Federal Circuit Says ITC Ruling is Too Narrow

The Federal Circuit has overturned a decision by the International Trade Commission (ITC or Commission) on a polycrystalline diamond compound owned by US Synthetic.

The case is US Synthetic Corp. v. International Trade Commission.

US Synthetic Corp. (USS) filed a complaint with the ITC alleging that SF DIAMOND CO., LTD., among others, violated 19 U.S.C. § 1337 (section 337) based upon the importation, the sale for importation, and the sale within the United States after importation of certain products that allegedly infringed five of USS’s patents. Only one of those patents was at issue in this appeal: U.S. Patent No. 10,508,502.

The ’502 patent claims a type of composition known as a polycrystalline diamond compact.

As the court explained,

A polycrystalline diamond compact (PDC) is a composition made of a polycrystalline diamond table (diamond table) bonded to a substrate. The diamond table is made from synthesized polycrystalline diamond, and the substrate is made from a cemented hard metal composite, like cobalt-cemented tungsten carbide.

PDCs are used for things like drilling tools and machining equipment. USS is a provider of polycrystalline diamond cutters for oil and gas drilling.

The ITC instituted a Section 337 investigation against Chinese entities that were allegedly infringing the patent by bringing unauthorized copies of the patented technology into the United States.

As the ITC notes,

Unfair import (a.k.a. Section 337) investigations conducted by the U.S. International Trade Commission most often involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods. Both utility and design patents, as well as registered and common law trademarks, may be asserted in these investigations. Other forms of unfair competition involving imported products, such as infringement of registered copyrights, mask works or boat hull designs, misappropriation of trade secrets or trade dress, passing off, and false advertising, may also be asserted.

The primary remedy available in Section 337 investigations is an exclusion order that directs Customs to stop infringing imports from entering the United States.

The patent was challenged on the basis that the asserted claims were directed primarily to a patent-ineligible natural phenomenon.

The ALJ determined that the asserted claims “obviously do recite compositions of matter that are not found in nature.”

USS made a PDC that exhibits “a high degree of diamond-to-diamond bonding” and also contains a reduced amount of metal catalyst without leaching the diamond table.

The patent discloses that “physical characteristics of the [diamond table] may be determined by measuring certain magnetic properties of the [diamond table].”

The Commission determined that certain claims of the ’502 patent were infringed, not invalid under 35 U.S.C. §§ 102, 103, or 112, and that USS satisfied the economic prong of the domestic industry requirement.

However, the ITC Administrative Law Judge (ALJ) determined that the asserted claims are patent ineligible because they violate the abstract-idea exception to 35 U.S.C. § 101.

Section 101 provides that “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor.”

The US Supreme Court has held that “certain categories of subject matter, including abstract ideas, are not eligible for patent protection under § 101.”

The court noted, "The abstract ideas category embodies the longstanding rule that an idea of itself is not patentable.”

However, as the court explained,

The Supreme Court has also recognized that “at some level, all inventions embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. …Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept.”

The ALJ determined that the magnetic properties of the PDC were merely unintended “results or effects [of the manufacturing process] and thus abstract,” saying that the “causal connection is so loose and generalized that the claimed limitations appear to be little more than side effects.”

Thus, the ALJ determined that the claims lack an inventive concept and are therefore patent ineligible under § 101.

The Federal Circuit disagreed, saying

we conclude that the asserted claims of the ’502 patent are not directed to an abstract idea. Rather, the claims are directed to a specific, non-abstract composition of matter—a PDC—that is defined by its constituent elements (i.e., diamond, cobalt catalyst, substrate), particular dimensional information (i.e., grain size, lateral dimension of the diamond table), and quantified material properties (i.e., coercivity, specific permeability, and specific magnetic saturation), whereby the material properties correlate to the diamond table’s structure and thereby further inform a skilled artisan about what the claimed PDC is.

As to the magnetic properties, said the court, “the [patent] specification explains how the claimed magnetic properties correlate to structural aspects of the claimed PDC.”

Also:

The specific magnetic saturation also informs a skilled artisan about physical characteristics of the PDC. Particularly, “[t]he amount of the metal-solvent catalyst present in the [diamond table] may be correlated with the measured specific magnetic saturation of the [diamond table],” where “[a] relatively larger specific magnetic saturation indicates relatively more metal-solvent catalyst.”

The court found that

The Commission erred when it concluded that the asserted claims are directed to the “abstract idea of PDCs that achieve... desired magnetic... results, which the specifications posit may be derived from enhanced diamond-to-diamond bonding.”

Also, the court noted that

The Commission’s apparent expectations for precision between the recited properties and structural details of the claimed composition is too exacting for § 101 purposes.

Said the court,

The disclosed relationship here is sufficient for § 101, where we are trying to ascertain as a matter of law whether a patent claim is directed to a specific implementation of an idea or merely just the idea itself. Contrary to the Commission’s argument, no perfect proxy is required between the recited material properties and the structure of the PDC.

The court concluded that the asserted claims of the ’502 patent are not directed to an abstract idea and thus reversed the Commission’s conclusion that the asserted claims of the ’502 patent are ineligible under § 101.