BASCOM’s Nonstandard Combination of Known Software Elements Implemented on Generic Computer Hardware Confirmed Patentable

The Federal Circuit Court of Appeals reversed the grant of a motion to dismiss BASCOM Global Internet Services’ patent infringement claims on the grounds that the claims recite patent-eligible subject matter on June 27, 2016. The Federal District Court for the Northern District of Texas had invalidated the asserted claims, finding that they were directed to abstract ideas ineligible for patenting under 35 U.S.C. § 101. The asserted claims generally encompass content filtering software installed on a remote server to restrict access to content for multiple end users, each end user having customizable filtering features specific to the respective end user. The patent disclosure contrasted this implementation with conventional implementations, which involved installing customized content filtering on each end user’s device or installing standardized content filtering on a remote server.

The Court stated that the claims are directed to “filtering content,” which it characterized as an abstract idea because content filtering is a longstanding, well-known method of organizing human behavior. BASCOM had urged the Court to view the claims through a less generalized lens, arguing that the claims are not merely directed to content filtering, but to the specific implementation of content filtering they required by their own terms. The Court acknowledged that its analysis was divorced from the actual claim language, stating that the claims present a close call about how to characterize their content. Nonetheless, it concluded that the claims do not readily lend themselves to the conclusion that they are directed to a “nonabstract” idea.

Having concluded that the claims are directed to an abstract idea, the Court held that the nonstandard combination of installing the content filtering software on a remote server and providing customized filtering features to each end user accessing the remote server constituted an inventive concept, nudging the claims into the realm of patent-eligible subject matter. It noted that the hardware implementation was purely conventional, and that BASCOM had not purported to invent local computers, remote servers, network technology, or the concept of content filtering. Analogizing the § 101 inquiry to the nonobviousness inquiry, the Court held that a proper analysis of a claim as an ordered combination requires more than merely considering whether each individual claim element can be found in the prior art. Even when individual claim elements are composed of conventional features, the claims may present an inventive concept when the claimed arrangement of those features combines them in an unconventional way.

Like the Enfish decision in May, 2016, and DDR Holdings decision in 2014, BASCOM demonstrates that software innovations can merit patent protection, even when the individual software elements are known and the implementing hardware is conventional. However, inconsistency in the application of the law on subject-matter eligibility among panels of the Federal Circuit renders predicting the outcome of a given subject-matter eligibility challenge difficult. That is particularly true where, as with BASCOM, the proper lens through which to view the claimed subject matter is not apparent. In fact, the Court in BASCOM may have rendered outcomes even less predictable by sanctioning the practice of characterizing a claim as an abstract idea even though the identified abstract idea is untethered from the claim language. Without sufficient standards to guide step one of the subject-matter eligibility analysis, patent applicants, patent owners, patent challengers, and decision-makers remain uncertain whether a given claim is patentable.

Interestingly, the concurrence from Judge Newman criticizes the current trend of challenging claims on patent-eligibility grounds early in the case as an inefficient use of resources in at least some cases. Specifically, she noted that the eligibility analysis under § 101 may involve a truncated inquiry into issues relevant to patentability under §§ 102, 103, and 112, but that a full patentability analysis would require significantly more evidence than the § 101 analysis admits. Accordingly, courts should exercise sound discretion and caution to ensure that resources are not wastefully devoted to an uncertain, early eligibility challenge when they may be more beneficially spent on a full patentability and eligibility analysis.

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