CAFC Affirms Win for Hulu Due to Ineligibility of Digital Ad Tech Claims

The U.S. Court of Appeals for the Federal Circuit (CAFC) on Wednesday affirmed a decision for Hulu, LLC that dismissed a patent infringement suit brought by Piranha Media Distribution LLC because the asserted claims were found to be patent ineligible. The opinion was authored by Judge Cunningham.

Piranha claimed that Hulu infringed its U.S. Patent Nos. 10,986,403 and 11,463,768, which relate to systems for integrating advertisements in digital media. The U.S. District Court for the Central District of California granted Hulu’s motion to dismiss the complaint, finding that the claims were not directed to patent eligible subject matter. Specifically, the district court found the claims were directed to the abstract ideas of “displaying an advertisement in exchange for access to copyrighted material” and “receiving, organizing, and displaying data.”

Hulu had also argued that a decision of the Patent Trial and Appeal Board (PTAB) that had rejected earlier claims submitted as part of the application that led to the ’403 patent precluded Piranha from litigating patent eligibility in district court, but the district court rejected that argument.

On appeal, Piranha contended that the district court erred in finding the claims patent ineligible under Section 101 and also erred in finding no inventive concept under step two of the Alice-Mayo framework.

The CAFC disagreed, first explaining that claim 1 of the ‘403 patent “is directed to the abstract idea of preventing skipping advertisements by receiving, organizing, displaying, and controlling access to data.” Citing to Mobile Acuity v. Blippar Ltd., the CAFC reiterated its previous holding that “claims reciting generalized steps of collecting, analyzing, and presenting information, using nothing other than the conventional operations of generic computer components, are directed to abstract ideas.”

Piranha attempted to argue that claim 1 provides a technical solution to the technological problem of “users’ easily manipulating media to avoid ads.” However, the CAFC said that “the ’403 patent and Piranha’s own statements to the district court belie Piranha’s framing of claim 1.” Consumers have found ways to skip ads for decades, including via “tape recorders, video cassette recorders, compact disk burners, digital video disk burners, and computer systems,” noted the opinion.  Piranha’s statements in the district court confirmed as much, and thus the CAFC held the claims did not offer a new solution to a technological problem.

“The claim achieves the goal of preventing skipping advertisements via steps that do nothing more than receive, organize, display, and control access to data, which places the claim squarely in line with those claims we have previously determined to be directed to computer-implemented abstract ideas,” wrote the CAFC.

Piranha also argued that claim 1 should not be found patent ineligible because it does not “claim solely the result of preventing users from skipping advertisements or broadly preempt the field of preventing users from skipping advertisements,” but the opinion concluded that “the absence of complete preemption does not demonstrate patent eligibility,” quoting Ariosa v. Sequenom.

At step two of Alice, Piranha argued that claim one includes an inventive concept because the claimed intersplicer “offer[s] a specific improvement over the prior art.” But the CAFC said “the intersplicer performs only insignificant data gathering steps.” Piranha’s additional arguments amounted to a repetition of its step one arguments, said the CAFC, and therefore failed.

The CAFC did not reach the issue of the PTAB decision’s preclusive effect because the district court did not explicitly rely on it. Ultimately, the district court’s decision to grant Hulu’s motion to dismiss was affirmed.

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