Federal Circuit Rejects Section 101 Challenge To Software Patent

Since the Supreme Court's decision earlier this year in Alice Corp. v. CLS Bank Int'l., 134 S.Ct. 2347 (2014), the Federal Circuit has decided a series of cases in which it invalidated software patents for failing to claim eligible subject matter under 35 U.S.C. § 101. As recently as mid-November, the Federal Circuit invalidated a patent that claimed a detailed method for providing internet content in exchange for watching an advertisement, reversing its pre-Alice ruling that the patent claimed patent-eligible subject matter. Ultramercial, Inc. v. Hulu, LLC, 2014 U.S. App. LEXIS 21633 (Fed. Cir. Nov. 14, 2014). On December 5, however, a Federal Circuit panel held in a 2-1 decision written by Judge Chen that the claims of a software patent relating to Internet e-commerce "clear the § 101 hurdle." DDR Holdings, LLC v. Hotels.com, L.P., 2014 U.S. App. LEXIS 22902 (Fed. Cir. Dec. 5, 2014), found here.

The DDR Holdings patent is directed to the problem of a "host" website losing internet traffic when a website visitor clicks on a hypertext link in an advertisement for a third-party vendor, taking the visitor to the advertiser's website, and thus away from the host website. The patent solved this purported problem by providing a composite webpage that retained the "look and feel" of the host website but displayed the products of the advertiser. When a user clicked on an advertisement, the visitor would be taken to this composite webpage, giving the visitor the impression that he or she was still on the host website, and thus allowing the host to retain its visitor traffic.

The DDR Holdings patent claims a system containing a "data store" which stores the "visually perceptible elements," i.e. the "look and feel," of several host web pages. When a website visitor activates a link in an advertisement on the host website, the claimed system identifies the host web page and transmits a composite web page using the "look and feel" of the host website and the advertiser's product information to the visitor's web browser. In essence, the claimed system does nothing more than substitute a hyperlink leading to the advertiser's website with a hyperlink leading to a composite webpage that had the "look and feel" of the host website.

The contrast between Judge Chen's majority opinion and Judge Mayer's dissent in DDR Holdings demonstrates how patent eligibility under the Alice analysis can easily turn on how a particular judge characterizes the case law and...