Ddr Holdings, LLC v. hotels.com, L.P.
113 U.S.P.Q. 2d (BNA) 1097, 773 F.3d 1245, 2014 U.S. App. LEXIS 22902 (2014)
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Rule of Law:
Patent claims are not directed to an unpatentable abstract idea if they are necessarily rooted in computer technology to overcome a specific problem arising in the realm of computer networks, rather than merely claiming a longstanding commercial practice implemented on a generic computer.
Facts:
- Websites, acting as hosts, would display advertisements for third-party merchants.
- When a visitor on a host website clicked a link for a third-party merchant, standard internet protocol would transport the visitor away from the host's site to the merchant's site.
- This process caused the host website to lose its visitor traffic and the visitor's attention.
- DDR Holdings, LLC (DDR) held patents for a system designed to solve this problem.
- When a visitor clicks a merchant link on a host site using DDR's system, it generates a new, composite web page.
- This composite page combines the 'look and feel' (e.g., logo, color scheme, layout) of the host website with the product information of the third-party merchant.
- The system thereby gives the visitor the impression they are still on the host's website while viewing the merchant's products.
- National Leisure Group, Inc. (NLG) operated a system for travel-oriented websites where clicking a cruise line advertisement generated a composite web page incorporating the host website’s 'look and feel' with the cruise line's information.
Procedural Posture:
- DDR Holdings, LLC sued National Leisure Group, Inc. (NLG) and others in the U.S. District Court for the Eastern District of Texas for infringement of U.S. Patent Nos. 6,993,572 ('572 patent) and 7,818,399 ('399 patent).
- The case proceeded to a jury trial.
- The jury found that NLG infringed the asserted claims of both patents and that the patents were not invalid.
- The jury awarded DDR $750,000 in damages.
- NLG filed a renewed motion for judgment as a matter of law (JMOL), arguing that the patents were invalid under 35 U.S.C. § 101 (ineligible subject matter) and § 102 (anticipation), among other grounds.
- The district court (trial court) denied NLG's JMOL motion.
- NLG (Appellant) appealed the district court's final judgment to the U.S. Court of Appeals for the Federal Circuit, with DDR (Appellee) as the opposing party.
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Issue:
Does a patent claim for a system that generates a composite web page combining visual elements from a host website with content from a third-party merchant, thereby overriding the conventional operation of an internet hyperlink to solve a problem unique to the internet, constitute a patent-ineligible abstract idea under 35 U.S.C. § 101?
Opinions:
Majority - Chen, J.
No. The patent claim does not constitute a patent-ineligible abstract idea because it is directed to a specific implementation that solves a problem unique to the internet. The court applied the two-step framework from Alice Corp. v. CLS Bank Int'l. While the claims address a business challenge of retaining website visitors, it is a challenge particular to the Internet that did not exist in the pre-Internet world. The claimed solution is necessarily rooted in computer technology and overcomes a problem specifically arising in the realm of computer networks. It overrides the routine, conventional functioning of Internet hyperlink protocol by generating a new hybrid web page instead of transporting the user to the merchant's site. This is distinct from merely computerizing a fundamental economic practice or longstanding commercial practice, as it provides a specific, technical solution to a technical problem.
Dissenting - Mayer, J.
Yes. The patent claim constitutes a patent-ineligible abstract idea because it simply applies a well-known, pre-existing business practice using a generic computer. The patent is directed to the abstract concept of increasing sales by making two web pages look alike, which is merely the internet-based version of the long-established 'store within a store' business model. The claims do not disclose any new technology or inventive concept for achieving this goal; they use conventional computer elements like a 'data store' and 'computer processor.' The solution is entrepreneurial, not technological, and does not improve the functioning of the computer itself. Therefore, it fails to meet the patent-eligibility requirements of § 101.
Analysis:
This decision is significant for being one of the first Federal Circuit cases post-Alice Corp. v. CLS Bank Int'l to find a computer-implemented business method patent-eligible under § 101. It established a crucial distinction: claims that solve a problem specifically arising from the nature of the internet, rather than simply automating a pre-existing real-world practice, may survive a § 101 challenge. This provided a potential pathway for patent eligibility for software inventions by focusing on whether the claimed invention is a technical solution to a technical problem unique to the technological environment. It tempered the sweeping ineligibility trend post-Alice by suggesting that not all business-related software claims are inherently abstract.
