Pandora Prevails in “Shakedown” Patent Lawsuit

September 22, 2022

Music streaming giant Pandora recently prevailed in a patent lawsuit filed by Bluebonnet Internet Media Services. The lawsuit centered on Pandora’s use of auto-generated music playlists tailored to its listeners’ preferences. On September 7th, a Federal District Court Judge ruled that the patents involved were fundamentally addressed to an abstract idea – and should have never been issued in the first place.

The patents in question describe a method for using a “computer system for generating media playlists based on a user’s ratings.” As users rate songs, a “playlist generator” automatically creates playlists based on those preferences. Bluebonnet acquired the patents from now-defunct tech startup Friskit Inc. and filed the lawsuit against Pandora in August 2020.

“[T]he patents involved were fundamentally addressed to an abstract idea – and should have never been issued in the first place.”

U.S. courts have long held that abstract ideas and natural laws are not patentable because they form the basic “building blocks of human ingenuity.” The broad category of “abstract ideas” includes common fundamental commercial practices, such as tailoring a product based on the preferences and traits of the target consumer. District Judge Vince Chhabria ruled that the patents in question fit that mold. They were essentially a method of tailoring a product (music playlists) based on a consumer’s preferences (song ratings).

Nevertheless, an abstract idea can be patented if the patent describes an “inventive concept” that transforms the claims into something “significantly more” than a monopoly on the abstract concept itself. The U.S. Supreme Court’s 2014 decision in Alice Corp. Pty. v. CLS Bank Int’l clarified that merely implementing an abstract idea in a generic computer environment, without solving a specific technological problem or improving the technical function of a computer, is not enough to qualify as an “inventive concept” and save an abstract-concept patent from invalidity.

Here, the judge ruled that Bluebonnet’s patents did not embody an “inventive concept.” While the judge agreed that the patent “may capture the core of a good business idea,” the implementation of the abstract concept of playlist generating to a computer system does not save the patent from invalidity. Pandora was granted judgment on the pleadings, invalidating Bluebonnet’s patents.

While the application of the principles articulated in Alice is relatively straightforward here, it’s interesting to note the identifies of the parties. Pandora, of course, is a well-known player in the music-streaming world. Founded in 2000, Pandora boasted 52 million active listeners in 2021.

Bluebonnet, by contrast, is a Texas-based limited liability company with little-to-no online presence. In fact, Bluebonnet is a nonpracticing entity (NPE). NPEs hold patents, but do not actually implement or develop the patented technology; instead, they generate revenue by licensing their patents. Often, this licensing occurs only after the threat (or filing) of litigation.

NPEs that “opportunistically assert weak patents” are sometime referred to as “patent trolls.” Often, defendants in a patent lawsuit will assess the “nuisance value” of the suit; settling and paying the licensing fee may make more financial sense than fighting the lawsuit, even if the defendant believes the suit is meritless. That’s because determining whether a technology actually infringes on a patent is often expensive and time-consuming – the average patent litigation costs between $2.3 million and $4 million and can last up to three years.

“A spokesperson for Pandora referred to the lawsuit as a ‘shakedown.’”

Here, Bluebonnet fits the patent troll description. Bluebonnet does not implement the patented technology, and the patent asserted proved to be a weak one indeed, given that it was held invalid for lack of subject matter eligibility. A spokesperson for Pandora referred to the lawsuit as a “shakedown.”Fortunately, Pandora prevailed against such a weak patent during a relatively early stage in the case, in a motion for judgment on the pleadings. This represents a continuation of the trend of defendants in patent infringement suits prevailing under Alice against overbroad software patents.

Although the specific software in this case pertained to music playlists, the concept of tailoring a product to a user’s preferences is in widespread use among media and technology companies. Most video streaming services have some form of “recommended for you” feature. YouTube recommends videos based on a user’s viewing habits. Social media platforms and web browsers suggest news stories based on the same kind of input. Amazon recommends products based on a user’s browsing history.

The outcome of Pandora’s case should reassure all of these industries. Although Netflix and YouTube may not run afoul of this specific patent,  the reasoning in this decision is a clue that similar patents for user behavior-based recommendations might be held ineligible as well. Although Bluebonnet has appealed the case, Judge Chhabria’s decision tracks closely with cases that have raised similar questions, and is unlikely to be overturned.

Ben Rhodes

Ben is a second-year law student from Concord, North Carolina. He graduated from the University of North Carolina at Greensboro in 2015. His interests include employment and labor law and energy law. Outside of law school, he spends his time with his wife, travelling the country and watching baseball.