer;
`an eighth step of, if the
`sponsor message is not an
`interactive message, al-
`lowing said consumer ac-
`cess to said media product
`after said step of facilitat-
`ing the display of said
`sponsor message;
`
`a ninth step of, if the
`sponsor message is an in-
`teractive message, pre-
`senting at least one query
`to the consumer and al-
`lowing said consumer ac-
`cess to said media product
`after receiving a response
`[*4] to said at least one
`query;
`a tenth step of record-
`ing the transaction event to
`the activity log, said tenth
`step including updating the
`total number of times the
`sponsor message has been
`presented; and
`an eleventh step of re-
`ceiving payment from the
`sponsor of
`the sponsor
`message displayed.
`
`
`
`
`
`
`
`'545 patent col. 8, ll. 5-48.
`Ultramercial sued Hulu, LLC ("Hulu"), YouTube,
`LLC ("YouTube"), and WildTangent, Inc. ("WildTan-
`gent"), alleging infringement of the '545 patent. Hulu
`and YouTube have been dismissed from the case.
`WildTangent moved to dismiss for failure to state a
`claim, arguing that the '545 patent did not claim pa-
`tent-eligible subject matter. The district court granted
`WildTangent's pre-answer motion to dismiss under Rule
`12(b)(6). Ultramercial appeals. This court has jurisdic-
`tion under 28 U.S.C. § 1295(a)(1).
`This court reviews a district court's dismissal for
`failure to state a claim under the law of the regional cir-
`cuit. Juniper Networks, Inc. v. Shipley, 643 F.3d 1346,
`1350 (Fed. Cir. 2011) (citation omitted). The Ninth Cir-
`cuit reviews de novo challenges to a dismissal for failure
`to state a claim under Fed. R. Civ. P. 12(b)(6). Livid
`Holdings Ltd. v. Salomon Smith Barney, Inc., 403 F.3d
`1050, 1055 (9th Cir. 2005). [*5] This court also re-
`views
`the ultimate determination
`regarding pa-
`tent-eligible subject matter under 35 U.S.C. § 101 with-
`out deference. In re Ferguson, 558 F.3d 1359, 1363
`(Fed. Cir. 2009).
`
`II.
`
`The district court dismissed Ultramercial's claims for
`failure to claim statutory subject matter without formally
`construing the claims and, further, without requiring de-
`
`

`

`2013 U.S. App. LEXIS 12715, *
`
`Page 3
`
`fendants to file answers. This raises several preliminary
`issues.
`First, it will be rare that a patent infringement suit
`can be dismissed at the pleading stage for lack of pa-
`tentable subject matter. This is so because every issued
`patent is presumed to have been issued properly, absent
`clear and convincing evidence to the contrary. See, e.g.,
`CLS Bank Int'l v. Alice Corp., F.3d , 2013 U.S.
`App. LEXIS 9493, 2013 WL 1920941, *33 (Fed. Cir.
`May 10, 2013) (Chief Judge Rader, and Judges Linn,
`Moore, and O'Malley, concluding that "any attack on an
`issued patent based on a challenge to the eligibility of the
`subject matter must be proven by clear and convincing
`evidence," and Judges Lourie, Dyk, Prost, Reyna, and
`Wallach, concluding that a statutory presumption of va-
`lidity applies when § 101 is raised as a basis for invalid-
`ity in district court proceedings.). [*6] Further, if Rule
`12(b)(6) is used to assert an affirmative defense, dismis-
`sal is appropriate only if the well-pleaded factual allega-
`tions in the complaint, construed in the light most favor-
`able to the plaintiff, suffice to establish the defense. See
`Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127
`S. Ct. 1955, 167 L. Ed. 2d 929 (2007); Jones v. Bock, 549
`U.S. 199, 215, 127 S. Ct. 910, 166 L. Ed. 2d 798 (2007).
`Thus, the only plausible reading of the patent must be
`that there is clear and convincing evidence of ineligibil-
`ity. For those reasons, Rule 12(b)(6) dismissal for lack of
`eligible subject matter will be the exception, not the rule.
`Second, as is shown more fully below, the analysis
`under § 101, while ultimately a legal determination, is
`rife with underlying factual issues. For example, while
`members of this court have used varying formulations
`for the precise test, there is no doubt the § 101 inquiry
`requires a search for limitations in the claims that narrow
`or tie the claims to specific applications of an otherwise
`abstract concept. CLS Bank, F.3d at , 2013 U.S.
`App. LEXIS 9493, 2013 WL 1920941 at *27-30 (mean-
`ingful limitations); 2013 U.S. App. LEXIS 9493, [WL] at
`*10 (opinion of Lourie, J.). Further, factual issues may
`underlie determining whether the patent embraces a sci-
`entific principle [*7] or abstract idea. Id. (opinion of
`Lourie, J.) ("The underlying notion is that a scientific
`principle . . . reveals a relationship that has always exist-
`ed.") (quoting Parker v. Flook, 437 U.S. 584, 593 n.15,
`98 S. Ct. 2522, 57 L. Ed. 2d 451 (1978)). If the question
`is whether "genuine human contribution" is required, and
`that requires "more than a trivial appendix to the under-
`lying abstract idea," and were not at the time of filing
`"routine, well-understood, or conventional," factual in-
`quiries likely abound. 2013 U.S. App. LEXIS 9493, [WL]
`at *11-12. Almost by definition, analyzing whether
`something was "conventional" or "routine" involves an-
`alyzing facts. 2013 U.S. App. LEXIS 9493, [WL] at *12.
`Likewise, any inquiry into the scope of preemption--how
`
`much of the field is "tied up" by the claim--by definition
`will involve historic facts: identifying the "field," the
`available alternatives, and preemptive impact of the
`claims in that field. The presence of factual issues cou-
`pled with the requirement for clear and convincing evi-
`dence normally will render dismissal under Rule 12(b)(6)
`improper.
`Third, and in part because of the factual issues in-
`volved, claim construction normally will be required.
`This court has never set forth a bright line rule requiring
`district courts to construe [*8] claims before determin-
`ing subject matter eligibility. Indeed, because eligibility
`is a "coarse" gauge of the suitability of broad subject
`matter categories for patent protection, Research Corp.
`Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 869 (Fed.
`Cir. 2010), claim construction may not always be neces-
`sary for a § 101 analysis. See, e.g., Bilski v. Kappos, 130
`S. Ct. 3218, 3231, 177 L. Ed. 2d 792 (2010) (finding
`subject matter ineligible for patent protection without
`claim construction); CLS Bank, F.3d , 2013 U.S.
`App. LEXIS 9493, 2013 WL 1920941 (court decided eli-
`gibility of subject matter without formal claim construc-
`tion).
`On the other hand, if there are factual disputes,
`claim construction should be required. The procedural
`posture of the case may indicate whether claim construc-
`tion is required. This case involves Rule 12(b)(6), which
`requires courts to accept the well-pleaded factual allega-
`tions as true and to require the accused infringer to estab-
`lish that the only plausible reading of the claims is that,
`by clear and convincing evidence, they cover ineligible
`subject matter. It may also be feasible for the district
`court to choose to construe the claims in accordance with
`this court's precedent, or to adopt the [*9] construction
`proffered by the patentee. In either case, it cannot decide
`factual questions at this stage. At summary judgment, the
`district court may choose to construe the claims in ac-
`cordance with this court's precedent, or if not it may
`choose to give a construction most favorable to the pa-
`tentee, and to apply the usual rules pertaining to sum-
`mary judgment from there, and still require clear and
`convincing evidence of ineligible subject matter.
`Of course, even if not required, on many occasions a
`definition of the invention by claim construction can
`clarify the basic character of the subject matter of the
`invention. Thus, claim meaning may clarify the actual
`subject matter at stake in the invention and can enlighten,
`or even answer, questions about subject matter abstract-
`ness. In this procedural posture, however, the subject
`matter at stake and its eligibility does not require formal
`claim construction.
`Finally, fourth, the question of eligible subject mat-
`ter must be determined on a claim-by-claim basis. Con-
`
`

`

`2013 U.S. App. LEXIS 12715, *
`
`Page 4
`
`struing every asserted claim and then conducting a § 101
`analysis may not be a wise use of judicial resources.
`With these thoughts in mind, the court turns to the
`question of whether [*10] the court correctly dismissed
`the suit under § 101.
`
`III.
`
`A.
`
`The statute controls the inquiry into patentable sub-
`ject matter. 35 U.S.C. § 101 sets forth the categories of
`subject matter that are eligible for patent protection:
`"[w]hoever invents or discovers any new and useful
`process, machine, manufacture, or composition of mat-
`ter, or any new and useful improvement thereof, may
`obtain a patent therefor, subject to the conditions and
`requirements of this title." (Emphasis added). Under-
`scoring its breadth, § 101 both uses expansive categories
`and modifies them with the word "any." In Bilski, the
`Supreme Court emphasized that "[i]n choosing such ex-
`pansive terms modified by the comprehensive 'any,'
`Congress plainly contemplated that the patent laws
`would be given wide scope." 130 S. Ct. at 3225 (quoting
`Diamond v. Chakrabarty, 447 U.S. 303, 308, 100 S. Ct.
`2204, 65 L. Ed. 2d 144 (1980)).
`The pertinent, expansive definition of "process" in §
`100(b) confirms the statute's intended breadth. At first
`examination, the Act's definition of "process" to include
`a new use of a known machine seems superfluous. After
`all, if "any" process may be patented under § 101, §
`100(b) seems wholly unnecessary. The amendment was
`necessary to avoid [*11] narrow judicial interpretations
`of "process" given to the pre-1952 statute. Specifically,
`the 1952 amendments added § 100(b) to ensure that
`doubts about the scope of a "process" under the pre-1952
`version of the patent statute would not be read into the
`new Act. P.J. Federico, Commentary on the New Patent
`Act, reprinted in 75 J. Pat. & Trademark Off. Soc'y 161,
`177 (1993) ("Remarks have appeared in a few decisions
`and elsewhere that new uses are not patentable . . . . [I]f
`such remarks are interpreted to mean that a new use or
`application of an old machine . . . cannot result in any-
`thing patentable then such statements are not and have
`never been an accurate statement of the law."); Hearing
`Before Sub-comm. No. 3 of the Comm. on the Judiciary,
`at 37 (1951) (Federico testifying that the "definition of
`'process' has been added . . . to clarify the present law as
`to certain types of methods as to which some doubts
`have been expressed . . . ."); S. Rep. No. 82-1979, at 17
`(1952) (Explaining that the definition clarified that "pro-
`cesses or methods which involve merely the new use of a
`known process . . . are processes or methods under the
`statute and may be patented provided the conditions
`[*12] of patentability are satisfied."). Thus, changes were
`
`made to the 1952 Act to broaden eligible subject matter
`and eliminate doubt caused by narrow interpretations
`given to the prior statute. Moreover, not only did Con-
`gress expand the definition of "process" in 1952, Title 35
`does not list a single ineligible category. At a time when
`Congress considered § 101, it broadened the statute and
`certainly did not place any specific limits on it.
`The limited role of § 101 even in patentability (the
`patentee did not argue that § 101 is not a defense to in-
`fringement) is confirmed by other aspects of the Patent
`Act. As § 101 itself expresses, subject matter eligibility
`is merely a threshold check; patentability of a claim ul-
`timately depends on "the conditions and requirements of
`this title," such as novelty, non-obviousness, and ade-
`quate disclosure. 35 U.S.C. § 101; see Bilski, 130 S. Ct.
`at 3225 (Characterizing § 101 as a "threshold test");
`Classen Immunotherapies, Inc. v. Biogen IDEC, 659
`F.3d 1057,1064 (Fed. Cir. 2011) (Pointing out the dif-
`ference between
`"the
`threshold
`inquiry of pa-
`tent-eligibility, and the substantive conditions of patent-
`ability"). By directing attention to the substantive [*13]
`criteria for patentability, Congress made it clear that the
`categories of patent-eligible subject matter are no more
`than a "coarse eligibility filter." Research Corp., 627
`F.3d at 869. In other words, Congress made it clear that
`the expansive categories--process, machine, article of
`manufacture, and composition of matter--are not substi-
`tutes for the substantive patentability requirements set
`forth in §§ 102, 103, and 112 and invoked expressly by §
`101 itself. After all, the purpose of the Patent Act is to
`encourage innovation, and the use of broadly inclusive
`categories of statutory subject matter ensures that "inge-
`nuity
`.
`.
`.
`receive[s] a
`liberal encouragement."
`Chakrabarty, 447 U.S. at 308. The plain language of the
`statute provides that any new, non-obvious, and fully
`disclosed technical advance is eligible for protection.
`
`B.
`
`The Supreme Court has on occasion recognized
`narrow judicial exceptions to the 1952 Act's deliberately
`broadened eligibility provisions. In line with the broadly
`permissive nature of § 101's subject matter eligibility
`principles and the structure of the Patent Act, case law
`has recognized only three narrow categories of subject
` [*14] of §
`matter outside the eligibility bounds
`101--laws of nature, physical phenomena, and abstract
`ideas. Bilski, 130 S. Ct. at 3225. The Court's motivation
`for recognizing exceptions to this broad statutory grant
`was its desire to prevent the "monopolization" of the
`"basic tools of scientific and technological work," which
`"might tend to impede innovation more than it would
`tend to promote it." Mayo Collaborative Servs. v. Pro-
`metheus Labs., Inc., 132 S. Ct. 1289, 1293, 182 L. Ed. 2d
`
`

`

`2013 U.S. App. LEXIS 12715, *
`
`Page 5
`
`321 (2012) ("Prometheus") (internal quotation marks
`omitted).
`Though recognizing these exceptions, the Court has
`also recognized that these implied exceptions are in ob-
`vious tension with the plain language of the statute, its
`history, and its purpose. See Chakrabarty, 447 U.S. at
`308 ("In choosing such expansive terms as 'manufacture'
`and 'composition of matter,' modified by the comprehen-
`sive 'any,' Congress plainly contemplated that the patent
`laws would be given wide scope."); id. at 315 ("Broad
`general language is not necessarily ambiguous when
`congressional objectives require broad terms."). As the
`Supreme Court has made clear, too broad an interpreta-
`tion of these exclusions from the grant in § 101 "could
`eviscerate patent law." Prometheus, 132 S. Ct. at 1293;
`[*15] cf. Bilski, 130 S. Ct. at 3226 ("This Court has not
`indicated that the existence of these well-established
`exceptions gives the Judiciary carte blanche to impose
`other limitations that are inconsistent with the text and
`the statute's purpose and design.").
`Thus, this court must not read § 101 so restrictively
`as to exclude "unanticipated inventions" because the
`most beneficial inventions are "often unforeseeable." See
`Chakrabarty, 447 U.S. at 316; see also J.E.M. Ag Sup-
`ply, 534 U.S. at 135 (describing § 101 as "a dynamic
`provision designed to encompass new and unforeseen
`inventions."). Broad inclusivity is the Congressional goal
`of § 101, not a flaw.
`To sum up, because eligibility requires assessing ju-
`dicially recognized exceptions against a broad and delib-
`erately expanded statutory grant, one of the principles
`that must guide our inquiry is these exceptions should
`apply narrowly. Indeed, the Supreme Court has cau-
`tioned that, to avoid improper restraints on statutory
`language, acknowledged exceptions thereto must be rare.
`
`C.
`
`In the eligibility analysis as well, the presumption of
`proper issuance applies to a granted patent. As a practical
`matter, because
`judicially acknowledged exceptions
`[*16] could eviscerate the statute, application of this
`presumption and its attendant evidentiary burden is con-
`sistent with the Supreme Court's admonition to cabin
`exceptions to § 101. Further, applying the presumption is
`consistent with patent office practice. Before issuing a
`patent, the Patent Office rejects claims if they are drawn
`to ineligible subject matter, just as it rejects claims if not
`compliant with §§ 102, 103, or 112. With one exception,
`the Supreme Court's decisions since 1952 have addressed
`the propriety of those decisions. Thus, when a patent
`issues, it does so after the Patent Office assesses and
`endorses its eligibility under § 101, just as it assesses and
`endorses its patentability under the other provisions of
`
`Title 35. See Microsoft Corp. v. i4i Ltd. P'ship, 131 S. Ct.
`2238, 2242, 180 L. Ed. 2d 131, (2011) ("Congress has set
`forth the prerequisites for issuance of a patent, which the
`PTO must evaluate in the examination process. To re-
`ceive patent protection a claimed invention must, among
`other things, fall within one of the express categories of
`patentable subject matter, § 101, and be novel, § 102,
`and nonobvious, § 103.").
`In sum, the high level of proof applies to eligibility
`as it [*17] does to the separate patentability determina-
`tions. Accordingly, any attack on an issued patent based
`on a challenge to the eligibility of the subject matter
`must be proven by clear and convincing evidence. Cf.
`Microsoft, 131 S. Ct. at 2242 ("We consider whether §
`282 requires an invalidity defense to be proved by clear
`and convincing evidence. We hold that it does.").
`
`IV.
`
`A.
`
`Defining "abstractness" has presented difficult
`problems, particularly for the § 101 "process" category.
`Clearly, a process need not use a computer, or some ma-
`chine, in order to avoid "abstractness." In this regard, the
`Supreme Court recently examined the statute and found
`that the ordinary, contemporary, common meaning of
`"method" may include even methods of doing business.
`See Bilski, 130 S. Ct. at 3228. Accordingly, the Court
`refused to deem business methods ineligible for patent
`protection and cautioned against "read[ing] into the pa-
`tent laws limitations and conditions which the legislature
`has not expressed." Id. at 3226 (quoting Diamond v.
`Diehr, 450 U.S. 175, 182, 101 S. Ct. 1048, 67 L. Ed. 2d
`155 (1981)).
`In an effort to grapple with this non-statutory "ab-
`stractness" exception to "processes," the dictionary pro-
`vides some help. See Merriam-Webster's [*18] Colle-
`giate Dictionary 5 (11th ed. 2003) (defining abstract as
`"disassociated from any specific instance . . . expressing
`a quality apart from an object <the word poem is con-
`crete, poetry is [abstract]>"). An abstract idea is one that
`has no reference to material objects or specific exam-
`ples--i.e., it is not concrete. This court at one point set
`forth a machine-or-transformation test as the exclusive
`metric for determining the subject matter eligibility of
`processes. In re Bilski, 545 F.3d 943, 956 (Fed. Cir.
`2008), aff'd on other grounds, Bilski, 130 S. Ct. 3218,
`177 L. Ed. 2d 792. The Supreme Court rejected this ap-
`Bilski,
`proach
`in
`noting
`that
`the ma-
`chine-or-transformation test is simply "a useful and im-
`portant clue, an investigative tool, for determining
`whether some claimed inventions are processes under §
`101" and is not "the sole test for deciding whether an
`invention is a patent-eligible 'process.'" 130 S. Ct. at
`
`

`

`2013 U.S. App. LEXIS 12715, *
`
`Page 6
`
`3227
`ma-
`While
`added).
`(emphasis
`chine-or-transformation logic served well as a tool to
`evaluate the subject matter of Industrial Age processes,
`that test has far less application to the inventions of the
`Information Age. See id. at 3227-28 ("[I]n deciding
`whether previously unforeseen inventions [*19] qualify
`as patentable 'processes,' it may not make sense to re-
`quire courts to confine themselves to asking the ques-
`tions posed by the machine-or-transformation test. §
`101's terms suggest that new technologies may call for
`new inquiries."). Technology without anchors in physical
`structures and mechanical steps simply defy easy classi-
`fication under the machine-or-transformation categories.
`As the Supreme Court suggests, mechanically applying
`that physical test "risk[s] obscuring the larger object of
`securing patents for valuable inventions without trans-
`gressing the public domain." Id. at 3227.
`Members of both the Supreme Court and this court
`have recognized the difficulty of providing a precise
`formula or definition for the abstract concept of ab-
`stractness. See id. at 3236 (Stevens, J., concurring) ("The
`Court . . . [has] never provide[d] a satisfying account of
`what constitutes an unpatentable abstract idea."); Re-
`search Corp., 627 F.3d at 868. Because technology is
`ever-changing and evolves in unforeseeable ways, this
`court gives substantial weight to the statutory reluctance
`to list any new, non-obvious, and fully disclosed subject
`matter as beyond the reach of Title 35.
`
`B.
`
`A claim can [*20] embrace an abstract idea and be
`patentable. See Prometheus, 132 S. Ct. at 1294 (explain-
`ing that the fact that a claim uses a basic tool does not
`mean it is not eligible for patenting). Instead, a claim is
`not patent eligible only if, instead of claiming an appli-
`cation of an abstract idea, the claim is instead to the ab-
`stract idea itself. The inquiry here is to determine on
`which side of the line the claim falls: does the claim
`cover only an abstract idea, or instead does the claim
`cover an application of an abstract idea? See Bilski, 130
`S. Ct. at 3230 ("[W]hile an abstract idea, law of nature,
`or mathematical formula could not be patented, an ap-
`plication of a law of nature or mathematical formula to a
`known structure or process may well be deserving of
`patent protection." (emphasis in original) (internal quota-
`tion marks omitted)); Gottschalk v. Benson, 409 U.S. 63,
`67, 93 S. Ct. 253, 34 L. Ed. 2d 273 (1972) ("He who
`discovers a hitherto unknown phenomenon of nature has
`no claim to a monopoly of it which the law recognizes. If
`there is to be invention from such a discovery, it must
`come from the application of the law of nature to a new
`and useful end." (emphasis added) (internal quotation
`marks omitted)); Diehr, 450 U.S. at 187 [*21] ("It is
`now commonplace that an application of a law of nature
`
`or mathematical formula to a known structure or process
`may well be deserving of patent protection.")
`In determining on which side of the line the claim
`falls, the court must focus on the claim as a whole. As
`the Court explained:
`
`
` In determining the eligibility of re-
`spondents' claimed process for patent
`protection under § 101, their claims must
`be considered as a whole. It is inappropri-
`ate to dissect the claims into old and new
`elements and then to ignore the presence
`of the old elements in the analysis. This is
`particularly true in a process claim be-
`cause a new combination of steps in a
`process may be patentable even though all
`the constituents of the combination were
`well known and in common use before the
`combination was made.
`
`
`
`
`Diehr, 450 U.S. at 188 (emphasis added). The majority
`in Diehr rejected the minority's approach ignoring por-
`tions of the claims: "[i]n order for the dissent to reach its
`conclusion it is necessary for it to read out of respond-
`ents' patent application all the steps in the claimed pro-
`cess which it determined were not novel or 'inventive.'
`That is not the purpose of the § 101 inquiry . . . ." Id. at
`193 n.15 [*22] (citations omitted); Aro Mfg. Co. v.
`Convertible Top Replacement Co., 365 U.S. 336, 345, 81
`S. Ct. 599, 5 L. Ed. 2d 592, 1961 Dec. Comm'r Pat. 635
`(1961) ("[T]here is no legally recognizable or protected
`'essential' element, 'gist' or 'heart' of the invention.").
`The Court has long-recognized that any claim can be
`stripped down, simplified, generalized, or paraphrased to
`remove all of its concrete limitations, until at its core,
`something that could be characterized as an abstract idea
`is revealed. A court cannot go hunting for abstractions by
`ignoring the concrete, palpable, tangible limitations of
`the invention the patentee actually claims.
`Instead, the relevant inquiry is whether a claim, as a
`whole, includes meaningful limitations restricting it to an
`application, rather than merely an abstract idea. See
`Prometheus, 132 S. Ct. at 1297 ("[D]o the patent claims
`add enough to their statements of the correlations to al-
`low the processes they describe to qualify as pa-
`tent-eligible processes that apply natural laws?"); see
`also Fort Props., Inc. v. Am. Master Lease LLC, 671
`F.3d 1317, 1323 (Fed. Cir. 2012) ("[T]o impart pa-
`tent-eligibility to an otherwise unpatentable process un-
`der the theory that the process is linked to a machine, the
`use of the [*23] machine must impose meaningful lim-
`its on the claim's scope." (internal quotation marks omit-
`ted)). For these reasons, a claim may be premised on an
`
`

`

`2013 U.S. App. LEXIS 12715, *
`
`Page 7
`
`abstract idea and, indeed, the abstract idea may be of
`central importance to the invention--the question for pa-
`tent eligibility is whether the claim contains limitations
`that meaningfully tie that abstract idea to an actual ap-
`plication of that idea through meaningful limitations.
`This analysis is not easy, but potentially wrought
`with the risk of subjectivity and hindsight evaluations. It
`also, as noted at the outset, often entails factual inquiries
`inappropriate on a motion directed to the pleadings. For-
`tunately, the Supreme Court has provided some guide-
`posts.
`An old example may be the most informative. The
`claims in O'Reilly v. Morse, 56 U.S. (15 How.) 62, 14 L.
`Ed. 601 (1854), and a case described therein, illustrate
`the distinction between a patent ineligible abstract idea
`and a practical application of an idea. The "difficulty" in
`Morse arose with the claim in which Morse:
`
`
` d[id] not propose to limit [him]self to
`the specific machinery or parts of ma-
`chinery described in the . . . specification
`and claims; the essence of [his] invention
`being the use of [*24] the motive power
`of the electric or galvanic current . . .
`however developed for marking or print-
`ing intelligible characters, signs, or letters,
`at any distances . . . .
`
`
`
`Id. at 112 (internal quotation marks omitted). In consid-
`ering Morse's claim, the Supreme Court referred to an
`earlier English case that distinguished ineligible claims
`to a "principle" from claims "applying" that principle:
` [I]t seems that the court at first doubt-
`ed, whether it was a patent for anything
`more than the discovery that hot air would
`promote the ignition of fuel better than
`cold. And if this had been the construc-
`tion, the court, it appears, would have
`held his patent to be void; because the
`discovery of a principle in natural philos-
`ophy or physical science, is not patenta-
`ble.
`
`But after much consideration, it was
`finally decided that this principle must be
`regarded as well known, and that the
`plaintiff had invented a mechanical mode
`of applying it to furnaces; and that his in-
`vention consisted in interposing a heated
`receptacle, between the blower and the
`furnace, and by this means heating the air
`after it left the blower, and before it was
`thrown into the fire. Whoever, therefore,
`used this method of throwing [*25] hot
`
`air into the furnace, used the process he
`had invented, and thereby infringed his
`patent, although the form of the receptacle
`or the mechanical arrangements for heat-
`ing it, might be different from those de-
`scribed by the patentee.
`
`
`
`Id. at 116. The claim in Morse itself was impermissible
`because it covered "'an effect produced by the use of
`electro-magnetism, distinct from the process or machin-
`ery necessary to produce it.'" The Telephone Cases, 126
`U.S. 1, 534, 8 S. Ct. 778, 31 L. Ed. 863, 1888 Dec.
`Comm'r Pat. 321 (1888) (quoting Morse, 56 U.S. (15
`How.) at 120). This was in contrast to a sustained claim
`that was limited to:
` making use of the motive power of
`magnetism, when developed by the action
`of such current or currents, substantially
`as set forth in the . . . description, . . . as
`means of operating or giving motion to
`machinery, which may be used to imprint
`signals upon paper or other suitable mate-
`rial, or to produce sounds in any desired
`manner, for the purpose of telegraphic
`communication at any distances.
`
`
`
`Id. (first ellipsis added, second ellipsis in original)
`(quoting Morse, 56 U.S. (15 How.) at 85). "'The effect of
`[Morse] was, therefore, that the use of magnetism as a