ITC Takes Section 101 to Its Illogical Extreme

By Michael Borella --

Hat tip to Prof. Lefstin who wrote a detailed analysis of this case on Patently-O.  We will keep our review short and to the point (pun intended, see below).

We are all familiar with the rhetorical device of a parade of horribles -- a series of very bad things that could happen if some action is (or isn't) taken.  Often, these parades involve a degree of hyperbole.  In other cases, they underestimate just how horrible the horribles actually are.

The Supreme Court's Alice Corp. v. CLS Bank Int'l decision set off such a parade.  It started with certain computerized financial transactions being ruled ineligible, to more general forms of software inventions being held similarly invalid.  The exceptions to the broad statutory categories of patent subject matter now include audio/video streaming, wirelessly-controlled garage door openers, electric vehicle charging stations, cameras, methods of tuning drive shafts, and cardiac monitoring devices.

In a decision that came down last October but somehow managed to avoid attention until recently, the International Trade Commission (ITC) affirmed an administrative law judge's decision that patent claims directed to an article of manufacture are abstract ideas under Alice.  An example of one of these claims recites:

A polycrystalline diamond compact, comprising:
    a polycrystalline diamond table, at least an unleached portion of the polycrystalline diamond table including:
        a plurality of diamond grains directly bonded together via diamond-to-diamond bonding to define interstitial regions, the plurality of diamond grains exhibiting an average grain size of about 50 μm or less;
        a catalyst occupying at least a portion of the interstitial regions;
        wherein the unleached portion of the polycrystalline diamond table exhibits a coercivity of about 115 Oe or more;
        wherein the unleached portion of the polycrystalline diamond table exhibits an average electrical conductivity of less than about 1200 S/m; and
        wherein the unleached portion of the polycrystalline diamond table exhibits a G_ratio of at least about 4.0×10⁶; and
    a substrate bonded to the polycrystalline diamond table.

In plain English, a polycrystalline diamond compact (PDC) "can be used in drilling tools (e.g., cutting elements, gage trimmers, etc.), machining equipment, bearing apparatuses, wire-drawing machinery, and in other mechanical apparatuses" and "have found particular utility in cutters in rotary drill bits."  So the invention here is the business end of a drill.

The ITC's main problem with the above claim resides in the wherein clauses.  Indeed, the ITC wrote:

It is clear from the language of the claims that the claims involve an abstract idea—namely, the abstract idea of a PDC that achieves the claimed performance measures (G-Ratio and thermal stability) and has certain measurable side effects (specific magnetic saturation, coercivity, and specific permeability), which, as discussed below, the specifications posit are derived from enhanced diamond-to-diamond bonding in the PCDs.

Here, the ITC seems to find that the claimed characteristics of the unleached portion are "performance measures" and appear to discount or ignore, for purposes of eligibility, the physical PDC properties that these characteristics represent.  Instead, the ITC stated that "[t]he Federal Circuit has explained that the patent eligibility inquiry requires that the claim identify how a functional result is achieved by limiting the claim scope to structures specified at some level of concreteness."

This is a misstatement of the law.  Functional claiming is explicitly permitted by the patent statute, and using it is subject to well-known caveats, none of which are ineligibility.

Finding the claims abstract, the ITC went on to conclude that "[t]he elements of the asserted claims—individually and as an ordered combination—do not transform the nature of the claims into something patent-eligible" because they "recite results-oriented language and the recited physical elements are conventional."  What the ITC munges in its analysis is that the claims are alleged to provide a performance improvement over prior techniques -- they even take that as given, stating that the stronger PDCs of the claim "that achieve certain performance measures and desired magnetic and electrical properties" are still abstract.

The Supreme Court and Federal Circuit have stated that providing improvements to a technology can render an otherwise abstract invention eligible.  But the ITC appears to want the claim to recite the exact PDC structure that causes it to have the claimed characteristics, regardless of any improvement provided.

It is very hard to square this outcome with a number of Federal Circuit decisions.  For example, in Thales Visionix Inc. v. U.S., that Court found the following claim eligible because it encompassed a technological improvement:

A system for tracking the motion of an object relative to a moving reference frame, comprising:
    a first inertial sensor mounted on the tracked object;
    a second inertial sensor mounted on the moving reference frame; and
    an element adapted to receive signals from said first and second inertial sensors and configured to determine an orientation of the object relative to the moving reference frame based on the signals received from the first and second inertial sensors.

This claim is arguably even broader and more functional than the PDC claim above.  The ITC, however, relied on the reasoning in American Axle & Mfg. v. Neapco Holdings LLC that used a bastardized version of the Alice test made up out of thin air to find a functionally-drafted claim ineligible.  So add this case to the parade.

A silver lining to this thundercloud is that Commissioner Schmidtlein dissented from her colleagues' reasoning and would have found the claim eligible.  Commissioner Schmidtlein focused on the improvements over the prior art that were not persuasive to her colleagues, noting that the claimed PDC "exhibits improved mechanical and/or thermal properties and performs better in high-abrasion applications, such as earth-boring drill bits."

She also looked to the specification's teaching that the claimed characteristics relating to coercivity, conductivity, magnetic saturation, and specific permeability "reflect the extent to which the diamond grains have bonded and formed large diamond grains thereby displacing the metal catalyst in the diamond matrix."  As a result, the invention is claimed "in terms reflecting its structure, including its microstructure quantified by various measurements."

Commissioner Schmidtlein explicitly considered the claims as a whole rather than dividing the elements into structure and measurements.  In a detailed review of the specification, she asserted that the characteristics that the majority found to be measurements were in fact tied to the improved performance of the structure.  In finding the claims directed to an eligible composition of matter, she wrote:

Labeling certain claim elements merely as "performance standards," "results," "side effects," or "not a design choice," in my view, fails to appreciate that the claimed parameters are concrete, objective measurements for defining the invention and which reflect the diamond microstructure.  Many properties of patented materials could be described the same way.  As is often the case in materials science and chemistry, intrinsic properties like density, pH, conductivity, and melting point result from other design choices, such as the choice of chemical inputs, processing parameters, and finishing steps.  The claimed PDC involves a composition of matter that the inventors characterized based on what it is.  That a particular material property of this composition of matter "results" from other design choices does not render it abstract.

She also found a distinction between the tangibility of the claimed invention and the precedent used by the majority, which was largely drawn to ineligible software claims involving intangible information.[1]  She further distinguished the invention over that of American Axle, in that the advance of the claimed PDC is a physical structure rather than a law of physics with unbounded parameters.

Finally, Commissioner Schmidtlein wrote "finding claims reciting a specific, definable composition of matter as ineligible . . . suggests that the ID [final initial determination] and Majority have strayed from the preemption concerns that motivate the judicial exception to patent eligibility."

In other words, a drill bit is not an abstract idea.

Commission Opinion

[1] Screaming into the void once again, I remind the world that all software has a tangible representation and that, when executed by hardware, has a tangible effect. 

Comments

[Max Drei]

I jump in early, from Europe, in the hope of prompting useful comments in reply. The "abstract idea" litmus test is problematic but so too are "parameter claims" in general.

Thus here. The skilled person knew the relationship between the recited material properties and drilling performance. Further, the skilled person knew that increasing the sintering pressure would improve these performance-relevant material properties. So, when the contribution to the art is the use of a higher sintering pressure, don't claim simply that. Instead claim the resulting product, defined by its material properties. That's an idea in the mind of the patent attorney. I wouldn't call it "abstract" though.

Pity that, here, there isn't a patent family member at the EPO, for comparison what objections to patentability would have been raised.

Regularly assessing the alloy claims of the competitors of my metal industry client leaves me weary and cynical about such "parameter claims", which are hard for a Patent Office to filter out, ex Parte, with the classic tools of 102, 103 and 112 . They need to be filtered out, but how shall a poor beleagured Patent Office, under the cosh of efficiency-seeking management, do it effectively?