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On June 27, 2016 the Federal Circuit handed down an opinion helping to clarify the two-step test for patent eligibility post-Alice. In this case, BASCOM v. AT&T, the claims of a patent by BASCOM Global Internet Services was deemed invalid by a district court using the two-step analysis of patent eligibility, an abstract idea analysis and a search for an innovative concept, stopping an infringement suit against AT&T in its tracks. However, the Federal Circuit, using this same test, came to the conclusion the claims were in fact patent-eligible. The importance of this case is its further clarification of the two-step test process, especially outlining the importance of the second step of the test even if the first part is failed. As a result of this case, patentees now have another powerful tool to point to when addressing allegations their claims are directed to ineligible subject matter under §101.

The patent in this case involved a method of filtering Internet traffic, mainly for the purpose of controlling user access to certain websites deemed inappropriate by the controllers of the filter. When confronted with an infringement suit, AT&T argued, and the district court agreed, that the patent was invalid because claims were directed to the abstract idea of “filtering content” because “content provided on the Internet is not fundamentally different from content observed, read, and interacted with through other mediums like books, magazines, television, or movies.” This covered the first part of the test, abstract idea analysis. As to the second part of the test the district court held that the limitations in combination were not an inventive concept 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.”

What is key about this case is the fact that at the Federal Circuit level the judge agreed with the district court as to the first part of the test, but still found for patent-eligibility based on the second part of the test. Federal Circuit agreed, “filtering content is an abstract idea because it is a longstanding, well-known method of organizing human behavior, similar to concepts previously found to be abstract.” However, the Federal Circuit disagreed with the lower court’s analysis of the ordered combinations of limitations. In the words of the Court:

“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.”

While filtering content on the Internet was a known concept, the fact that the patent described a particular arrangement of elements was a technical improvement over prior art. It was this unique arrangement that was the relevant factor in deciding for patent-eligibility. Stated another way, “an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces.”

The crucial take-away from this case is the fact that you can respond to a § 101 rejection by arguing that the specific arrangement of the components in your system, if they provide a technical improvement, can succeed under step 2 of the Alice test. This should be seen as another powerful tool for those rejected for subject matter ineligibility.

BASCOM v. AT&T: The Evolving State of §101 Eligibility