IP Law Daily, PATENT—Fed. Cir.: IBM’s appeal in patent case involving the display of online ads succeeds in rescuing one claim from dismissal, (Mar 5, 2024)

By Robert B. Barnett Jr., J.D.

IBM mostly lost on appeal, with dismissal of eight of the nine claims being affirmed, but it did obtain reversal on one claim in a patent describing the display of online ads.

In a case in which a New York federal court granted summary judgment to pet food merchant Chewy in its claim that its method of presenting online ads to website and app users did not infringe two of IBM’s patents, the Federal Circuit has reversed and remanded on a single claim in one of the patents, ruling that genuine questions of fact remained about whether Chewy’s ad-sorting processes may have delivered ads to users based on user-specific targeting criteria in violation of one of IBM’s patents. Otherwise, the Federal Circuit upheld the lower court’s ruling in favor of Chewy, including that: (1) the other four claims in the same patent did not infringe IBM’s patent and (2) all four claims in the second patent were patent-ineligible for failing to contain an inventive concept (Chewy, Inc. v. International Business Machines Corp., March 5, 2024, Moore, K.).

Background. IBM owns U.S. Patent No. 7,072,849 (’849), which discloses improved methods for presenting ads to users of an interactive service, and U.S Patent No. 7,076,443 (’443), which discloses improved systems and methods for targeting ads. Patent ’849 minimizes ad traffic interference by storing and managing ads before the user requests it. Patent ’443 targets ads by identifying them based on search results rather than on the more conventional approach of identifying them based on user profiles and search queries. Chewy’s website and mobile applications also deliver ads to users based on various criteria.

Chewy preemptively sued IBM in New York federal court, seeking a declaratory judgment of noninfringement. IBM counterclaimed, alleging patent infringement. After claim construction and discovery, the district court granted summary judgment to Chewy, ruling that claims 1, 2, 12, 14, and 18 of the ’849 patent were not infringed. The court also ruled that claims 13, 15, 16, and 17 of the ’443 patent were invalid as directed to ineligible subject matter under 35 U.S.C. §101. IBM appealed the decision to the Federal Circuit in D.C.

’849 patent claims. The appellate court began by addressing four of the five claims in the ’849 patent: claims 1, 2, 14, and 18. The district court had ruled that those four claims did not infringe the IBM patents because neither Chewy’s website nor its mobile apps performed the “selectively storing limitation” that patent ’849 claimed.

The appellate agreed with the lower court’s conclusions. The lower court had construed IBM’s “selectively storing limitation” as describing the retrieval of advertising objects and their storage in anticipation of display concurrently with the applications. The district court had characterized this process as “pre-fetching,” i.e., fetching the ads before they are actually requested. The Federal Circuit agreed with the district court, ruling that the written description of the ’849 patent supports that construction by specifically referring to an ad that can be “pre-fetched” from the network.

IBM argued that the “selectively storing limitation” did not require pre-fetching because the written description referred to “predetermined storage criterion” rather than pre-fetching. The appellate court, however, rejected this argument, noting that the language that IBM cited refers to “objects” generally rather than to advertising objects specifically. The Federal Circuit went on to note that the prosecution history further supports the lower court’s claim construction. In one of its briefs, IBM referred to the fact that “advertising objects may be separately pre-fetched from the network.” The appellate court, therefore, ruled that selectively storing advertising objects requires pre-fetching, and it affirmed the lower court’s claim construction.

IBM then argued that, even with the lower court’s claim construction, a factual dispute remains about whether Chewy infringed the four claims in the patent because Chewy’s website and mobile apps selectively store ad objects. In support of its argument, IBM points to Chewy’s source code, which provides that Chewy “prefetches/preloads.”

The lower court had rejected this argument on the ground that the reference in the source code had no bearing on whether the Chewy products actually perform pre-fetching. Because they did not, the lower court had ruled, no infringement had occurred. The district court had also ruled that its claim construction did not include retrieving an ad object on demand by the user. The Federal Circuit agreed, noting that this clarification was consistent with the written description of the ‘849 patent. Chewy does retrieve ads in response to a user’s request, but it does not retrieve them in anticipation of the user requesting the page on which they appear, which was what the ‘849 patent describes. The Federal Circuit, therefore, affirmed the lower court’s grant of summary judgment on claims 1, 2, 14, and 18 of the ’849 patent on noninfringement grounds.

Claim 12. The appellate court’s ruling left only claim 12 of the ’849 patent, which describes a method for presenting ad in a computer network. Among the steps involved is “establishing characterizations for respective users based on the compiled data.” The district court had granted summary judgment on claim 12 because it ruled that Chewy’s products did not establish characterizations for respective users, which was described as delivering ads to a user based on user-specific targeting criteria, including the user’s interaction history and demographics.

The Federal Circuit, however, disagreed. Chewy’s privacy policy tells users that Chewy uses “what ads you see, what ads you interact with, and other actions you take on our Services” to provide targeted ads. By granting summary judgment to Chewy, the Federal Circuit ruled, the lower court failed to draw all reasonable inferences in IBM’s favor, as the nonmoving party. A reasonable trier of fact may believe that the privacy policy indicates that Chewy delivers ads based on the individual user’s interaction history, which may be construed to infringe the IBM patent.

In addition to the privacy policy, Chewy’s internal documents describe Chewy’s strategy as involving the use of individualized targeting criteria. Those documents reveal that Chewy delivers ads to users suggesting the repurchase of an item, based on the customer’s previous order history. As a result, the appellate court ruled, a genuine dispute of material fact exists about whether Chewy “establishes characterizations for respective users.” Summary judgment was thus reversed as to noninfringement of claim 12 of the ’849 patent.

’443 patent. The proper approach to deciding whether the four claims in the ’443 patent were unpatentable is the two-step framework set forth in Alice Corp. v. CLS Bank Int’l, 573 U.S. 208, 217-218 (2014). The Alice framework calls for, first, a determination of whether the targeted ads were directed to an abstract idea, and, second, if so, a determination whether the claims contain an inventive concept.

The court first found that the claims were directed to the abstract idea of identifying ads based on search results. Broadly speaking, the appellate court ruled, the claims recite a process for correlating ads with search results using a generic process. These claims, the court noted, “are not directed to any challenges unique to computer networks, or specific improvements in the functionality of the computer itself.” Instead, the claims “merely recite the concept of identifying advertisements based on search results, without any specificity as to how this is accomplished.” Thus, the Federal Circuit ruled that the claims were directed to an abstract idea.

Turning to step two, the appellate court agreed with the lower court that the four claims failed to recite an inventive concept. Rejecting IBM’s argument, the Federal Circuit ruled that “[u]sing a generic database to store the information used in correlating advertisements with search results is not an inventive concept.” IBM had no right to claim that the repository was specialized. In addition, the appellate court ruled that “the use of off-line batch processing in combination with a repository that associates search results with advertisements is not an inventive concept.” Third, “the claimed use of session values, individually or in combination with the remaining elements of claim 16, is not a sufficient inventive concept.” The patent provided no additional detail as to how this might have been done unconventionally. And, finally, the fourth claim merely describes a generic method for using search results in targeted advertising.

As a result, the Federal Circuit ruled that all four claims lacked any inventive concept necessary to transform an abstract idea into patent-eligible subject matter. All four claims employed conventional methods to obtain conventional results and were thus unpatentable.

The court, therefore, affirmed the district court’s grant of summary judgment on noninfringement grounds for claims 1, 2, 14, and 18 of the ’849 patent, and it affirmed the district court’s grant of summary judgment that claims 13, 15, 16, and 17 of the ’443 patent were unpatentable. The court, however, reversed summary judgment on noninfringement grounds for claim 12 of the ’849 patent, and it remanded for further proceedings.

The Case is No. 22-1756.

Attorneys: Joshua Lee Raskin (Greenberg Traurig LLP) for Chewy, Inc. Karim Zeddam Oussayef (Desmarais LLP) for International Business Machines Corp.

Companies: Chewy, Inc.; International Business Machines Corp.

Cases: Patent FedCirNews NewYorkNews