Charter Gets Judge To Kill Advertising Patents Under Alice
Share us on: By Ryan Davis
Law360 (March 5, 2018, 8:15 PM EST) -- A New York federal judge has ruled that three targeted-advertising patents asserted against Charter Communications are invalid for claiming nothing more than abstract ideas, saying that they “do not describe the kind of 'discovery'” that patents are meant to protect.
In a decision Thursday, Judge Paul Engelmayer of the Southern District of New York granted Charter’s motion to dismiss the suit by Quantum Stream Inc. for failure to state a claim because the patents implement an abstract idea using computers, something the U.S. Supreme Court said in its 2014 Alice case is not eligible for a patent.
The patents describe a content distribution system in which advertisements are selected and delivered to users based on demographics and other information about them. The judge said that is a patent-ineligible abstract idea.
"The court holds that Quantum's three patents at issue claim at their inventions no more than the abstract idea of custom advertising, including when advertising is directed to a user based upon qualities of the user, such as the user's selection of other content,” he wrote.
The ruling ends a case that began almost exactly one year ago on March 7, 2017, when Quantum Stream, a unit of the patent licensing company once known as Vringo Inc., sued Charter, alleging that its Spectrum cable service provides targeted ads to customers in ways that infringe its patents.
The complaint refers to several press releases in which Charter announced new targeted-advertising capabilities through its Ads Everywhere system for delivering ads through the cable company’s streaming app.
According to the press releases, the system "enables marketers to target consumers with specialized ads using insights and demographic data such as household income, lifestyle, and purchasing preferences."
The patents, issued in 2015 and 2016, describe a process of matching secondary advertising content to a user's selection of primary content using a variety of consumer devices like TVs with set-top boxes, computers and mobile phones.
The judge concluded that “Quantum's claims capture nothing more than a recitation of the abstract idea of customizing secondary advertising content based on user or other criteria,” and therefore "do not describe the kind of 'discovery' that [the Patent Act] was designed to protect."
The patents add nothing to the "familiar and unremarkable" process of matching ads to users to make a tailored presentation, and involve no improvements to computer technology, the judge said, adding that a person could perform the same function without any technology at all.
"A human mind could evaluate attributes or other criteria (e.g., the user's age), derive from these tailored secondary advertising content and implement these selections by using a simple device that inserts digital advertising content into the stream of primary content," he said.
Quantum Stream had previously sued DirecTV LLC and Cablevision Systems Corp. over the patents. Those companies reached settlements in 2016 and 2017, respectively.
Quantum Stream is a unit of a company now called XpresSpa Group Inc., the latest in a series of name changes as it has changed its business model. It has now shifted gears completely from monetizing patents, as it did under the Vringo name, to operating a chain of spas located in airports.
Attorneys for the parties could not immediately be reached for comment Monday.
The patents-in-suit are U.S. Patent Numbers 9,047,626; 9,117,228; and 9,349,136.
Quantum Stream is represented by Gregory S. Gewirtz, Jonathan A. David and Alexander Solo of Lerner David Littenberg Krumholz and Mentlik LLP.
Charter is represented by David S. Benyacar and Daniel L. Reisner of Arnold & Porter.
The case is Quantum Stream Inc. v. Charter Communications Inc., case number 1:17-cv-01696, in the U.S. District Court for the Southern District of New York.
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