On August 15, 2018, the Federal Circuit affirmed the invalidation of BSG Tech LLC’s (“BSG”) patents as ineligible subject matter. See BSG Tech LLC v. Buyseasons, Inc., No. 2017-1980, 2018 WL 3862646 (Fed. Cir. Aug. 15, 2018) (before Reyna, Wallach, and Hughes, J.) (opinion by Hughes, J.).
BSG asserted three patents with similar specifications that were directed to a “self-evolving generic index” for organizing information stored in a database — U.S. Patents No. 6,035,294, 6,243,699, and 6,195,652. The patents were “self-evolving” because users of the database could “add new parameters for use in describing items”, with guidance from the system, which would allow the database to be searched according to the new and existing parameters.
The defendant, BuySeasons, moved to dismiss for failure to state a claim based on the argument that the patents were directed to ineligible subject matter. The district court did not treat the motion to dismiss as such, instead treating it as a motion for summary judgment. Ultimately, however, the district court did agree with BuySeasons and found the claims ineligible. Judge Schroeder of the Eastern District of Texas found that the claims were directed to the abstract idea of “considering historical usage information while inputting data” (Alice Step 1) and also lacked an inventive concept sufficient to transform them into patent-eligible subject matter (Alice Step 2).
The Federal Circuit agreed with the district court that the claims were directed to the abstract idea of considering historical information while inputting data. To reach this conclusion, the Court analyzed the claims in the context of its precedent, Enfish, noting that the Court was assessing whether “the focus of the claims is on a specific asserted improvement in computer capabilities or, instead, on a process that qualifies as an ‘abstract idea’ for which computers are invoked merely as a tool.” Here, the Court said, BSG “does not purport to have invented database structures that allow database users to input item data as a series of parameters and values.” Rather, the claims amounted “to having users consider previous item descriptions before they describe items to achieve more consistent item descriptions,” which the Court found was an abstract idea no matter how it was characterized or “labeled.”
The Court rejected BSG’s three arguments that the claims were not directed to an abstract idea. First, BSG argued that because its claims required a specific database structure it was not using a generic computer and therefore the claims could not be directed to an abstract idea. The Court pointed to precedent, however, for the proposition that “claims are not saved from abstraction merely because they recite components more specific than a generic computer.” Second, BSG argued that the claims were not directed to an abstract idea because of the requirement that users consider a specific type of information, “summary comparison usage information,” rather than any type of historical usage information. The Court rejected this argument, focusing on the breadth of the claim in light of the specification—the claim would cover “any historical information about parameter or value usage.” Moreover, the Court noted that it had “never suggested” that the recitation of “limitations that render [a claim] narrower than [the] abstract idea” was sufficient to satisfy the first step of Alice. In other words, “a claim is not patent eligible merely because it applies an abstract idea in a narrow way.” Third, BSG argued that its claimed invention “improves the quality of information added to the database and the organization of information in the database” and therefore that “its claims focus on a non-abstract improvement in database functionality.” The Court rejected this argument, instead characterizing the improvements as the result of “performing an abstract idea in conjunction with a well-known database structure.” Unlike the Court’s precedents, the claims at issue were abstract ideas because they did not result in a “non-abstract improvement in computer functionality” and, instead, were “unrelated to how databases function.” Perhaps importantly, the court distinguished between “an improvement to the information stored by a database” and “an improvement in the database’s functionality.”
The Court also briefly analyzed Alice Step 2. The Court rejected BSG’s argument that, like in Berkheimer, the patents contained “unconventional features” that precluded summary judgment because they introduced an issue of fact. The Court noted that its precedents preclude the finding of an inventive concept where the patentee attempts to rely on the abstract idea to supply the inventive concept. For example, in Alice, the Supreme Court “did not consider whether it was well-understood, routine, and conventional to execute the claimed intermediated settlement method on a generic computer. Instead, the Court only assessed whether the claim limitations other than the invention’s use of the ineligible concept to which it was directed were well-understood, routine and conventional.” Thus, BSG’s argument that its claims’ “requirement that users are guided by summary comparison usage information or relative historical usage information” was unconventional was without merit because it “simply restates what we have already determined is an abstract idea.” The Federal Circuit also rejected BSG’s argument that its claims did not broadly preempt the field of use, noting that “the absence of complete preemption does not demonstrate patent eligibility.”
The Federal Circuit continues to focus on the distinction between an improvement in computer capabilities and an abstract idea for which computers are invoked merely as a tool. Here, in the context of a database, the Court distinguished between “an improvement to the information stored by a database” and “an improvement in the database’s function”—the former being what the patent covered and also patent-ineligible subject matter. The Court also rejected multiple arguments related to the breadth of the patents, finding that a narrowed application or scope was not sufficient to meet either step of Alice.