Patent on pre-roll ads found valid as case heads back to California court

A patent ruling last week could make it more expensive to show pre-roll ads to online video viewers.

The U.S. Appeals Court for the Federal Circuit reversed a lower court's decision that said Ultramercial Inc.'s patent for showing an ad before a piece of online content was invalid. This move came after the U.S. Supreme Court had tossed a similar decision from the appeals court and asked it to reconsider in light of some more recent jurisprudence in the Supreme Court's 2012 Mayo Collaborative Servs. v. Prometheus Labs Inc. opinion.

The case started when Ultramercial sued Hulu, YouTube and WildTangent for allegedly infringing its patent on the technology. Both Hulu and YouTube have since been dismissed from the case, but WildTangent remains a defendant.

The ruling last week means the case will go back to a federal district court in California, where the proceedings have been stayed for more than year. They have not yet restarted, court filings show.

Last year, a group of technology companies comprising Google (Nasdaq: GOOG), Twitter, Hewlett-Packard (NYSE: HPQ) and Red Hat, Inc. argued in support of WildTangent's request that a larger panel of judges hear the case. That request was ultimately denied, but the companies provided a good overview of why the litigation is important to them.

"Granting a patent for high-level, abstract ideas is inimical to the basic purposes of the patent system," they argued. "It grants exclusive patents to those who have not innovated, and thereby penalized those that do innovate by blocking or taxing their applications of the abstract idea."

For more:
- see the brief supporting WildTangent
GigaOM had this story
The Washington Post had this blog post

Special report: New advertising formats, timing could help monetize online video advertising

Related article:
Study: In-stream ads tops in viewer recall

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