On February 11, 2015, the United States District Court, Central District of California granted Clickbooth’s Motion for Judgment on the Pleadings, ruling that the claims asserted by Essociate are patent ineligible under 35 U.S.C. § 101 and are therefore invalid. A copy of the motion can be seen, below.
Title 35 of the U.S. Code Section 101 is a section of federal patent law pertaining to what is eligible for patent protection. The decision comes following the 2014 United States Supreme Court decision issued in Alice v. CLS Bank and the subsequent line of software patent infringement cases.
The opinion on Essociate’s patent is a well-reasoned one and reflects the arguments made by defense counsel James A. Epstein, Richard B. Newman and Darren M. Franklin, as well as by counsel Ben M. Davidson for co-defendant Crakmedia. Specifically, defense counsel argued that the Essociate patent is directed to the abstract idea of “receiving and tracking referrals from referral sources.”
Essociate sued Clickbooth on December 3, 2013, accusing Clickbooth of infringing its patent. The lawsuit was another in a slew of patent infringement actions filed by Essociate, and its co-founders Evan Horowitz and Michael Landau, against numerous affiliate networks dating back to 2009.
Clickbooth filed counterclaims contending that it did not infringe the patent and that the patent is otherwise invalid. In addition, Clickbooth filed a petition for inter partes review in the U.S. Patent and Trademark Office challenging all of the patent claims asserted by Essociate.
According to the court’s order, the Essociate patent generally describes steps for how a merchant can gain access to customers from a referring entity without having to compete with other merchants for those same customers. This process allows a merchant to avoid, or at least reduce, competition while also allowing it to still track which and how many customers the referring entity directs to the merchant.
In granting the motion, U.S. District Court Judge James V. Selna noted that “mathematical algorithms, including those executed on a generic computer, are abstract ideas.” Judge Selna rejected Essociate’s contentions and agreed with Clickbooth’s argument that the steps simply embody the fundamental economic practice of receiving and tracking referrals from referral sources, and providing incentives to those referral sources, both concepts that involve the mere formation of economic relations.
The court next considered Clickbooth’s argument that Essociate’s patent claims do nothing more than seek to limit the use of the abstract idea of receiving and tracking referrals from referral sources to the technological environment of an existing affiliate system. Clickbooth asserted in the motion that aspects of the patent “do no more than require a generic computer to perform generic computer functions.”
Implementing an abstract idea on a generic computer is not patentable. Clickbooth argued that the patent claims added no inventive concept to the most routine, basic functions of a computer.
The court agreed, stating that “the claims list steps to configure an existing affiliate system to receive referrals from a new source, assign unique identification codes to webmasters in this new source, receive requests for access to merchant URLs, correlate the identification codes of the affiliate system and the webmaster using a tool like a lookup table, and then generate a URL for the merchant. These claimed steps do not improve the functioning of the computer or the Internet, but only ‘amount to electronic bookkeeping.’”
Defense counsel Richard B. Newman said, “We are pleased the court agrees with Clickbooth’s position that Essociate’s patent claims are directed to an abstract idea.”
Clickbooth sought more than a ruling of non-infringement, which would have allowed Essociate to continue pursuing other affiliate networks. Rather, Clickbooth was able to quickly obtain a complete victory on behalf of the entire affiliate marketing industry by having the asserted claims of the Essociate patent invalidated.
Erin Cigich, Clickbooth CEO, commented, “Essociate has imposed burdensome federal litigation on industry colleagues for years. We decided that it was time for someone to take a stand. Clickbooth will continue to aggressively defend the interests of the affiliate marketing industry.”
It is anticipated that Essociate will appeal the ruling to the U.S. Court of Appeals for the Federal Circuit.
The case is Essociate, Inc. v. Clickbooth.com, LLC, SACV 13-1886 JVS (DFMx), in the U.S. District Court for the Central District of California.
