Full Federal Circuit Continues 101 Spin on Driveshaft Eligibility
| August 14, 2020
American Axle & Manufacturing v. Neapco Holdings – Part II
July 31, 2020
Opinion by: Dyke, Moore and Taranto
Dissent by: Moore
Summary:
A 6-6 split vote for en banc rehearing dooms clarification on the patent eligibility of a driveshaft manufacturing method by the full Federal Circuit. The petition for rehearing en banc for this case engendered 6 amici curiae briefs. The denial of en banc rehearing triggered 2 concurrences and 4 dissenting opinions.
Nevertheless, a new modified panel decision is issued, with different results than the first panel decision. While the first panel decision found representative claims 1 and 22 ineligible under 35 U.S.C. §101, this second panel decision still found claim 22 ineligible for essentially the same reasons as before, but remanded claim 1. Like the first panel decision, this new panel decision also includes a strong dissent by Judge Moore.
The conflicting positions of a split Federal Circuit in this case highlight the turmoil in current 101 jurisprudence.
Procedural History:
American Axle & Manufacturing, Inc. (AAM) sued Neapco Holdings, LLC (Neapco) for infringement of U.S. Patent 7,774,911 (the ‘911 patent) on a method of manufacturing driveline propeller shafts for automotive vehicles. On appeal, the Federal Circuit upheld the District Court of Delaware’s holding of invalidity under 35 U.S.C. §101 in the first panel decision issued October 3, 2019 (hereinafter, AAM I). A combined petition for panel rehearing and for en banc rehearing was filed. A modified, precedential, panel decision was issued on July 31, 2020 in response to the petition for panel rehearing (hereinafter, AAM II) – affirming the ineligibility of claim 22, its dependent claims and claim 36, but remanding claim 1 and its dependent claims to the district court. The petition for en banc rehearing was denied.
Background:
The ‘911 patent relates to a method for manufacturing driveline propeller shafts (“propshafts” that transmit power in a driveline) with liners that attenuate vibrations transmitted through a shaft assembly. During use, propshafts experience three types of vibration: bending mode vibration, torsion mode vibration, and shell mode vibration, each involving different frequencies. To attenuate the noise accompanying such vibration, various conventional methods using weights, dampers, and liners are inserted to frictionally engage the propshaft to dampen certain vibrations. However, such conventional dampening methods were designed to individually attenuate each of the three types of vibration. According to AAM, the ‘911 patent seeks to attenuate two vibration modes simultaneously, which the prior art did not do.
The CAFC focused on independent claims 1 and 22 as being “representative” claims:
| Claim 1 | Claim 22 |
| 1. A method for manufacturing a shaft assembly of a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being adapted to transmit torque between the first driveline component and the second driveline component, the method comprising: providing a hollow shaft member; tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member; and positioning the at least one liner within the shaft member such that the at least one liner is configured to damp shell mode vibrations in the shaft member by an amount that is greater than or equal to about 2%, and the at least one liner is also configured to damp bending mode vibrations in the shaft member, the at least one liner being tuned to within about ±20% of a bending mode natural frequency of the shaft assembly as installed in the driveline system. | 22. A method for manufacturing a shaft assembly of a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being adapted to transmit torque between the first driveline component and the second driveline component, the method comprising: providing a hollow shaft member; tuning a mass and a stiffness of at least one liner, and inserting the at least one liner into the shaft member; wherein the at least one liner is a tuned resistive absorber for attenuating shell mode vibrations and wherein the at least one liner is a tuned reactive absorber for attenuating bending mode vibrations. |
The district court construed claim 1’s “tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member” to mean “controlling characteristics of at least one liner to configure the liner to match a relevant frequency or frequencies to reduce at least two types of vibration transmitted through the shaft member” (emphasis in original). Claim 22’s “tuning a mass and a stiffness of at least one liner” was construed to mean “controlling the mass and stiffness of at least one liner to configure the liner to match the relevant frequency or frequencies.” Notably, the above claim interpretation for claim 1 was not mentioned in AAM I, and the district court made no distinction between claims 1 and 22 in its decision.
AAM II Panel Decision:
Claim 22
With regard to claim 22, the §101 analysis is essentially the same between AAM I and AAM II.
Under the Mayo/Alice step 1, claim 22 was deemed “directed to” Hooke’s law, mathematically relating mass and stiffness of an object to the frequency with which that object vibrates. Claim 22 merely recites “tuning a mass and a stiffness of at least one liner,” without any particular physical structures or steps for tuning. “[C]laim 22 here does not specify how target frequencies are determined or how, using that information, liners are tuned to attenuate two different vibration modes simultaneously, or how such liners are tuned to dampen bending mode vibrations.” As such, claim 22 is merely claiming a desired result (tuning a liner), without limitation to any particular structures or ways to achieve it. AAM II concludes, “[t]his holding as to step 1 of Alice extends only where, as here, a claim on its face clearly invokes a natural law, and nothing more, to achieve a claimed result.”
Notably absent from AAM II’s Alice step 1 analysis is the majority’s earlier reference in AAM I to Hooke’s law “and possibly other natural laws” in describing what natural law claim 22 is directed to.
Under the Mayo/Alice step 2, claim 22 does not recite an “inventive concept” to transform it into patent eligible subject matter. The majority summarizes AAM’s argument for an inventive concept to be merely a restatement of the desired results (tuned liners that dampen two different vibration modes simultaneously) being an advance. However, an ineligible concept cannot supply the inventive concept. And the remaining steps in claim 22 are merely conventional pre- and post-solution activity.
Claim 1
With regard to claim 1, the majority focused on three differences from claim 22.
One difference is that claim 1’s feature of “tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member” was construed by the district court to mean “controlling characteristics of at least one liner to configure the liner to match a relevant frequency or frequencies to reduce at least two types of vibration transmitted through the shaft member” (emphasis in original). Claim 22 did not require “controlling characteristics…”
Second, such “characteristics” are described in the specification to include variables other than mass and stiffness, including length and outer diameter of the liner 204, diameter and wall thickness of a structural portion 300 and the material thereof, quantity of resilient member(s) 302 and the material thereof, a helix angle 330 and pitch 332 with which resilient members 302 are fixed to the structural portion 300, the configuration of lip member(s) 322 of the resilient member 302, and the location of the liners 204 within the shaft member 200. Claim 22 did not go beyond tuning involving mass and stiffness.
Third, claim 1 requires “positioning the at least one liner.” The majority considered claim 22’s “inserting the at least one liner into the shaft member” as not being equivalent to claim 1’s “positioning” feature, without explanation. On this point, J. Moore, noted in the dissent, that this is improper sua sponte appellate claim construction which neither parties briefed nor argued. J. Moore argued claim 22’s ineligibility should not have been premised on such unsupported sua sponte claim construction.
Because of these differences, the majority held that claim 1 is not merely directed to Hooke’s law “and nothing more.” “The mere fact that any embodiment practicing claim 1 necessarily involves usage of one or more natural laws is by itself insufficient to conclude the claim is directed to such natural laws.”
But, this doesn’t mean that claim 1 is eligible. The majority notes that the district court and Neapco also raised ineligibility based on the judicial exception for an abstract idea. “But the abstract idea basis was not adequately presented and litigated in the district court.” Thus, the majority remanded the claim 1 and its dependent claims to the district court to address this abstract idea issue in the first instance.
J. Moore’s Dissent:
Like in AAM I, J. Moore’s dissent in AAM II is likewise stinging. “The majority’s decision expands §101 well beyond its statutory gate-keeping function and collapses the Alice/Mayo two-part test to a single step – claims are now ineligible if their performance would involve application of a natural law.”
- A new “Nothing More test”
J. Moore asserts that the majority created a new test, a “Nothing More test” – “when claims are directed to a natural law despite no natural law being recited in the claims.” According to the majority, claim 22’s “tuning” feature meant “controlling the mass and stiffness of at least one liner to configure the liner to match the relevant frequency or frequencies” and “[t]hus, claim 22 requires use of a natural law of relating frequency to mass and stiffness – i.e., Hooke’s law.” However, J. Moore notes that “[e]very mechanical invention requires use and application of the laws of physics. It cannot suffice to hold a claim directed to a natural law simply because compliance with a natural law is required to practice the method.”
“Section 101 is monstrous enough, it cannot be that use of an unclaimed natural law in the performance of an industrial process is sufficient to hold the claims directed to that natural law.” “All physical methods must comply with, and apply, the laws of physics and the laws of thermodynamics…[t]he fact that they do does not mean the claims are directed to all such laws.” “This case turns the gatekeeper into a barricade. Unstated natural laws lurk in the operation of every claimed invention. Given the majority’s application of its new test, most patent claims will now be open to a §101 challenge for being directed to a natural law or phenomena.”
The majority’s counterpoint: “If patentees could avoid the natural law exception by failing to recite the law itself [like here – no mention of ‘Hooke’s law’, but varying frequency attenuation (tuning) based on mass and stiffness is on its face Hooke’s law], patent eligibility would depend upon the ‘draftsman’s art,’ the very approach that Mayo rejected.”
However, avoiding the “draftsman’s art” is not the primary focus of §101. Instead, it is on preemption. That is why claims may be patent eligible under §101 if the “claimed advance” reflects an improvement in technology. As J. Moore also noted, “[t]he claims at issue contain a specific, concrete solution (inserting a liner inside a propshaft) to a problem (vibrations in propshafts).” The ‘911 claims are directed to the traditional manufacturing of a drive shaft assembly for a car, which have historically avoided any concern under §101. On this point, see also J. Stoll’s dissent on the denial of en banc rehearing below.
Another problem with the majority’s new “Nothing More test” is that it arguably requires appellate judges to “resolve questions of science de novo on appeal.” J. Moore raises a concern about appellate judges making determinations of scientific fact on appeal, in the first instance, as a matter law. Nothing in the intrinsic record (nothing in the patent and nothing in the prosecution history) mentions Hooke’s law. So, “how can we conclude, as a matter of law, the claim nonetheless clearly invokes Hooke’s law?” To J. Moore, “judges are not fact or technical experts…[t]he only appropriate fact finder is the district court and not on summary judgment.”
Indeed, during litigation both sides’ experts and the district court noted that the claims involve Hooke’s law and friction damping. Yet, the majority concludes that the natural law used is Hooke’s law “and nothing more.” The majority’s counterpoint is that even “[i]f claim 22’s language could be properly interpreted in a way such that it invokes friction damping as it does with Hooke’s law, the claims would still on its face clearly invoke natural laws, and nothing more, to achieve a claimed result.”
“A disturbing amount of confusion will surely be caused by this opinion, which stands for the proposition that claims can be ineligible as directed to a natural law even though no actual natural law is articulated in the claim or even the specification. The majority holds that claims are directed to a natural law if performance of the claimed method would use the natural law.”
- Failure to consider unconventional claim elements under Mayo/Alice step 2
Under the Mayo/Alice step 2 analysis, while the majority asserts that “[w]hat is missing is any physical structure or steps for achieving the claimed result,” J. Moore notes that AAM’s arguments identified “many” inventive concepts that should have at least precluded summary judgment. For instance, AAM argued that liners (a physical and explicitly recited claim element) were never before used to reduce bending mode vibrations. Instead of addressing all the inventive concepts laid out by AAM, “the majority creates its own strawman to knock down” (i.e., sophisticated FEA software and computer modeling that are not claimed).
- Enablement on Steroids
“[T]he majority has imbued §101 with a new superpower – enablement on steroids.” “The majority’s concern is not preemption of a natural law (which should be the focus), but rather that the claims do not teach a skilled artisan how to tune a liner without trial and error. The majority’s blended 101/112 defense is confusing, converts fact questions into legal ones and eliminates the knowledge of a skilled artisan.”
Of course, the majority clarified that there is a “how to” 1 and a “how to” 2. The “how to” 1 is a requirement under 101 that “the claim itself (whether by its own words or by statutory incorporation of specification details under section 112(f)) must go beyond stating a functional result: it must identify ‘how’ that functional result is achieved by limiting the claim scope to structures specified at some level of concreteness, in the case of a product claim, or to concrete action, in the case of a method claim.” The “how to” 2 is a different requirement that applies to the specification under §112, not to the claim. But, see, J. Stoll’s dissent below. At what level of specificity is sufficient to pass muster under the majority’s “how to” 1? How is this to be determined, absent any input by a skilled artisan? Doesn’t this “how to” inquiry involve questions of fact which should not be determined de novo as a matter of law by appellate judges?
Concurring and Dissenting Opinions on the Denial of en banc Rehearing:
J. Dyk’s concurrence argues that this modified panel decision is consistent with precedent and that there was no “new” test.
J. Chen’s concurrence also states that the panel majority’s decision is consistent with long-standing precedent, and there was no new patent-eligibility test. And, “[a]s evidenced by the majority opinion’s conclusion that claim 1 is not directed to a natural law, the narrow holding of this case should not be read to open the door to eligibility challenges based on the argument that a claim is directed to one or more unspecified natural laws.” J. Chen also disagrees about 101 being enablement on steroids, “result-oriented claim drafting raises concerns under section 101 independent from section 112.” “The lesson to patent drafters should now be clear: while not all functional claiming is the same, simply reciting a functional result at the point of novelty poses serious risks under section 101.”
J. Newman’s dissent stated “[t]he court’s new spin on Section 101 holds that when technological advance is claimed too broadly, and the claims draw on scientific principles, the subject matter is barred ‘at the threshold’ from access to patenting.” This is contrary to the warning in Alice to be careful to avoid oversimplifying the claims because ‘[a]t some level, ‘all inventions…embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.’” “The court’s notion that the presence of a scientific explanation of an invention removes novel and non-obvious technological advance from access to the patent system, has moved the system of patents from its once-reliable incentive to innovation and commerce, to a litigation gamble.”
J. Stoll’s dissent makes notable challenges to the majority’s “how to” analysis in §101’s directed to inquiry:
“Even assuming that claim 22 applies Hooke’s law (or any other unnamed law of nature), the claim seems sufficiently specific to qualify as an eligible application of that natural law. The claim identifies specific variables to tune, including ‘a mass and a stiffness of at least one liner.’ It requires that the tuned liner attenuate specific types of vibration, including ‘shell mode vibrations’ and ‘bending mode vibrations,’ and further requires that the tuned liner is inserted in a ‘hollow shaft member.’ With this level of specificity, claim 22 appears to be properly directed to ‘the application of the law of nature to a new and useful end,’ not to the law of nature itself. Yet this level of detail is insufficient in the majority’s view, and it remains unclear how much more ‘how to’ would have been sufficient to render the claim eligible under the majority’s approach.” (citations omitted).
J. Stoll also remarked, “[i]n my view, the result in this case suggests that this court has strayed too far from the preemption concerns that motivate the judicial exception to patent eligibility.”
J. O’Malley’s dissent identifies at least three problems in the majority opinion: “(1) it announces a new test for patentable subject matter at the eleventh hour and without adequate briefing; (2) rather than remand to the district court to decide the issue in the first instance, it applies the new test itself; and (3) it sua sponte construes previously undisputed terms in a goal-oriented effort to distinguish claims and render them patent ineligible, or effectively so.”
Takeaways:
- Even in traditionally eligible industrial and mechanical inventions, potential §101 issues may now be raised depending on the scope of the functional claiming being used, especially if result-oriented. J. Stoll expressed legitimate concerns about the practical effect of this modified panel decision, “[a]lthough the majority has dialed back its original decision to some degree on panel rehearing, one can still reasonably ponder whether foundational inventions like the telegraph, telephone, light bulb, and airplane – all of which employ laws of nature – would have been ineligible for patenting under the majority’s revised approach.”
- But, don’t give up. Whether defending a patent or challenging a patent on §101, the Federal Circuit is clearly split on various issues under 101. Unfortunately, §101 jurisprudence is, as J. Newman remarked, becoming a “litigation gamble.” Nevertheless, depending on who is on your panel, you may get a favorable decision. Only the Supreme Court or Congress can come to the rescue of §101.
- This case is a reminder that claim construction can change the result of the 101 determination.
- As J. Chen noted, functional, result-oriented, claiming, especially at the point of novelty, may trigger serious 101 issues, even in mechanical cases that, until now, were mostly immune to §101 attack.
- Try to include a “kitchen sink” claim. The specificity provided may help overcome such 101 issues.
- Perhaps AAM never expected such results for its independent claims. But, another lesson learned from this case is to try to preserve arguments based on the dependent claims and challenge the characterization of the “representative” claim if possible.
