BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC (Fed. Cir. 2016) - Federal Circuit Concurrence -- Decide Patentability with Patent-Eligibility

McDonnell Boehnen Hulbert & Berghoff LLP

The Federal Circuit earlier today vacated a District Court's order dismissing BASCOM's complaint and remanded for further proceedings.  BASCOM sued AT&T Inc. for patent infringement of U.S. Patent No. 5,987,606, and the U.S. District Court for the Northern District of Texas held that BASCOM failed to state a claim upon which relief can be granted because the claims of the '606 patent are invalid as a matter of law under 35 U.S.C. § 101.  The District Court followed the two-step approach for analyzing patent-eligibility including an abstract idea analysis followed by a search for an inventive concept.

However, the Federal Circuit vacated that decision, and instead found that the claims are patent-eligible.  Judge Newman's concurring opinion also proposes a possible improvement to the way in which patent-eligibility challenges should be handled that looks to handle "inventive concepts" as a patentability analysis instead of a patent eligibility analysis.

Looking at the patent-in-suit, the '606 patent (filed in 1997) describes that some websites contain information deemed unsuitable for some users, and corporations had the need to prevent their employees from accessing websites with certain types of information, such as "entertainment oriented sites," while allowing them to continue to access "technical or business sites," and parents had the need to prevent their families from accessing websites containing "sexually explicit or other objectionable information."  The computer industry responded to this need by developing a software tool that allowed control over the type of information received over the Internet.  The software tool inspected a user's request to access a website and applied one or more filtering mechanisms:  exclusive filtering ("black-listing") which prevents access to all sites on a predetermined list of Internet sites; inclusive filtering ("white-listing") which allows access only to a predetermined list of Internet sites; and word-screening or phrase-screening which prevents access to web site pages which contain any word or phrase on a predetermined list.

According to the '606 patent, filtering software was first placed on local computers, such that each local computer had its own tool for filtering websites (or other Internet content) requested by the operator of the computer.  But to overcome some of the disadvantages of installing filtering software on each local computer, the '606 patent describes a filtering system that avoids being modified or thwarted by an end-user, and avoids being installed on and dependent on individual end-user hardware and operating systems or tied to a single local area network or a local server platform by installing the filter at the ISP server.  The claimed filtering tool retains the advantage of a filtering tool that is located on each local computer, and individuals are able to customize how requests for Internet content from their own computers are filtered instead of having a universal set of filtering rules applied to everyone's requests.

To summarize, the claimed invention of the '606 patent includes an ISP server that receives a request to access a website, associates the request with a particular user, and identifies the requested website.  The filtering tool then applies the filtering mechanism associated with the particular user to the requested website to determine whether the user associated with that request is allowed access to the website.  The '606 patent describes its filtering system as a novel advance over prior art computer filters, in that no one (in the 1997 timeframe) had previously provided customized filters at a remote server.

The '606 patent contains two groups of claims:  a first group that is limited to individual-customizable filtering on a remote ISP server, and a second group that is further limited to a hybrid filtering scheme implemented on the ISP server comprised of a master-inclusive list, an individual-customizable set of exclusive lists, and an individual-customizable set of inclusive lists.  For the individually customizable filtering claims, BASCOM points to claim 1 as instructive:

1.  A content filtering system for filtering content retrieved from an Internet computer network by individual controlled access network accounts, said filtering system comprising:
    a local client computer generating network access requests for said individual controlled access network accounts;
    at least one filtering scheme;
    a plurality of sets of logical filtering elements; and
    a remote ISP server coupled to said client computer and said Internet computer network, said ISP server associating each said network account to at least one filtering scheme and at least one set of filtering elements, said ISP server further receiving said network access requests from said client computer and executing said associated filtering scheme utilizing said associated set of logical filtering elements.

For the hybrid filtering scheme claims, BASCOM points to claim 23, which depends on claim 22, as instructive:

22.  An ISP server for filtering content forwarded to controlled access network account generating network access requests at a remote client computer, each network access request including a destination address field, said ISP server comprising:
    a master inclusive-list of allowed sites;
    a plurality of sets of exclusive-lists of excluded sites, each controlled access network account associated with at least one set of said plurality of exclusive-lists of excluded sites; and
    a filtering scheme, said filtering scheme allowing said network access request if said destination address exists on said master inclusive-list but not on said at least one associated exclusive-list, whereby said controlled access accounts may be uniquely associated with one or more sets of excluded sites.

23.  The ISP server of claim 22 further comprising:
    a plurality of inclusive-lists of allowed sites, each controlled access user associated with at least one of said plurality of inclusive-lists of allowed sites, said filtering program further allowing said network access request if said requested destination address exists on said at least one associated inclusive-list.

Step One -- Abstract Idea

At the District Court, AT&T argued that the claims were directed to the abstract idea of "filtering content," "filtering Internet content," or "determining who gets to see what," each of which is a well-known "method of organizing human activity" like the intermediated settlement concept that was held to be an abstract idea in Alice.  AT&T analogized the idea of filtering content to a parent or librarian forbidding children from reading certain books, and argued that performing the filtering on the Internet does not make the idea non-abstract.

BASCOM responded by arguing that the claims of the '606 patent are not directed to an abstract idea because they address a problem arising in the realm of computer networks, and provide a solution entirely rooted in computer technology, similar to the claims at issue in DDR Holdings, LLC v., L.P., 773 F.3d 1245 (Fed. Cir. 2014).  But the District Court agreed with AT&T, as did the Federal Circuit.  Specifically, the Federal Circuit found that claim 1 is directed to filtering content, which is an abstract idea because it is a longstanding, well-known method of organizing human behavior, similar to concepts previously found to be abstract.

Step Two -- Inventive Concept

In its search for an "inventive concept," the District Court first determined 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 then determined that the limitations in combination were not inventive either because filtering 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 District Court also noted that the absence of specific structure for the generic computer components raises the likelihood that such claims could preempt every filtering scheme under the sun.

The Federal Circuit agreed with the District Court that the limitations of the claims, taken individually, recite generic computer, network, and Internet components, none of which is inventive by itself.  However, the Federal Circuit disagreed with the District Court's analysis of the ordered combination of limitations.

The Federal Circuit stated that the District Court's analysis in this case 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.  But 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 found that the inventive concept described and claimed in the '606 patent 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.  BASCOM explained that the inventive concept rests on taking advantage of the ability of at least some ISPs to identify individual accounts that communicate with the ISP server, and to associate a request for Internet content with a specific individual account.  According to BASCOM, the inventive concept harnesses this technical feature of network technology in a filtering system by associating individual accounts with their own filtering scheme and elements while locating the filtering system on an ISP server.

The Federal Circuit provided a caveat that, "[o]n this limited record, this specific method of filtering Internet content cannot be said, as a matter of law, to have been conventional or generic."

The Federal Circuit noted that (i) the claims do not merely recite the abstract idea of filtering content along with the requirement to perform it on the Internet, or to perform it on a set of generic computer components, and (ii) the claims do not preempt all ways of filtering content on the Internet.

The Federal Circuit seemed to focus on the "technical aspects" of the claimed invention and stated that while filtering content on the Internet was already a known concept, the patent describes how its particular arrangement of elements is a technical improvement over prior art ways of filtering such content (e.g., prior art filters were either susceptible to hacking and dependent on local hardware and software, or confined to an inflexible one size-fits-all scheme).

The Federal Circuit analogized DDR to the present case in which the '606 patent is claiming a technology-based solution (not an abstract-idea-based solution implemented with generic technical components in a conventional way) to filter content on the Internet that overcomes existing problems with other Internet filtering systems.  The Federal Circuit stated that by taking a prior art filter solution (one-size fits-all filter at the ISP server) and making it more dynamic and efficient (providing individualized filtering at the ISP server), the claimed invention represents a "software-based invention[ ] that improve[s] the performance of the computer system itself."

Thus, while the claims of the '606 patent are directed to the abstract idea of filtering content, BASCOM adequately alleged that the claims pass step two of Alice's two-part framework.

In a concurring opinion, Judge Newman stated that she agreed with the Court that the claims of the BASCOM patent are patent-eligible, but wrote separately to urge a more flexible approach to the determination of patent eligibility, "for the two-step protocol for ascertaining whether a patent is for an 'abstract idea' is not always necessary to resolve patent disputes."  Judge Newman stated that there is no good reason why the District Court should be constrained from determining patentability, instead of eligibility based on "abstract idea," when the patentability/validity determination would be dispositive of the dispute.  Judge Newman noted inefficiencies with an initial evidentiary procedure for determination of eligibility at trial and appeal, followed by another cycle of patentability litigation when eligibility is found, when an initial decision directed to patentability may resolve or moot any issue of eligibility.  Initial determination of eligibility often does not resolve patentability, whereas initial determination of patentability issues always resolves or moots eligibility.

Judge Newman specifically proposed returning to the letter of Section 101, where eligibility is recognized for "any new and useful process, machine, manufacture, or composition of matter," and if any of these classes is claimed so broadly or vaguely or improperly as to be deemed an "abstract idea," this could be resolved on application of the requirements and conditions of patentability.  This determination would avoid resolving an undefined "inventive concept" applied to eligibility.

Judge Newman's opinion would be welcomed because determining what satisfies § 101 is unpredictable today, whereas, guidelines for determining what satisfies § 102, § 103, and § 112 are well-established.  Judge Newman wrote that a new and useful process or machine or manufacture or composition of matter is not an abstract idea, and if the claims are deemed to be so broad as to be abstract, application of the requirements of patentability is a direct path to resolution of validity disputes.  More specifically, Judge Newman stated:

Claims that are imprecise or that read on prior art or that are unsupported by description or that are not enabled raise questions of patentability, not eligibility.  35 U.S.C. § 112(a) requires a written description in "full, clear, concise, and exact terms," and § 112(b) requires "claims particularly pointing out and distinctly claiming the subject matter" of the invention.  The process, machine, manufacture, or composition of Section 101 must comply with Section 112.  Subject matter that complies with Section 112 averts the generality or vagueness or imprecision or over-breadth that characterize abstract ideas.  These are conditions of patentability, not of eligibility.  The "conditions and requirements of this title" weed out the abstract idea.

As support for this proposition, Judge Newman noted that in arguing "inventive concept" for the § 101 challenge here, both sides presented arguments that would also be relevant to patentability.  But in the District Court, the only issue that was finally decided was that of eligibility.  Thus, remand is the appropriate next step.  However, direct resolution of patentability would lead to increased efficiency, and savings in cost and time.

Judge Newman concluded by stating that "when evidence of patentability is needed or presented to resolve a challenge to eligibility of claims to a new method or machine or manufacture or composition, the District Court and the parties should have the flexibility to resolve patentability at this threshold," and "[i]f the claims are unpatentable, any issue of abstractness, however defined, is mooted.  And if the subject matter is patentable, it is not an abstract idea."  Judge Newman thus urged that expediency should be an available response to challenges on the ground of "abstract idea."

BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC (Fed. Cir. 2016)
Panel: Circuit Judges Newman, O'Malley, and Chen
Opinion by Circuit Judge Chen; opinion concurring in the result by Circuit Judge Newman

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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