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Federal Circuit Expanding Interpretation of Step Two of the Test for Patent Eligibility

White & Case Technology Newsflash

The Federal Circuit recently reversed a district court's decision granting a motion to dismiss a patent under 35 U.S.C. § 101 in Bascom Global Internet Services, Inc. v. AT&T Mobility LLC.[1] The patent-in-suit, U.S. Patent No. 5,987,606 (the "'606 patent"), disclosed a method and system for filtering Internet content by installing a filter on an Internet service provider ("ISP") server.  The '606 patent allowed for customizable filtering at the ISP server level, rather than at local computers (e.g., AT&T filters content before it reaches a local desktop computer).  The district court found the software was patent ineligible under Section 101.  In one of the few Federal Circuit decisions to do so, the Court reversed the district court and held that the patent's ordered combination of conventional limitations arranged in non-conventional and non-generic ways was an "inventive concept" conferring patent eligibility for the '606 patent.[2] 

The Federal Circuit applied the two-step test for patent eligibility set forth by the Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank International.[3]  The inquiry asks:

  • Whether the claims at issue are directed to a patent-ineligible concept such as an abstract idea; and
  • If so, whether the claim elements alone or as an ordered combination contain an "inventive concept.[4]

Under step one, the Federal Circuit agreed with the district court and held that the claims of the '606 patent were directed to the abstract idea of filtering content.[5]  The Court disagreed with BASCOM that the claims were directed to a narrower implementation of filtering content as set forth in the claim limitations.[6]  In refusing to incorporate the claim language into the step one analysis, the Court simply stated that the "claims and their specific limitations d[id] not readily lend themselves to a step-one finding that they are directed to a nonabstract idea."[7]  The Court reserved consideration of the claim limitations' narrowing effect for analysis under step two.

Under step two, the Federal Circuit disagreed with the lower court, and held that the limitations, as an ordered combination, provided an inventive concept. [8]  The Federal Circuit emphasized that the individual limitations, though routine and conventional, still conferred patent-eligibility because they were combined in a "non-conventional and non-generic arrangement" that transformed the nature of the claims.[9]  The inventive concept claimed by the '606 patent is the combination of the installation of a filtering tool at a specific location with customizable filtering features, a particular arrangement of elements that was a technical improvement over the prior art.[10]  Prior filtering software was vulnerable to hacking, dependent on local hardware, or confined to a standard scheme.  The '606 patent limitations allowed filters to be adapted to users' preferences while existing remotely and on a single server.  Further, the Federal Circuit held there was no concern for preempting all ways of filtering content on the Internet since the claims recited a "specific, discrete implementation" of the abstract idea.[11]  Thus, the Federal Circuit held that the order combination of the '606 patent claims were directed to more than a drafting effort to monopolize the abstract idea and provided an inventive concept.

Bascom is one of only a few decisions by the Federal Circuit to reverse a ruling of patent ineligibility post-Alice.[12]  With the emphasis in Bascom on whether an ordered combination of otherwise conventional steps confers an inventive concept, practitioners should be prepared to conduct a more in-depth analysis of step two that further explains whether the limitations taken together are still directed to only an abstract idea.  Though the majority of federal court decisions post-Alice still find that claims are directed to patent-ineligible subject matter, those involved in intellectual property protection should be careful to not take the ordered combination analysis lightly and should provide a detailed step two analysis in light of Bascom.


[1] - Bascom Global Internet Servs., Inc. v. AT&T Mobility LLC, No. 2015-1763, 2016 U.S. App. LEXIS 11687, at *1 (Fed. Cir. Jun. 27, 2016).
[2] - Id. at *21.
[3] - Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347, 2355 (2014).
[4] - Id. at 2355, 2358.
[5] - Bascom, 2016 U.S. App. LEXIS 11687, at *16.
[6] - Id. at *18.
[7] - Id.
[8] - Id. at *20-21.
[9] - Id. at *21.
[10] - Id. at *21-22.
[11] - Id. at *23.
[12] - See, e.g., DDR Holdings, 773 F.3d 1245 (Fed. Cir. 2014); Enfish LLC v. Microsoft Corp., 2016 U.S. App. LEXIS 8699 (Fed. Cir. May 12, 2016); Rapid Litigation Management Ltd. v. Cellzdirect, Inc., 2016 U.S. App. LEXIS 12352 (Fed. Cir. July 5, 2016); and Bascom, 2016 U.S. App. LEXIS 11687.


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