BSG Tech LLC v. BuySeasons, Inc.

            On August 15, 2018, the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”) issued a decision in BSG Tech LLC v. BuySeasons, Inc., holding that when an unconventional feature of the patent claim is determined to be an abstract idea, that unconventional feature cannot make the patent claim eligible under 35 U.S.C §101 (“§ 101”).

            In May 2016, BSG Tech LLC (“BSG”) sued BuySeasons, Inc. (“BuySeasons”) for infringement of several patents related to systems and methods for indexing information stored on wide access databases in U.S. district court. BSG”™s U.S. Patent Nos. 6,035,294 (“the ”²294 patent”), 6,243,699 (“the ”²699 patent”), and 6,195,652 (“the ”²652 patent”), had substantially overlapping specifications and were directed to a “self evolving generic index” for organizing information about various items using classifications, parameters, and values. The district court concluded that the asserted claims were invalid under § 101 for being directed to the abstract idea of considering historical usage information while inputting data and for lacking an inventive concept sufficient to render the subject matter patent-eligible. BSG subsequently appealed to the Federal Circuit.

            On appeal, BSG first argued that the ”²699 patent was not directed to an abstract idea and was therefore valid under the first step of Alice. BSG asserted that the claims of the ”²699 patent were valid because: (1) the claims required a specific database structure, (2)  the claims required users to specifically consider “summary comparison usage information” instead of historical usage information, and (3) the claims focused on non-abstract improvements in database functionality.

            The Federal Circuit analyzed BSG”™s first argument and found it unpersuasive. The Federal Circuit stated that a specific database, although more detailed than a generic computer, is nonetheless a generic environment, and therefore invalid under step one of Alice.  Next, the Federal Circuit addressed BSG”™s second argument and determined that the term “summary comparison usage information” only provided a narrow application of an abstract idea and did not “focus” on a non-abstract idea. Lastly, in regards to BSG”™s third argument, the Federal Circuit concluded that the benefits of the patent flowed “from performing an abstract idea in conjunction with a well-known database structure,” and not from improvements in database functionality. Furthermore, the Federal Circuit applied its analysis of the ”²699 patent to the ”²294 patent due to their similarities. Accordingly, the Federal Circuit found the ”²294 patent was not patent-eligible under the first step of Alice.

            BSG next argued that claim 9 of the ”²952 patent was valid because it was directed to a database that behaved differently than a generic database. Specifically, BSG argued claim 9 was limited to a database in which its predefined structure is not modified when users add additional parameters. The Federal Circuit found that this limitation was not patent-eligible because it did not improve database functionality for the same reasons the limitations in the ”²699 and ”²294 patents were not patent-eligible.

            Finally, BSG argued that the ”²699, ”²294, ”²652 patents were valid under step two of Alice. Specifically, BSG alleged that the “requirement that users are guided by summary comparison usage information or relative historical usage information” was an unconventional feature.  In response, the Federal Circuit relied on its decision in Berkheimer v. HP, Inc. to emphasize that unconventional features must be directed to a non-abstract idea. Because the Federal Circuit had already determined that the unconventional feature was an abstract idea at step one of Alice and BSG did not argue any further improvements from non-abstract features, the claims of the ”²699, ”²294, and ”²652 patents lacked inventive concepts.

            Accordingly, the Federal Circuit affirmed the District Court”™s decision that the claims of the ”²699, ”²294, and ”²652 patents were ineligible under § 101. In doing so, the Federal Circuit held that an unconventional feature directed to an abstract idea at step one of Alice also fails step two and is therefore ineligible.