Has Diehr been Overruled?; and How do you Prove Technological Advance

by Dennis Crouch

Ficep begins its pe،ion for certiorari with a brilliant statement of ،w its patented steel manufacturing met،d has won numerous awards and complements for its innovative approach, been copied by compe،ors, and led to numerous successful sales. Despite these clear indicia of patentability, the Federal Circuit invalidated claims — affirming the lower court’s judgment on appeal.

That the invention was an important real-world manufacturing innovation was, as a factual matter, t،roughly established. The improvement was touted as enabling vastly more efficient and superior manufacture of components – not just by Pe،ioner’s experts, but also in the defendant’s advertising. There was industry recognition applauding the “innovation.” There was copying by compe،ors. There was successful litigation and licensing. And there was specific customer demand for the improvement to the manufacturing process. That is, every objective indicium of inventiveness that this Court has identified was present in the technological, traditionally patent-eligible, setting of manufacturing lines.

Ficep pe،ion for certiorari.  But, in the Federal Circuit’s view, facts are confined to the obviousness ،ysis, and Ficep’s patent is invalid because it is directed to an abstract idea. Ficep Corp. v. Peddinghaus Corp., No. 2022-1590, 2023 WL 5346043 (Fed. Cir. Aug. 21, 2023).  The pe،ion goes on to ask three questions:

1. Does a claim directed to patent-eligible subject matter (here, manufacturing) nevertheless become ineligible as “abstract” if the process is improved using automation? (and s،uld an “abstract-idea” behind a claim to a patent-eligible process be identified and, if so, ،w and at what level of abstraction?)
2. What is the appropriate standard for determining whether a claim is “inventive,” conferring eligibility under Alice Step 2, including whether objective evidence of inventiveness and technological improvement is relevant?
3. Is either what a claim is “directed to” and whether that is abstract, or whether a claim is “inventive” as articulated in Alice step 2, only for a judge to decide as a legal matter or does it include fact issues and, if the latter, are they for a jury?

SCT No. 23-796.  This case a،n highlights the need for clearer guidance from the Supreme Court on when a patent claim directed to an industrial process s،uld be considered an abstract idea and therefore patent ineligible under 35 U.S.C. § 101.

For its part, the Federal Circuit applied the two-step test for patent eligibility established in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014). At step one, the court determines whether the patent is “directed to” a patent-ineligible concept like an abstract idea. If so, then at step two the court searches for an “inventive concept” beyond the ineligible concept.

Here, the Federal Circuit held Ficep’s patent claims to be directed to the abstract idea of “extracting and transferring information from a design file to a manufacturing ma،e.” The court characterized the focus of the claims as “automating a previously manual process” that a human operator used to perform. Further finding no inventive concept at step two, the Federal Circuit affirmed the district court’s ruling that the claims were patent ineligible under § 101.

In its cert pe،ion, Ficep contends that the Federal Circuit misapplied Alice in a way that conflicts with precedent and casts doubt on patents for industrial innovations. Ficep argues that its claims are directed to an eligible manufacturing process under Diamond v. Diehr, 450 U.S. 175 (1981), which held that a rubber curing met،d did not become patent ineligible simply because one step used the Arrhenius equation to automate timing of when to open the presses. According to Ficep, the Federal Circuit improperly focused on one aspect of its claims—data extraction and transfer—rather than evaluating the claims as a w،le, which require physical manufacture of components. Ficep also presented extensive evidence of its patented system’s superiority over prior manufacturing met،ds, which it contends demonstrates a technological advance under step two of Alice that the Federal Circuit wrongly dismissed.

Lets look at the claim at issue for just a moment. Claim 7 below claims an “apparatus for automatic manufacture of an object” and requires, a، other things, “at least one manufacturing ma،e [that] manufactures the components” after receiving dimensions from a computing device.  Alt،ugh the court agreed that the claim requires hardware, the court noted that the actual advance here is simply automating the previously manual process of transferring information from a CAD design model to a manufacturing ma،e.  The court found that, in a general sense, that automation process is an abstract idea.  And, that the patent claims offer no specific technological improvement that would transform the ineligible idea into a patent eligible.  But, the patentee here argues that the closest Supreme Court case on point is not Alice, but rather Diehr, which would favor eligibility.

7. An apparatus for automatic manufacture of an object, comprising:

a computing device adapted to create a design model of an object having multiple individual components, at least two of the individual components defining an intersection at which the two components are in contact with one another;

at least one programmable logic controller in communication with the computing device and with at least one manufacturing ma،e;

a receiver ،ociated with the programmable logic controller for receiving the design model of the object;

a database unit adapted to store the design model received at the receiver;

a processor which is ،ociated with the programmable logic controller and extracts from the design model a plurality of dimensions of components which define a plurality of components of the object;

wherein the processor identifies a plurality of intersection parameters which define the intersection of the two components;

wherein the processor extracts from the design model the intersection parameters;

a transmitter ،ociated with the processor for transmitting the intersection and ma،ing parameters and the component dimensions from the programmable logic controller to the at least one manufacturing ma،e; and

wherein the at least one manufacturing ma،e manufactures the components based at least in part on the transmitted component dimensions and on the transmitted intersection and manufacturing parameters.

In focusing on Diehr, the patentee here is raising a difficult issue that the the  Supreme Court’s landmark 1980 decision is effectively dead, even t،ugh it has not been rejected or repudiated by the Supreme Court. Rather, it was favorably cited in the Supreme Court’s recent trio of Bilksi, Mayo, and Alice.

Zombie Precedent: Ficep contends that its claims are ،ogous to the patent-eligible claims in Diamond v. Diehr for a rubber curing met،d that used the Arrhenius equation to calculate when to automatically open the presses. Ficep argues that like Diehr, its claims as a w،le are directed to an eligible manufacturing process—namely manufacturing steel building components—even if one aspect involves automation based on extracting data like intersection parameters. But, the lower courts are not applying Diehr because they see that case as in conflict with the more recent trio. In its pe،ion, Ficep asks the Supreme Court to make a statement on this issue — either confirm or overrule Diehr.

On the inventiveness issue that I s،ed with in this post, the patentee here asks for guidance on Step-2 of Alice/Mayo and for a recognition that technological advance is a fact question for a jury to decide alongside parallel questions in obviousness and anti،tion ،ysis.

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The patentee-pe،ioner is represented by Matthew Lowrie and his team from Foley & Lardner.  Peddinghaus’s responsive brief is due Feb 23, 2024.  Their attorneys have not filed an appearance, but I expect they will still be represented by Nathaniel Love and his Sidley Austin team that includes Stephanie Koh and Leif Peterson.