Federal Circuit Upholds Patent on “Viewing Ads Online”


Concerns have been raised that a recent decision by the Federal Circuit court of appeal could lead to an escalation in so-called patent abuse in the technology industry. The decision, which was taken last Friday, upheld a controversial patent owned by a company called Ultramericial, and has been called a “missed opportunity” to finally rein in abusive patent trolls.

Writing for the Washington Post, Timothy E. Lee states that the court missed a golden opportunity to “rein in these abstract patents,” many of which are incredibly obvious and probably should never have been awarded a patent in the first place. Lee’s view was reiterated by the Electronic Frontier Foundation, which issued a statement calling on the courts to “limit some of the worst software patents we’ve seen.”

The case relates to a patent owned by Ultramercial that governs the process of offering website customers the option to view commercial ads rather than pay for content. In other words, it claims to have a patent for displaying ads, which numerous companies choose to do so that they can offer their services for free. Hvaing been granted a patent for its ‘idea’, Ultramercial decided to file a lawsuit against video streaming provider Hulu and gaming network WildTangent – both of whom use display advertising as an alternative to charging their customers.

Now one would think that this is pretty damn silly – after all, how can someone patent an abstract concept like displaying ads? That was the view taken by the Supreme Court, which ruled that abstract ideas cannot be patented – but the appeals court saw things differently, ruling that in Ultramercial’s case, the entire process was carried out online and was therefore an original ‘idea’, even though the underlying idea is an abstract one.

According to the Washington Post, the implications of this ruling will result in even more tech companies patenting “conceptual categories for future inventions,” with the courts likely to allow them.

The problem with these so-called abstract patents is that in many cases they are so blindingly obvious that numerous companies will come up with similar concepts independently, yet whoever gets their first and lands the patent is allowed to sue the rest. Even worse, many of the patent holders sit on their ideas, refusing to develop any products or services around them, effectively stifling innovation unless someone agrees to pay licensing fees to use their ‘idea’.

Fortunately, the Ultramercial ruling is not thought to be definitive, as previous judgments on abstract patents have often been split. According to the Washington Post, there’s a good chance that the Supreme Court may once again overturn the Federal Circuit’s judgment, as it often takes a much tougher stance on these kinds of abstract patents – in the last three related cases that came up before it, the Supreme Court invalidated the patents that the Federal Circuit had previously approved.