Use upper bound as inference fallback more consistently

mypy/checkexpr.py

@@ -1989,7 +1989,9 @@ def infer_function_type_arguments_using_context(
             # in this case external context is almost everything we have.
             if not is_generic_instance(ctx) and not is_literal_type_like(ctx):
                 return callable.copy_modified()
-        args = infer_type_arguments(callable.variables, ret_type, erased_ctx)
+        args = infer_type_arguments(
+            callable.variables, ret_type, erased_ctx, skip_unsatisfied=True
+        )
         # Only substitute non-Uninhabited and non-erased types.
         new_args: list[Type | None] = []
         for arg in args:

mypy/infer.py

@@ -63,9 +63,13 @@ def infer_function_type_arguments(
 
 
 def infer_type_arguments(
-    type_vars: Sequence[TypeVarLikeType], template: Type, actual: Type, is_supertype: bool = False
+    type_vars: Sequence[TypeVarLikeType],
+    template: Type,
+    actual: Type,
+    is_supertype: bool = False,
+    skip_unsatisfied: bool = False,
 ) -> list[Type | None]:
     # Like infer_function_type_arguments, but only match a single type
     # against a generic type.
     constraints = infer_constraints(template, actual, SUPERTYPE_OF if is_supertype else SUBTYPE_OF)
-    return solve_constraints(type_vars, constraints)[0]
+    return solve_constraints(type_vars, constraints, skip_unsatisfied=skip_unsatisfied)[0]

mypy/solve.py

@@ -43,6 +43,7 @@ def solve_constraints(
     constraints: list[Constraint],
     strict: bool = True,
     allow_polymorphic: bool = False,
+    skip_unsatisfied: bool = False,
 ) -> tuple[list[Type | None], list[TypeVarLikeType]]:
     """Solve type constraints.
 
@@ -54,6 +55,8 @@ def solve_constraints(
     If allow_polymorphic=True, then use the full algorithm that can potentially return
     free type variables in solutions (these require special care when applying). Otherwise,
     use a simplified algorithm that just solves each type variable individually if possible.
+
+    The skip_unsatisfied flag matches the same one in applytype.apply_generic_arguments().
     """
     vars = [tv.id for tv in original_vars]
     if not vars:
@@ -110,7 +113,7 @@ def solve_constraints(
                 candidate = AnyType(TypeOfAny.special_form)
             res.append(candidate)
 
-    if not free_vars:
+    if not free_vars and not skip_unsatisfied:
         # Most of the validation for solutions is done in applytype.py, but here we can
         # quickly test solutions w.r.t. to upper bounds, and use the latter (if possible),
         # if solutions are actually not valid (due to poor inference context).

test-data/unit/check-inference.test

@@ -3748,3 +3748,22 @@ empty: Dict[NoReturn, NoReturn]
 def bar() -> Union[Dict[str, Any], Dict[int, Any]]:
     return empty
 [builtins fixtures/dict.pyi]
+
+[case testUpperBoundInferenceFallbackNotOverused]
+from typing import TypeVar, Protocol, List
+
+S = TypeVar("S", covariant=True)
+class Foo(Protocol[S]):
+    def foo(self) -> S: ...
+def foo(x: Foo[S]) -> S: ...
+
+T = TypeVar("T", bound="Base")
+class Base:
+    def foo(self: T) -> T: ...
+class C(Base):
+    pass
+
+def f(values: List[T]) -> T: ...
+x = foo(f([C()]))
+reveal_type(x)  # N: Revealed type is "__main__.C"
+[builtins fixtures/list.pyi]