Federal Circuit distinguishes between tests for obviousness and patent-eligible subject matter

On June 27 2016 the US Court of Appeals for the Federal Circuit issued its decision in Bascom Global Internet v AT&T Mobility LLC. In Bascom the Federal Circuit reversed the district court, determining that the district court had improperly applied the two-step test for determining patent eligibility under Section 101 of the Patent Act established by the Supreme Court in Alice Corporation Pty Ltd v CLS Bank International. The Bascom decision should reduce district courts' conflation of the test for determining whether a patent claim is obvious under Section 103 with the test for determining whether a claim is directed to patentable subject matter under Section 101.

Facts
The claims in Bascom were directed to a system for a remote location, filtering internet content using user-specific filters. The specification noted that in prior art systems, to enable user-specific filters filtering had to be performed locally. The specification also noted that remote filtering was known in the prior art, but remote filters could not distinguish between users. The claimed invention advanced the art by, at a remote location, identifying a user and applying a particular filter based on the identity of the user in order to filter the internet content delivered to the user.

Bascom sued AT&T for patent infringement in the US District Court for the Northern District of Texas. AT&T moved to dismiss Bascom’s complaint on the basis that each of the claims was invalid for being directed to unpatentable subject matter. The district court granted AT&T's motion. Bascom appealed.

Decision
In Alice (and a companion case, Mayo v Prometheus Labs) the Supreme Court fashioned a two-step test for determining whether patent claims are patentable subject matter under 35 USC 101:

• The court must determine whether the claims at issue are directed to a patent-ineligible concept (eg, an abstract idea).
• If so, it will consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.

Applying the first step of the Alice inquiry, the district court found that the claims were directed to the abstract idea of "filtering content". In its application of the second step, the district court held that no individual limitation was inventive because each limitation, in isolation, was a "well-known, generic computer component" or a standard filtering mechanism. The district court further held that the combination of claim limitations was not inventive because "[f]iltering software, apparently composed of filtering schemes and filtering elements, was well-known in the prior art" and "using ISP servers to filter content was well-known to practitioners".

The Federal Circuit agreed with the district court's generalisation of the claims as being directed to "filtering content on the Internet", and further that filtering content on the Internet was an abstract idea. In defining the claims broadly for step one of the Alice inquiry, the Federal Circuit noted that while it "sometimes incorporates claim limitations into its articulation of the idea to which a claim is directed", the claims at issue "d[id] not readily lend themselves to a step-one finding that they are directed to a nonabstract idea". The Federal Circuit distinguished prior cases based on those claims "understood in light of their specific limitations, [as being] unambiguously directed to an improvement in computer capabilities".

Like the district court, the Federal Circuit also found that each of the claim limitations were well-known generic computer components. However, the Federal Circuit found that there was no basis to support the district court’s conclusion that the ordered combination of claim limitations was generic. The Federal Circuit held that the:

"inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art. As is the case here, an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces."

The Federal Circuit continued:

"[t]he inventive concept described and claimed is the installation of a filtering tool at a specific location, remote from the end-users, with customizable filtering features specific to each end user. This design gives the filtering tool both the benefits of a filter on a local computer and the benefits of a filter on the ISP server."

In contrasting the district court’s decision, the Federal Circuit noted that "[t]he district court’s analysis looks similar to an obviousness analysis under 35 U.S.C. § 103, except lacking an explanation of a reason to combine the limitations as claimed".

Comment
Bascom cautions that district courts should not conflate the test for obviousness under Section 103 with the test for patentable subject matter under Section 101. As the Federal Circuit noted, a district court may not invalidate a claim under Section 101 simply by finding that each of the claim limitations was prior art under Section 103, something that district courts have been all too eager to do.