A firm called Ultramercial claims to have invented the concept of showing a customer an ad instead of charging for content. The company has sought royalties from a number of Web sites, including Hulu and YouTube. Ultramercial’s patent isn’t limited to any specific software algorithm, server configuration or user interface design. If you build a Web site that follows the general business strategy claimed by the patent, Ultramercial thinks you owe them money.The Supreme Court has repeatedly held that abstract ideas cannot be patented. So one of Ultramercial’s targets, a company called WildTangent, challenged the validity of the patent. But in a 2011 ruling, the U.S. Court of Appeals for the Federal Circuit, which hears appeals in all patent cases, sided with Ultramercial, holding that its patent is not too abstract to be patented.

In 2012, after striking down another abstract patent, the Supreme Court ordered the Federal Circuit to reconsider its 2011 decision.

On Friday, the Federal Circuit’s three-judge panel stuck to its guns. Chief Judge Randall Rader, insisted that there was nothing abstract about Ultramercial’s patent. After listing the steps claimed by the patent (“receiving media products from a copyright holder, selecting an advertisement to be associated with each media product, providing said media products for sale on an Internet website,” and so forth), Rader wrote that “Even at this general level, it wrenches meaning from the word to label the claimed invention ‘abstract.'” He notes that by upholding the patent, “there is no risk of preempting all forms of advertising, let alone advertising on the Internet.”

“No risk of preempting all forms of advertising” is a rather permissive standard.

This week’s decision is unlikely to be the last word on abstract patents. Another recent decisionĀ split the Federal Circuit down the middle, with some judges voting to uphold the patent and others voting to invalidate it. The 5-5 decision was over patents concerning computerized financial trading. As patent scholar Mark Lemley put it on Twitter, “we’ve got two Federal Circuits on this issue, and it seems to depend on the luck of the draw.” That kind of legal uncertainty can’t last forever.

via WashPost