Federal Circuit Affirms § 101 Ineligibility of Set-Top Box Advertising Claims: Customedia Techs., LLC v. Dish Network Corp.

Claims of two patents directed to “data management and on-demand rental and purchase of digital data products,” e.g., selling advertising to be displayed via a set-top box, recites patent-ineligible subject matter under 35 U.S.C. § 101 and the Alice/Mayo test, held the Federal Circuit in Customedia Techs., LLC v. Dish Network Corp., No. 2018-2239 (March 6, 2020) (precedential). The Federal Circuit, in an opinion by Judge Moore, joined by Chief Judge Prost and Judge Dyk, affirmed the PTAB’s final written decisions, in Covered Business Method Review proceedings, of ineligibility of U.S. Patent Nos. 8,719,090 and 9,053,494.

Claim 1 of the ’090 patent recites:

1.  A data delivery system for providing automatic delivery of multimedia data products from one or more multimedia data product providers, the system comprising:

a remote account transaction server for providing multimedia data products to an end user, at least one of the multimedia data products being specifically identified advertising data; and

a programmable local receiver unit for interfacing with the remote account transaction server to receive one or more of the multimedia data products and for processing and automatically recording the multimedia data products, said programmable local receiver unit including at least one individually controlled and reserved advertising data storage section adapted specifically for storing the specifically identified advertising data, said at least one advertising data storage section being monitored and controlled by said remote account transaction server and such that said specifically identified advertising data is delivered by said remote account transaction server and stored in said at least one individually controlled and reserved advertising data storage section.

Under Alice step one, the patent owner argued that this claim improved “the operation and functioning of computer systems.” The Federal Circuit disagreed, finding the claims instead “directed to the abstract idea of using a computer to deliver targeted advertising to a user.” Where the patent owner argued that the claims provided for dedicated storage for advertising data improve storage and transfer capabilities, the court found that “the claimed invention merely improves the abstract concept of delivering targeted advertising using a computer only as a tool,” which does not qualify as improving functioning of a computer itself.

Notably, the court provided a long list of precedent that was distinguishable, including Enfish, LLC v. Microsoft Corp. (Fed Cir. 2016) (improved data structure held patent eligible) and Visual Memory, LLC v. NVIDIA Corp. (Fed. Cir. 2017), as cases where patent claims were eligible because they improved operation of a computer as opposed to improving application of a computer to an abstract idea. On the other hand, a long line of cases including Affinity Labs of Texas, LLC v. Amazon.com Inc. (Fed. Cir 2016) (providing out-of-region access to digital broadcasts not patent-eligible), TLI Communications LLC v. AV Automotive LLC (Fed. Cir. 2016) (classifying and storing digital images not patent-eligible), and Intellectual Ventures I LLC et al. v. Capital One NA (Fed. Cir. 2015) (tailoring webpages to advertise to individual users not patent-eligible).

Turning to Alice step two, the court agreed with the PTAB that the claims did not recite an inventive concept. Not only did “the claims recite only generic computer components,” but the patent “specification acknowledges” that various components were those known in the art. The patent owner’s argument that dedicating storage for advertising was to no avail; invoking a known computer could not “supply the required inventive concept.”

Finally, it should be noted that not all claims of both patents were at issue in this appeal; not all claims were at issue in the Covered Business Method Review, and some of the claims in the CBM had been dealt with on § 102 grounds, or § 112 grounds, and/or were not appealed.