Internet Advertising is an Abstract Idea says US District Court

On 13 August 2010, a Los Angeles District Court found patent US 7,346,545 invalid in view of the US Supreme Court's Bilski v. Kappos opinion. The patent relates to delivering of copyrighted media products (e.g. audio or video data) through a computer or server to internet users free of charge in exchange for watching advertisements. The patent holder, a company named Ultramercial, had sued Hulu and WildTangent for patent infringement, while the defendants filed a motion to dismiss, arguing that the patent neither disclosed nor claimed patentable subject matter. As reported on Patent Litigation Weekly, Ultramercial had argued that the defendants infringed the patent, because they kept copyrighted content in the form of videos or games behind a wall that could only be bypassed after watching an advertisement. Relying on such ad walls has become fundamental to the business model that online video sites like Hulu and YouTube use (see also report on IP Spotlight and the 271 Patent blog). The decision Ultramerical v. Hulu (Central District of California, CV 09-06918) is said to be the first patent lawsuit that was decided based on the grounds of the Bilski ruling (see earlier posts here and here). After the Bilski opinion, according to which the machine-or-transformation test is not the only test for assessing patent eligibility and abstract ideas are not patentable at all, some have interpreted Bilski to completely reject the machine-or-transformation test, while others thought that the decision backed an extensively liberal approach on software and business method patenting, which would also legitimate granting claims like those of the Ultramerical's patent. In fact, Ultramerical v. Hulu clearly shows that in the post-Bilski era the machine-or-transformation test still plays an important role and that there still exists subject-matter that is not patent-eligible even though it might be regarded novel and non-obvious. The Supreme Court’s Bilski opinion apparently was not the kind of “triumphus” some US software and business method advocates thought it was. According to claim 1 of the ‘545 patent, a “method for distribution of products over the Internet via a facilitator” comprises the following steps: receiving, from a content provider, media products that are covered by intellectual-property rights protection [...]; selecting a sponsor message to be associated with the media product, […]; providing the media product for sale at an Internet website; restricting general public access to said media product; offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message; receiving from the consumer a request to view the sponsor message [...]; facilitating the display of a sponsor message to the consumer […]; allowing said consumer access to said media product [...], if the sp…