United States: Focusing On The Second Step Of Alice, Federal Circuit Finds Inventive Concept In Software Patent In BASCOM

Arming software-patentees with additional precedent in favor of eligibility for software patents post-Alice, the Federal Circuit on June 27, 2016 handed down its decision in BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, et al., No. 2015-1763, 2016 U.S. App. LEXIS 11687 (Fed. Cir. June 27, 2016), vacating the lower court's decision. Below, Judge Barbara M. G. Lynn in the Northern District of Texas rejected patentee BASCOM's argument that the software-based claims of U.S. Patent No. 5,987,606 contain an "inventive concept" in their ordered combination of limitations sufficient to satisfy the second step of the Supreme Court's two-part Alice test. BASCOM, 2016 U.S. App. LEXIS 11687 at *1-2.

At the Federal Circuit, Judge Chen (joined by Judges Newman and O'Malley) described the invention disclosed by the '606 Patent as an internet filtering tool, where a remote ISP server "receives a request to access a website, associates the request with a particular user,...applies the filtering mechanism associated with the particular user to the requested website[,]...[and] returns either the content of the website to the user, or a message to the user indicating that the request was denied." Id. at *7. The specification of the '606 Patent describes this filtering tool as an improvement over prior art filters because "no one had previously provided customized filters at a remote server." Id. at *7-8 (emphases added); see also '606 Patent at 2:36-65 ("Accordingly, there exists a need for a remote ISP server based method and system for filtering Internet content received by controlled access subscribers on an individually customizable basis." (emphases added)).

Interestingly, like its approach in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) (also written by Judge Chen), the Federal Circuit in BASCOM shifted much of its analysis of the claim limitations from Alice step one to Alice step two. See DDR, 773 F.3d at 1257 ("under any of [the parties' and the dissent's] characterizations of the abstract idea, the '399 patent's claims satisfy Mayo/Alice step two"). In BASCOM, the Court stated that, unlike Enfish, LLC v. Microsoft Corp., No. 2015-1244, 2016 U.S. App. LEXIS 8699 (Fed. Cir. May 12, 2016), where the claims at step-one, understood in light of their specific limitations, were unambiguously directed to an improvement in computer capabilities, "the claims and their specific limitations [of the '606 Patent] do not readily lend themselves to a step-one finding that they are directed to a nonabstract idea. We therefore defer our consideration of the specific claim limitations' narrowing effect for step two."

The district court held that the limitations of the '606 Patent standing alone and in combination were merely well-known and generic computer mechanisms. Id. at *12-13. The Federal Circuit panel disagreed, highlighting the inventive arrangement of claim elements in concluding that the claims of the '606 Patent contain an inventive concept. Id. at *21-22. First, the court discussed the existing technical feature of certain ISPs that enables the identification of individual user accounts, for associating requests for Internet content with those accounts. Id. at *21. The Court then stated that "[a]ccording to BASCOM, the inventive concept harnesses this technical feature of network technology...by [further] associating [those] individual accounts with their own filtering scheme...on an ISP server[.]" Id. at *22 (emphasis added). Judge Chen explained that "[f]iltering content on the Internet was already a known concept, and the patent describes how its particular arrangement of elements is a technical improvement over prior art ways of filtering such content." Id. at *23. The Court held that, "construed in favor of BASCOM as they must be in this procedural posture, the claims of the '606 patent do not preempt the use of the abstract idea of filtering content on the Internet or on generic computer components performing conventional activities." As a result, the subject claims in BASCOM passed step two of Alice's two-part framework. Id. at *27-28.

This case represents just the third time that the Federal Circuit has ruled in favor of a software patent's eligibility since Alice (the other two instances being DDR and Enfish). The following chart details all Federal Circuit rulings on Section 101 since the Supreme Court's Alice decision:

*DDR
**Enfish and BASCOM

DDR, Enfish, and now BASCOM reinforce a growing understanding among practitioners that Alice did not sound the death knell of software patents. The BASCOM decision also underscores that where a patent claims a particular arrangement of elements in a technical improvement over prior art, such claims are patentable and should not be subject to an Alice challenge. Finally, BASCOM instructs practitioners to pay close attention to both steps of the Alice analysis, as the Federal Circuit has shown a willingness to engage in its substantive and determinative analyses under step one (Enfish) and step two (DDR and BASCOM) of the Alice framework.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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