Earlier this week the United States Court of Appeals for the Federal Circuit issued a decision in BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC. Writing the opinion for the majority was Judge Raymond Chen, who also authored the Court’s decision in DDR Holdings, which is one of the few cases to similarly find software patent claims to be patent eligible. Joining Chen on the panel were Judges O’Malley and Newman, with Judge Newman concurring and writing separately. The good news for those who believe software should be patent eligible is that this represents yet another data point on the software can be patent eligible map.
Procedure on Motions to Dismiss
This case arrived at the Federal Circuit on an appeal brought by BASCOM from the district court’s decision to grant a motion to dismiss under Rule 12(b)(6). In the majority opinion Chen made much of the civil procedure aspects of a 12(b)(6) motion, as well he should.
Frankly, it is about time that the Federal Circuit notice that these patent eligibility cases are reaching them on motions to dismiss. This should be overwhelmingly significant in virtually all cases given that a motion to dismiss is an extraordinary remedy in practically every situation throughout the law. Simply put, judges are loath to dismiss cases on a motion to dismiss before there has been any discovery or any issues are considered on their merits. That is, of course, except when a patent owner sues an alleged infringer.
Where a patent owner sues for patent infringement many district court judges become suddenly all too willing to dismiss the case straight away without giving the patent a presumption of validity (despite what 35 U.S.C. §282 directs by its plain language) and without ever construing the patent claims. How can you possibly know whether a patent claim is patent eligible if you don’t construe the patent claim in order to determine what the invention is that is being claimed?
Never mind that it is logically (and factually) impossible to know what is being claimed without construing the claims, it has become commonplace for district courts to dismiss patent infringement lawsuits on a motion to dismiss while at the same time ruling the patent claims ineligible. All of this is done with no consideration of the merits of the case or the substance of what is being claimed. There has been no discovery, no claim construction and on a motion to dismiss the procedural laws forbid consideration of the merits.
Shocking, isn’t it? The merits of the patent owner’s case does not matter at all on a motion to dismiss, yet the merits of the patent claims that won’t ever be construed by the judge do matter. To call the deck stacked against the patent owner doesn’t begin to capture the procedural unfairness at play.
In any event, in the majority decision Chen went to great lengths to explain that the Court was giving all inferences to the nonmoving party (i.e., the patentee). In other areas of federal litigation this would not be noteworthy simply because that is what the law commands. In the patent sphere, however, the patent owner seems to rarely, if ever, be afforded even the most basic procedural rights available to all other litigants. To call patent owners second-class citizens in the eyes of much, if not most, of the federal judiciary is not a stretch. Sadly, it is a reality.
Chen is certainly right to point out the procedural posture, which many in the patent community have been talking about for some time, but to my knowledge this is the first decision to actually apply basic civil procedure protections in the context of a 12(b)(6) motion that argues patent claims are ineligible. Thus, I think the story of BASCOM will be written only once we know whether other panels of the Federal Circuit begin to enforce the most fundamental rules of civil procedure, and also once we known whether district courts actually get the message.
The invention described in U.S. Patent No. 5,987,606, relates to a method and system for content filtering information retrieved from an Internet computer network. The patent explains that the advantages of the invention are found in the combination of the then-known filtering tools in a manner that avoids their known drawbacks. The claimed filtering system avoids being “modified or thwarted by a computer literate 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. Thus, the claimed invention is able to provide individually customizable filtering at the remote ISP server by taking advantage of the technical capability of certain communication networks.
The claims of the ’606 patent generally recite a system for filtering Internet content. The claimed filtering system is located on a remote ISP server that associates each network account with (1) one or more filtering schemes and (2) at least one set of filtering elements from a plurality of sets of filtering elements, thereby allowing individual network accounts to customize the filtering of Internet traffic associated with the account.
The Alice/Mayo framework adopted by the United States Supreme Court requires reviewing courts to ask and answer a series of questions before determining whether a patent claim constitutes patent eligible subject matter. The first question is whether the patent claim covers an invention from one of the four enumerated categories of invention defined in 35 U.S.C. §101 (i.e., is the invention a process, machine, article of manufacture, or composition of matter). If the answer to this question is no then the patent claim is patent ineligible. If the answer is yes, as it was in the case of the claims for the ‘606 patent, move on to the next inquiry.
The second question asks whether the patent claim seeks to cover one of the three specifically identified judicial exceptions to patent eligibility. Although there is absolutely no textual support for the creation of any judicial exceptions to patent eligibility, the Supreme Court has long legislated from the bench and ignored the clear language of the statute. The three identified judicial exceptions are: laws of nature, physical phenomena and abstract ideas. If the claim does NOT seek to protect one of those judicial exception then the claim is patent eligible, as was the case in Enfish v. Microsoft. In this case, the Federal Circuit agreed with the district court that the filtering of content is an abstract idea because “it is a long-standing, well-known method of organizing human behavior, similar to concepts previously found to be abstract.”
In the case where the patent claim seeks to cover a judicial exception to patent eligibility, the final question asks whether the inventive concept covered in the claimed invention was “significantly more” than merely the judicial exception. In this case, the question was whether the claim added significantly more such that more than a mere abstract idea would be captured. The Federal Circuit ruled that the claims did add significantly more and, therefore, the claims are patent eligible.
Of course, it is worth reminding everyone that no court – not the Supreme Court and not the Federal Circuit – has ever defined the term “abstract idea” or the term “significantly more.” As such, both remain properly characterized as a “we know it when we see it” undefined standard.
Conflating Obviousness with Patent Eligibility
Perhaps one of the most significant aspects of the Federal Circuit decision in BASCOM is that the Court explained that the district court’s analysis conflated obviousness with patent eligibility. This is hardly a unique observation, or a one-off problem. In fact, the Supreme Court’s decision in Mayo v. Prometheus actually mandates the conflating of obviousness (and novelty) with patent eligibility. What is unique here is that the Federal Circuit has called it out for what it is – inappropriate.
“The district court’s analysis in this case, however, looks similar to an obviousness analysis under 35 U.S.C. §103,” explained Judge Chen in the decision. Indeed, it does look similar to an obviousness inquiry in some ways, but without any of the limitations or protections limiting how and under what circumstances a proper combination can lead to a conclusion of obviousness. In other words, when obviousness is conflated with patent eligibility the test becomes even more subjective and is wholly without boundaries.
“The inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art,” Chen explained. “As is the case here, an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces.”
Judge Chen would go on to explain that the inventive concept of 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.”
Ultimately, the Federal Circuit held that the “claims do not merely recite the abstract idea of filtering content along with the requirement to perform it on the Internet…Nor do the claims preempt all ways of filtering content on the Internet.”
In a concurring opinion Judge Newman wrote that she sees no good reason why district courts should, or must, start cases by determining whether patent claims are patent eligible. Newman sharply criticized (although not as sharply as she can criticize at times) the practice of piecemeal litigation. Judge Newman explained: “Initial determination of eligibility often does not resolve patentability, whereas initial determination of patentability issues always resolves or moots eligibility.”
Judge Newman is, of course, correct. The problem, however, is that disposing of patent infringement litigation on a motion to dismiss has nothing to do with proper administration of justice. The disposition of patent infringement litigation on a motion to dismiss has everything to do with tilting the playing field and rigging the system in favor of the defendant. Nowhere else in the law is it so easy for a defendant to prevail on a motion to dismiss. But the Supreme Court seems to want district courts to dispose of patent infringement cases without ever considering the merits of the case, without construing the claims, without providing a presumption of validity, and without giving the owner of a constitutionally protected property right their day in court.