Once again addressing patent eligibility of software patent claims, the US Court of Appeals for the Federal Circuit this time reversed a finding of ineligible subject matter based on the Alice step two inventive concept inquiry. BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, Case No. 15-1763 (Fed. Cir., June 27, 2016) (Chen, J) (Newman, J, concurring).

BASCOM sued AT&T for infringement of BASCOM’s patent on remotely filtering internet content using a server maintained by the internet service provider, where the filtering is customized for each user. AT&T moved to dismiss the case, arguing patent ineligibility of the claimed subject matter. The district court granted the motion, concluding that the claims were directed to the abstract idea of filtering content (Alice step one) and finding no inventive concept because both the filtering software and the individual computer components recited in the claims were known in the prior art (Alice step two). BASCOM appealed.

On the first step of the Alice analysis—whether the claims are directed to an abstract idea—the Federal Circuit concluded that it was a close call and deferred consideration of the issue, moving directly to step two and examining whether the claim included “specific claim limitations” that narrowed the (possibly) abstract idea. On this issue, the Court concluded that the evidence was insufficient to find the claims ineligible at the motion to dismiss stage. 

The Federal Circuit agreed with the district court’s analysis that the claim elements, taken individually, recited only “generic computer, network and internet components.” The Court disagreed, however, as to whether the ordered combination of those elements recited only “well-understood, routine and conventional activities.” The Federal Circuit likened the analysis to an obviousness analysis without any reasons to combine. The Court went on to explain its view that the claims were directed to a specific and discrete filtering implementation that amounted to a technological improvement over the prior art.

The Court next addressed the parties’ battle of prior case analogies, where BASCOM had analogized its claims to those found eligible in the Court’s DDR opinion (IP Update, Vol. 18, No. 1), while AT&T attempted to analogize the more numerous opinions that went the other way. The Federal Circuit agreed with BASCOM that the claims were akin to those in DDR by covering a technology-based solution that improves the performance of the computer itself. It then distinguished its OIP opinion (IP Update, Vol. 18, No. 7), which found that the claims in issue merely automated traditional techniques using generic computer components, and also distinguished four other recent opinions that turned on preemption of the abstract idea.

Judge Newman concurred in the result but wrote separately to complain about separate eligibility and patentability determinations leading to increased costs and uncertainty with no corresponding benefit. She urged a more flexible approach with an initial patentability determination to moot eligibility questions.