Welcome

INSIGHT: SCOTUS Should Clear Up Section 101 Patent Test Confusion

Aug. 27, 2020, 8:01 AM

In a July 31 order, the U.S. Court of Appeals for the Federal Circuit denied full panel review of its controversial 2019 panel decision in American Axle & Mfg. Inc. v. Neapco Holdings LLC, which had extended the doctrine of patent ineligibility under 35 U.S.C. § 101 to mechanical inventions.

The judicial acrimony generated in American Axle reflects a state of confusion that screams for U.S. Supreme Court review of the modified panel decision. Yet the forecast for Supreme Court review remains cloudy. Earlier this year, the Supreme Court denied review of several cases presenting Section 101 issues, signaling reluctance to address any more Section 101 cases.

Decisions Continue Controversy Around Section 101

Instead of granting en banc review, the Federal Circuit issued a modified panel decision that continued to hold several of the litigated patent claims ineligible under Section 101 for being directed to a “law of nature,” while remanding the case back to the district court for further analysis of another set of claims.

The orders and opinions perpetuate the raging controversy surrounding Section 101, especially as applied to mechanical inventions. They also spotlight profound division among the judges, in terms of both an evenly-split 6–6 en banc vote and the severity of criticisms exchanged among the judges.

Exemplifying the intensity of this debate, a judge dissenting from in the modified panel decision charged the panel majority with applying a new standard that “will, as in the poem [The Raven], lead to insanity.”

‘Directed to Laws of Nature’

The case involved American Axle’s (AAM) method (U.S. Patent No. 7,774,911) for manufacturing noise-reducing driveshafts.

AAM had sued Neapco, alleging infringement of the ‘911 patent, but the district court granted Neapco’s motion for summary judgment of patent ineligibility under Section 101, finding that all asserted ‘911 patent claims were “‘directed to laws of nature: Hooke’s law and friction damping.’”

In October 2019, the Federal Circuit affirmed the district court’s judgment in a 2-1 decision. Judge Kimberly A. Moore authored a blistering dissent and Rep. Doug Collins (R-Ga.) called for a new eligibility test in a stinging criticism of the decision.

In November 2019, AAM filed a combined petition for panel rehearing and rehearing en banc. The Federal Circuit granted only the panel rehearing request by issuing the modified panel decision.

Nothing More’ Test

The modified panel decision comprised a two-judge majority opinion, plus another powerful dissent by Moore. This modified panel decision differs from its original counterpart in two major respects:

  1. recitation of what Moore labeled a “Nothing More” test; and
  2. escape of one group of patent claims from invalidation, at least for now, to undergo further analysis in a remanded district court proceeding.

Regarding the “Nothing More” test, the majority said that claim 22 “is directed to a natural law because it clearly invokes a natural law, and nothing more, to accomplish a desired result.” It added that its holding only extended to “where, as here, a claim on its face clearly invokes a natural law, and nothing more, to achieve a claimed result.” The majority therefore ruled that claim 22, depending claims 23–35, and a similar claim 36, were all patent-ineligible.

Claims 1–21 of the ‘911 patent survived the modified panel decision. The majority reasoned that claim 1 merited different treatment from claim 22, mainly because, as interpreted, claim 1 incorporated a larger list of liner characteristics that could be controlled, beyond just the “mass and stiffness” recited in claim 22. Claim 1, concluded the majority, was thus not merely directed to natural laws.

However, the majority remanded the case back to the district court to further consider Neapco’s alternative Section 101 theory, that claim 1 and its dependents are directed to an “abstract idea,” because this alternative theory was purportedly “not adequately presented and litigated in the district court.”

Dissenting Judges—Both Current and Retired—Sound Off

Moore blasted the majority opinion, asserting that it:

  1. created a new, overreaching “Nothing More” test for “natural law” analyses, where AAM’s claims did not recite any natural law, providing no opportunity for AAM to be heard;
  2. confused its Section 101 analysis with analysis under a separate invalidity theory, namely, nonenablement under Section 112(a) of the Patent Act; and
  3. rewrote the history of the proceedings, ignoring a claim 22 element addressed by both litigants.

Among other judges who dissented from the order denying the en banc rehearing, Judge Kara Fernandez Stoll lamented: “we are, piece by piece, allowing the judicial exception to patent eligibility to ‘swallow all of patent law.’”

Retired Federal Circuit Judge Paul Michel co-authored a piece further criticizing the majority as having misread the precedent it cited.

Ramifications

Barring intervention by either the Supreme Court or Congress, abject uncertainty will continue to plague Section 101 law, and patent owners contemplating litigation will now still need to account for the possibility of a patent ineligibility defense, regardless of the type of invention embodied in the patent claims.

Prospective patent applicants with inventions involving trial-and-error iterations should strive to both stress in the specification and to recite in the claims, all novel aspects of the invention beyond performing such iterations, so as to provide as many factual distinctions from American Axle as possible.

Articulating the specific problem addressed by the invention, and explaining in fine detail how the invention solves that problem, have never been more important.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Michael Cicero, a member of Taylor English’s Intellectual Property Department, focuses his practice on patent prosecution and preparation of opinions. His work also extends to trademark prosecution and copyright matters.

To read more articles log in. To learn more about a subscription click here.