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Patenting Web Advertising? Ask Alice, I Think She’ll Know

In a wide-ranging opinion, the US Court of Appeals for the Federal Circuit affirmed the district court’s grant of summary judgment of invalidity for lack of patent eligible subject matter under 35 U.S.C. § 101 with respect to claims directed to web-based advertising. Chewy, Inc. v. International Business Machines, Corp., Case No. 22-1756 (Fed. Cir. March 5, 2024) (Moore, Stoll, Cunningham, JJ.)

Chewy filed suit against International Business Machines (IBM) seeking a declaration that Chewy’s website did not infringe multiple patents related to web-based advertising. IBM responded by filing infringement counterclaims. After claim construction and discovery, the district court granted Chewy’s motions for summary judgment of invalidity for lack of patent eligible subject matter with regard to the asserted claims of one patent and noninfringement of the asserted claims of a second patent.

The claims of the first patent relate to providing a targeted advertisement from an “information repository” to a user based on the user’s internet search. In affirming the district court, the Federal Circuit first determined that, under Alice step 1, “[t]he claims broadly recite correlating advertisements with search results using a generic process.” The Court noted that the claims “merely recite the concept of identifying advertisements based on search results, without any specificity as to how this is accomplished,” and are directed to “the abstract idea of identifying advertisements based on search results.”

Turning to Alice step 2, the Federal Circuit found that the claims used a generic database and conventional processing steps, and “claimed use of a conventional repository for storing advertisements and associated search results in a well-known way.” Because “the claims recite the generic process for obtaining search results from a search query and using the search results to identify advertisements,” they failed under Alice step 2 and did not claim patent eligible subject matter under § 101.

Regarding the second asserted patent, the district court construed the claim term “selectively storing advertising objects at a store established at the reception system” as requiring the “advertising objects” to be “pre-fetched” and retrieved before the user requested a page on a website. Because it was undisputed that “Chewy retrieves advertisements in response to a user requesting a page” and not before, the district court ruled that Chewy’s website did not meet this claim limitation. Looking to the intrinsic claim construction evidence, the Federal Circuit held that the district court’s claim construction was amply supported by the specification and prosecution history and affirmed the district court’s grant of summary judgment of noninfringement. Of note, the Court explained that the specification made multiple references to pre-fetching as being part “of the present invention” and therefore limited the scope of the claims.

With respect to one asserted claim of the second patent, which did not include the limitation at issue, the district court found that Chewy’s website did not practice the limitation of “establishing characterizations for respective users based on the compiled data” because “the record undisputedly showed they deliver advertisements based on the page the user is currently viewing, [...]

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Standard Computer Equipment Can Support Inventive Concept under Alice Step 2

The US Court of Appeals for the Federal Circuit overturned a district court dismissal of a patent case for errors in analyzing the claims’ patent eligibility under Alice. The Court found that regardless of whether the claimed invention was abstract under step 1, the invention claimed specific improvements rendering it patent eligible under step 2. Cooperative Entertainment, Inc. v. Kollective Technology, Inc., Case No. 21-2167 (Fed. Cir. Sept. 28, 2022) (Moore, C.J.; Lourie, Stark, JJ.)

Cooperative Entertainment sued Kollective Technology for infringement of several claims of Cooperative’s patent directed to structuring a peer-to-peer (P2P) dynamic network for distributing large files. After Kollective filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) arguing that all of the patent claims were ineligible under 35 U.S.C. § 101, Cooperative filed an amended complaint. Kollective refiled its motion to dismiss, and the district court granted the motion, holding the challenged claims ineligible under § 101. Cooperative appealed.

The patent relates to systems and methods of structuring a P2P dynamic network for distributing large files, specifically videos and video games. The patent specification explains that in prior art systems, video streaming was controlled by content distribution networks (CDNs), with content “distributed directly from the CDN server originating the content.” In contrast, the challenged claims recite methods and systems for a network in which content distribution occurs “outside controlled networks and/or [CDNs]” (emphasis added), and therefore outside a “static network of controlled systems.” Dynamic P2P networks comprising “peer nodes,” which consume the same content contemporaneously, transmit content directly to each other instead of receiving content from the CDN. The claimed P2P networks use “content segmentation” to segment a video file into smaller clips and distribute it piecemeal. Viewers can obtain individual segments as needed, preferably from other viewers. The disclosed segmentation techniques include “CDN address resolution, trace route to CDN and the P2P server manager, dynamic feedback from peers reporting traffic rates between individual peer and its neighbors, round-robin, other server side scheduling/resource allocation techniques, and combinations thereof” (emphasis in original).

The Federal Circuit applied the two-step Alice framework: (1) determining whether the claim is “directed to” a “patent-ineligible concept,” such as an abstract idea, and if it is, (2) examining “the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Step 2 examines whether the claim elements, individually and as an ordered combination, contain an inventive concept that more than merely implements an abstract idea using “well-understood, routine, [and] conventional activities previously known to the industry.”

Under Alice step 1, the district court had held that the “focus of the [] patent” is the abstract idea of “the preparation and transmission of content to peers through a computer network.” The Federal Circuit disagreed, concluding that regardless of whether the invention could be reduced to an abstract concept, under step 2 the claims contained several alleged inventive concepts that the specification touted as specific improvements in the distribution of data [...]

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