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Supreme Court orders new look at Internet-based business methods

The U.S. Supreme Court ordered a lower court to reconsider a decision allowing patent protection for some ideas involving business methods conducted over the Internet.

The justices on Monday set aside an appeals court decision allowing a patent for a way to make consumers watch advertisements before they can view copyrighted material on the Web. The appeals court had said patent owner Ultramercial LLC, which offers online advertising services, could pursue a lawsuit against WildTangent Inc., which lets consumers play online games after first watching a commercial.

The U.S. Court of Appeals for the Federal Circuit, which specializes in patent cases, must reconsider the case under two Supreme Court decisions that made it harder for some types of ideas to get legal protection. The cases were part of a trend by courts and Congress to consider ways to curb infringement lawsuits against technology companies.

WildTangent’s appeal to the Supreme Court was supported by Google Inc. and Verizon Communications Inc.

The appeals court ruling exposes “high-tech companies to increased litigation risk by sanctioning sketchy, high-level claims that lack the specifics that transform abstract ideas into patentable processes,” Google and Verizon said in their filing with the court.

Ultramercial, based Rancho Palos Verdes, Calif., had sued Google’s YouTube unit in the same case. That claim was settled in 2010.

A trial judge ruled that Ultramercial’s concept was an abstract idea and not entitled to patent protection. The Federal Circuit revived the case after deciding the patent covered a practical application of an old idea.

A trial is scheduled for October to determine whether the Ultramercial patent is invalid based on earlier inventions, and if not, whether WildTangent infringed the patent.

WildTangent said the Federal Circuit, in permitting the trial, misinterpreted a 2010 Supreme Court decision, named after patent owner Bernard L. Bilski, that limits what types of business methods can receive patents.

The Ultramercial ruling would allow anyone with a general concept to get a patent by adding the phrase “over the Internet,” lawyers for WildTangent, based in Redmond, Wash., said in court papers.

Ultramercial’s lawyers said the appeals court properly ruled that the patent covers specific steps that can be implemented only through complex computer programming. They said the court complied with the Bilski decision and a later Supreme Court ruling that made it harder to obtain a patent on medical diagnostic tests.

The case is WildTangent Inc. v. Ultramercial LLC, 11-962.

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