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The Need for Subject Matter Eligibility Reform Gets Even More Dire – Now Targeting Manufacturing Processes for Tuning Automotive Parts

October 15 2019

American innovation has been increasingly under attack from judicially created constructs applying  35 U.S.C. § 101, which governs patent subject matter eligibility.  The ability of inventors to secure and enforce rights to their inventions, in all areas of technology, has been reduced repeatedly over the past two decades in decisions limiting the scope of what is patent subject matter eligible in a trend that has continued  in the past few years.

Patent subject matter eligibility under 35 U.S.C. § 101 has been a challenge for the United States Patent Office (USPTO) and the courts.  Determining what is and is not patentable solely from a subject matter perspective has been an inventor’s and patent practitioner’s nightmare alike.

The Court of Appeals for the Federal Circuit (CAFC)’s recent ruling in American Axle & Manufacturing Inc. v. Neapco Holdings LLC, in which the CAFC, affirmed a summary judgment that a claims directed to a method for dampening vibrations in vehicle driveshafts were patent ineligible under § 101 as preempting a natural law.  The decision indicates that the CAFC appears to be in need of better guidance from the Supreme Court and Congress on how to apply Section 101.

A strongly worded dissent from Judge Moore argued that “the majority’s concern with the claims at issue has nothing to do with a natural law and its preemption and everything to do with concern that the claims are not enabled.”  Judge Moore cautioned that “there is a clear and explicit statutory section for enablement, § 112” and [w]e cannot convert § 101 into a panacea for every concern we have over an invention’s patentability, especially where the patent statute expressly addresses the other conditions of patentability and where the defendant has not challenged them.”

The decision has already found voices outside the community of patent practitioners and litigators that have taken issue with this new and troubling expansion of 35 U.S.C. § 101 into new territories.  A day after the ruling, Rep. Doug Collings (R-Ga.), Ranking Member of the House Judiciary Committee released a statement the day after the ruling announcing:

“Our patent eligibility test is clearly flawed, and the court’s decision yesterday regarding American Axle & Manufacturing, Inc. showcases the inadequacies of this test. It’s unthinkable the courts found this invention, a manufacturing process for making a key automotive part, as patent ineligible. The courts have misstated the law several times, which deprives many innovative products of adequate protection. Congress must establish a new eligibility test to encourage investment in developing new U.S. technologies and ensure American inventors aren’t at a global disadvantage. I’ve been working on reforming this test with my colleagues in both the House and the Senate, and I look forward to continuing this important work.”

 

How Did We Get To This Point?

Early on, patent eligibility cases addressed the patentability of software that incorporated or implemented mathematical algorithms, such as in the cases of Gottschalk v. Benson[i], Parker v. Flook[ii] and Diamond v. Diehr[iii].  Other cases  involved the patenting of living organisms, such as in the case of Diamond v. Chakrabarty[iv].

In 1998, the Court of Appeals for the Federal Circuit (CAFC) found a business method patentable if “it produces a useful, concrete and tangible result” in State Street Bank & Trust Co. v. Signature Financial Group Inc[v] , only to reverse this rule in In re Bilski[vi] in 2008, where it found that the only test for determining patent eligibility was the “machine-or-transformation test”, which was later confirmed by the Supreme Court of the United States (SCOTUS) in Bilski v. Kappos[vii].

Thereafter, in  Mayo v. Prometheus[viii]the SCOTUS  held that methods for administering drugs, measuring metabolites and modifying the amount of the drug given based on those metabolites unpatentable, “Because methods for making such determinations were well known in the art, this step simply tells doctors to engage in well-understood, routine, conventional activity previously engaged in by scientists in the field. Such activity is normally not sufficient to transform an unpatentable law of nature into a patent-eligible application of such a law.[ix]”  This blow to medical diagnostic patents continued in 2019 with the CAFC’s decisions in Athena Diagnostics v. Mayo Collaborative Services[x], and Cleveland Clinic Foundation V. True Health Diagnostics LLC[xi], with both cases finding patents for such inventions invalid under Mayo v. Prometheus.  However, apparently feeling the weight of having their hands tied by Supreme Court precedent, in delivering the opinion for the majority, Justice Lourie wrote, “We would add further that, in our view, providing patent protection to novel and non-obvious diagnostic methods would promote the progress of science and useful arts.”

In between Mayo and Athena/Cleveland Clinic decisions, the SCOTUS 2014 ruling in Alice Corp. v. CLS Bank International[xii] in 2014, which built upon the findings in Mayo,created a two-step test for patent eligibility under 35 U.S.C. § 101.  It is first determined whether the claims are directed to a patent-ineligible concept; and if so, then step two is to determine whether the claim’s elements, considered both individually and as an ordered combination, transform the nature of the claims into a patent-eligible application that recites an inventive concept that is something significantly more than a patent ineligible concept.  The ruling in this case resulted in effectively invalidating many patents, and ultimately made obtaining patent protection for computer-based inventions far more difficult.

The American Axle Decision

While there have been numerous decisions grappling with the application of 35 U.S.C. § 101 since the Alice decision, the sharply divided ruling in American Axle & Manufacturing Inc. v. Neapco Holdings LLC[xiii]is a very strong indication that the need for better guidance remains unmet.  In this case, the claimed invention was a manufacturing process for automotive parts, comprising a method for attenuating vibrations using liners in a propeller shaft.  The majority opinion  found the claims were directed to the application of the patent-ineligible concept of “Hooke’s Law”, which mathematically relates the mass/stiffness of an object to the frequency with which that object oscillates (i.e., vibrates).  The majority found the  claims’ instruction to tune a liner essentially amounted to what the Supreme Court prohibited in Mayo—i.e., “simply stating a law of nature while adding the words “apply it.”  In the second step of the Mayo/Alice test, the majority opinion reasoned that the “claimed advance is simply controlling various known characteristics of the liner so as to achieve attenuation of two vibration modes simultaneously”, used methods “well known in the automotive industry.”  It reasoned further that direction to engage in a conventional, unbounded trial-and error process does not make a patent eligible invention, even if the desired result to which that process is directed would be new and unconventional.[xiv]

Judge Moore’s Dissent

Judge Moore rebuked the majority opinion, warning that “[t]he majority’s decision expands § 101 well beyond its statutory gate-keeping function and the role of this appellate court well beyond its authority”, particularly given that the ruling was made before trial at summary judgment.     Judge Moore asserted that the majority seemed untroubled by the repeated recognition that the claims may be directed to natural laws other than Hooke’s law.  Judge Moore also criticized the majority for substituting its own fact finding on the what was known in the prior art and well known conventional, arguing the majority ignored that there was no evidence in the record to contradict the patentee’s assertions on that issue.  Judge Moore concluded that “according to the majority, even if these claims are enabled, they are still ineligible because the claims themselves didn’t teach how.  This is now the law of § 101. The hydra has grown another head.”

Hope For The Future

Congress has been working on a bipartisan fix to issues related to subject matter eligibility under 35 U.S.C. § 101, having hearings as recent as September 11, 2019, there is hope in Rep. Collings statement that the issue will be taken up with renewed vigor and that when it is taken up, Judge Moore’s warnings  that Section 101 should not be used to address validity concerns other than subject matter eligibility , such as enablement, novelty, and obviousness that are addressed in other sections of the Patent Act will be heeded or that they will be heeded in further guidance from the SCOTUS.

[i] Gottschalk v. Benson, 409 U.S. 63 (1972)

[ii] Parker v. Flook, 437 U.S. 584 (1978)

[iii] Diamond v. Diehr, 450 U.S. 175 (1981)

[iv] Diamond v. Chakrabarty, 447 U.S. 303 (1980

[v] State Street Bank & Trust Co. v. Signature Financial Group Inc, 149 F.3d 1368 (Fed. Cir. 1998).

[vi] In re Bilski, 2007-1130 (Fed. Cir. 2008)

[vii] Bilski v. Kappos, 561 U.S. 593 (2010)

[viii] Mayo v. Prometheus, 566 U.S. 66 (2012)

[ix] Id.

[x] Athena Diagnostics v. Mayo Collaborative Services, 17-2508 (Fed. Cir. 2019)

[xi] Cleveland Clinic Foundation V. True Health Diagnostics LLC, 18-1218 (Fed. Cir. 2019)

[xii] Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014).

[xiii] American Axle & Manufacturing Inc. v. Neapco Holdings LLC, [2018-1763] (Fed. Cir., 2019)

[xiv] Id.