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Bar News - March 18, 2011


Intellectual Property: Hey - Thatís My Idea! Interval Licensing and a Quest to Rule the Virtual World

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Google is just one of many major Internet-based companies targeted in a lawsuit filed by Steve Allen regarding patent infringement. Also targeted are Netflix, Facebook, YouTube, Yahoo, and AOL.
Paul Allenís recent suit for patent infringement could result in a substantial extension of the scope of patentability under the US patent laws and radically alter the use of the Internet. Although his original suit was dismissed on December 10, 2010, for failing to "identify the infringing products or devices with any specificity," Allen refilled his complaint with greater detail but with the same baggage as the last time. If eventually successful, which is by no means certain, Allenís suit could in a sense privatize the virtual world.

Allen, Microsoftís co-founder, filed an action against several Internet giants, including Apple, Google, eBay, Netflix, Facebook, YouTube, Yahoo, and AOL, alleging that they infringe certain business method patents that claim some of the most basic tools for accessing and navigating through the Internet. The contested patents claim: 1) Browsers for Use in Navigating a Body of Information Represented by Audiovisual Data; 2) Attention Managers for Occupying the Peripheral Attention of a Person in the Vicinity of a Display Device; and 3) Alert to Items of Current Interest. The suit alleges, among other things, that the defendantsí websites automatically call up and display searched items as well as related content for the user in a manner that infringes the claimed patents.

Patents may validly claim a business method so long as they specifically describe a new, useful and nonobvious process for achieving a result, but many courts have invalidated such patents for vagueness and over-breadth, and for claiming unpatentable ideas rather than specific processes. Where the court eventually draws the line in Allenís case may well determine when unpatentable "ideas" cross the line into patentable "methods," and will likely affect the future of the Internet and indeed the culture of invention itself for years.

Interval Licensing v. Apple, et al.

Paul Allen and David Liddle founded Interval Licensing Co., the named plaintiff in the lawsuit, in 1992 to perform research and development in the areas of information systems, communications and computer science. In less than a decade, the company obtained a total of 300 patents, four of which are the subject of its current lawsuit. These four patents were issued between 2000 and 2004, and their general language raises substantial questions as to the extent such patents could legitimately cover current Internet features. The patent for the browser, for instance, states that the invention in one application called a "news browser" enables the acquisition and review of news stories obtained over a specific period of time. Although it can be inferred that the patent is referring to a form of search engine within a particular site, it is difficult to determine from the claims or specifications the specific function described.

The initial complaint, filed in August of 2010, shed very little light on the precise nature of the inventions protected by the patents. The complaint merely listed the name of the patents and stated that each of the named defendantís "had infringed and continues to infringe" the relevant patent. Not surprisingly, the suit was dismissed on December 10, 2010 for failing to provide the requisite specificity as to the products claimed to infringe the patents at issue. On December 28, 2010, Interval Licensing filed an amended complaint to address the courtís concerns.

The amended complaint provides some new detail concerning the products that allegedly infringe the patents in addition to illustrating Interval Licensingís perspective on the nature of patents at issue. It alleges, for example, that the first patent entitled, "Browser for Use in Navigating a Body of Information, with Particular Application to Browsing Information Representation By Audiovisual Data," protects software that enables a user to review a large body of information by categorizing and correlating segments of information and generating displays of segments that are related to the primary information being examined by the user. The two common website features that Interval Licensing now claims to infringe this invention are: 1) spam filters; and 2) displays of related content to a particular page being viewed by the user. For example, the amended complaint alleges that YouTube has infringed the patent because whenever a user views a video clip, a number of related videos are displayed on the side of the screen.

The second patent at issue is entitled, "Attention Manager for Occupying the Peripheral Attention." The invention enables information to be displayed without distracting the user from the primary interaction with the computer. The amended complaint alleges that websites and software that display alerts or widgets while a user is using the computer in another manner infringe this patent.

The third patent relates to and bears the same title as the second patent. As interpreted by Interval Licensing, one patent protects the invention itself while the other covers the use of the invention in the infrastructure of a product or website.

As an example of how these two patents relate, the amended complaint identifies Appleís Dashboard software as one product that uses both protected inventions. Dashboard is a program that displays widgets such as a calendar, a weather tracker and a calculator, as an overlay on the computer screen. Most Apple computers have a specialized Dashboard key that is included at the top of the keyboard. According to the amended complaint, the manufacture of Dashboard infringes the second patent, and its inclusion of the software in the infrastructure of its computers infringes the third.

The fourth patent at issue, entitled "Alerting Users to Items of Current Interest," describes a system that receives indications from users that online content is of current interest. The amended complaint alleges that software using a userís activities, such as viewing, rating, reviewing or purchasing content, to provide recommendations for other content to the user infringes this patent. For example, Interval Licensing alleges that Facebook infringes because multiple areas of the Facebook site use software that determines what content may be of interest to users based on the usersí activities on line, e.g., the site will often recommend other members whom a user may wish to "friend."

The amended complaint lays claim to several tools that have become an integral part of the Internet landscape. The number and size of the defendants named in the suit is a testament to their prevalence. However, the question remains whether the asserted patents claim patentable subject matter or whether they claim mere technological concepts that cannot be patented.

Business Method Patents

Patents cannot be issued for abstract ideas. For a patent to issue under ß101 of the Patent Act, an invention must be a "new and useful process, machine, manufacture, composition of matter or any new and useful improvement thereof." The most abstract of these four categories of patentable subject matters, and therefore the most troublesome, is the "process" category. Courts have struggled over where to draw the line between patentable processes on the one hand and unpatentable ideas on the other.

Indeed, the lines have been drawn, erased and redrawn by the federal courts over time.

Until 1998, the Patent Act was interpreted as prohibiting the issuance of patents for a way of doing business. In State Street Bank & Trust Co v. Signature Fin. Group, however, the Federal Circuit ruled that a business method that was sufficiently specific could be considered a "process" patentable under the Patent Act.

Business method patents became very popular after the State Street decision, particularly among Internet companies in the process of discovering how to make Internet business easy and effective. The year after State Street, Amazon.com obtained a patent for its 1-click express ordering feature. In 2001, the Federal Circuit upheld the patent in an infringement claim against BarnesandNoble.com. Following Amazon.com and State Street, patents were issued for a variety of Internet business methods including Netflixís "Dynamic Queue System," which allows customers to rent DVDs from an online source, and Priceline.comís reverse auction system, enabling customers to set their own price at an Internet auction.

Recently, the popularity and support for business method patents has sharply declined. In 2008, the Federal Circuitís In re Bilski decision held that, in order to be valid, all patents must claim either a machine or a transformation of a previous invention. Although the Court purported to reaffirm its State Street holding, it refused to uphold a patent for a method of hedging risks in commodities trading because the method at issue amounted to merely an abstract idea, and it did not involve the transformation or reduction of something into a different state or thing.

On June 28, 2010, the Supreme Court in Bilski v. Kappos affirmed the Federal Circuitís holding, but found that the machine or transformation test was not the only test for patent eligibility. Rather, the Court concluded that the test should be used as a tool to determine whether a patent claims a process that is truly new, useful and non-obvious as required under ß103 of the Patent Act. Nonetheless, the Court ruled against the petitioner because the patent purported to claim the concept of hedging risk as well as the application of that concept to energy markets.

Like the Federal Circuit, the majority of the members of the Supreme Court refused to categorically reject business methods. Both Justice Breyer and Justice Stevens, however, wrote concurrences claiming that business method patents should be rejected outright.

Implications for Interval Licensing Suit

The Interval Licensing patents were issued between 2000 and 2004, at the height of the popularity of business method patents. However, the inventions protected by the Interval Licensing patents are not strictly business methods. Unlike the 1-Click System patent, or the "Dynamic Queue System" patent, the Interval Licensing patents do not strictly involve business transactions. Instead, they are tools that could be useful in conducting a business, but could also be used in other contexts. In particular, the "Attention Manager" invention may be used to display commercial information, but its more common usages include alerting a user to a new e-mail, a change in a friendís status in an instant messenger program, or the newest sportsí scores.

Had the Interval Licensing suit been brought shortly after Amazon.com, itís possible that the Washington District Court would have adopted an expansive interpretation of business methods and upheld the patents. Although such a decision is still possible, it is less likely in light of the recent decisions by the Federal Circuit and Supreme Court. Regardless, any decision on the merits in the Interval Licensing case will certainly play a key role in determining whether Internet tools are patentable, or should instead be categorized as mere abstract ideas.

Impact of an Interval Licensing Victory

If Allen prevails, it could change the way the Internet operates. The Internet has become integral to modern life; it has changed the way we shop, watch movies, and interact with each other. In a virtual sense, it serves as our public marketplace, both in commerce and in ideas generally. The Internet has achieved this prominent position in modern society over just a couple decades. Its rapid advancement is largely due to the constant stream of technological innovation that has occurred, and the ability of different companies to use these new technologies.

A victory for Interval Licensing in this suit would give Allenís company a monopoly on a substantial number of these technologies. The patents involved in the Interval Licensing suit protect general Internet tools rather than specific methods of conducting business. They are found in a myriad of websites and programs. A monopolization of this technology at such an abstract level could slow innovation as it would lock out participation and creative activity not controlled by the "owner." In addition, commercial activity may turn to litigation and deal making rather than innovation. As a result, a victory for Allen could have serious negative repercussions for the future of innovation on the Internet.

Chris Vrountas leads the Nelson, Kinder, Mosseau & Saturley,) Employment Counseling and Litigation, and Food and Hospitality Practice Groups. He represents a variety of companies in employment and civil rights matters, covenants not to compete and trade secret disputes, intellectual property matters, and other complex business disputes. He can be reached at 603-606-5015 or cvrountas@nkms.com.

Supreme Court Rule 42(9) requires all NH admitted attorneys to notify the Bar Association of any address change, home or office.

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