Author: Howard Sheerin, SiliconValleyIP.com
The CAFC decision in American Axle & Manufacturing, Inc., v. Neapco Holdings LLC is further evidence that § 101 has simply morphed into § 103.
The patent law community is poring over American Axle exhorting all sorts of complex legal analysis and opinions on how the decision fits into the § 101 landscape. Patent attorneys are twisting into pretzels trying to square the decision by doing the the Alice two-step dance. But if you simply read American Axle as if it were decided under § 103, the decision becomes much easier to digest, both for the patent law community as well as the inventor community. That is, if you simply accept the claims were actually rejected for being too obvious under § 103 as opposed to covering ineligible subject matter under § 101, it becomes much easier to predict future outcomes as well as counsel clients moving forward.
The claim in American Axle covered a method for improving a driveline system:
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.
Without having to examine the litany of past cases decided by the Supreme Court, the above claim clearly covers eligible subject matter under § 101 since the claim covers a new "machine" having specific structural components, such as a "hollow shaft member" and "inserting the liner into the shaft member" which fits exactly into the language of 35 USC § 101:
"Whoever 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, subject to the conditions and requirements of this title."
Clearly a "driveline system having a liner inserted into a hollow shaft" falls within the definition of a "machine." Any attempt to argue otherwise is either foolish or evidence we have transported to a dimension where the English language has become nonsense.
Diamond v. Diehr 1981 is the closest (and still good) Supreme Court decision for finding patent eligible subject matter of a similar claim:
1. A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising:
providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) dependent upon the geometry of the particular mold of the press,
initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure,
constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding,
constantly providing the computer with the temperature (Z),
repetitively calculating in the computer, at frequent intervals during each cure, the Arrhenius equation for reaction time during the cure, which is
ln(v)=CZ+x where v is the total required cure time,
repetitively comparing in the computer at said frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time, and
opening the press automatically when a said comparison indicates equivalence.
The Court in Diamond v. Diehr adjudicated that a physical machine or process which makes use of a mathematical algorithm is different from an invention which claims the algorithm, as such, in the abstract.
From a legal perspective, the above claim in American Axle is exactly equivalent to the claim in Diamond v. Diehr. Both inventions use a known (prior art) equation for improving patent eligible subject matter. If the Supreme Court takes up the pending appeal of American Axle, the decision will either sustain or overturn Diamond v. Diehr (I predict the American Axle decision by the CAFC will be reversed and remanded for a finding of patentability under § 103).
The CAFC in American Axle affirmed the District Court's finding of ineligible subject matter reasoning the claims are directed to Hooke’s law (a known equation) and that there is no “inventive concept” other than “well-understood, routine, conventional activities previously known to the industry.” If a patent attorney awoken from cryogenic sleep for the last 10 years was to read that last sentence, the attorney would likely assume the CAFC made a typo and really meant to find "unpatnetable subject matter" under § 103 since lacking an "inventive concept" and claiming "well-understood, routine, conventional activities" is the literal definition of obviousness.
If the Supreme Court takes up the appeal of American Axle and reverses, it will likely remand the case to the CAFC for a finding of patentability under § 103. The CAFC will likely find the claims unpatentable under § 103 since they have already made the "inventive concept" analysis. That is, since the CAFC has already decided the claims lack an "inventive concept," it must mean the claims should be considered obvious under § 103 (which is again just evidence that § 101 at the CAFC has simply morphed into § 103).
The same "inventive concept" analysis could be applied to the above claim in Diamond v. Diehr, and since the analysis of patentability under § 103 is typically subjective and somewhat arbitrary, there is likely a 50/50 chance the claim would be found unpatentable today under § 103. This is particularly true since the equation recited in the Diamond v. Diehr claim is a well known (prior art) equation (the Arrhenius equation). Similarly, the American Axle claim relies on a well known equation (Hooke’s law), which makes the patentability argument under § 103 more challenging for the patent holder.
Interestingly, if the American Axle claim relied on a completely novel equation for improving a driveline system (or a significant improvement to the conventional Hooke's law equation), the CAFC would likely have considered the new or improved equation as being an "inventive concept" and therefore having magically transformed the claim into eligible subject matter. This was the exact result in the U.S. District Court for the Central District of California decision California Institute of Technology v. Hughes Communications Inc. 2014 in which the court found eligible subject matter under § 101 because the claim recited an improved equation for encoding data. These findings of eligible subject matter under § 101 for reciting an improved equation are an utter travesty for the confusion they sow. The seminal Supreme Court decision in Gottschalk v. Benson (which is still good law) laid out the unequivocal tenet that improving an equation does not transform the new equation (or algorithm) into eligible subject matter under § 101. In other words, whether an equation relied on by a claim is considered well known or improved makes no difference when analyzing the claim under § 101. Of course, discovering a new or improved equation typically renders a claim non-obvious and therefore patentable under § 103 (assuming the new or improved equation is used to improve already eligible subject matter under § 101).
My recommendation for counseling clients moving forward is to analyze the strength of an invention disclosure (or issued patent) relative to the degree of innovation being claimed, regardless as to whether the claim might be considered eligible subject matter under § 101. In other words, the new requirement of "inventive concept" has basically morphed the § 101 analysis into § 103 (§ 101 has basically disappeared). Accordingly the likelihood of successfully prosecuting a patent application or enforcing an issued patent will turn on the strength of the "inventive concepts" regardless as to what section of Title 35 is cited. For example, if an invention relies on a new or improved equation that is used to improve patent eligible subject matter (e.g., a machine), then you can safely counsel there is a high likelihood the claims will be found patentable under § 101 and § 103. Conversely when an invention relies on a known equation (or other law of nature, business method, etc.), then there is a 50/50 chance the claims will be rejected (or invalidated) under either § 101 or § 103. This way the client understands the notion of "inventive concept" and is prepared mentally and strategically in the event the claims fail either during prosecution or litigation. In addition, the client will understand that if a patent examiner or judge finds the claimed subject matter "ineligible" what they really mean is the claimed subject matter is "obvious" since (in their opinion) it lacks an "inventive concept."
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About the Author: Howard Sheerin is a California licensed patent attorney having drafted and prosecuted over 800 complex electrical and computer patent applications, including the successful defense of claim rejections under the Alice two step rule. Mr. Sheerin offers a free review of pending patent applications rejected under § 101, including how the claims might be amended to overcome the rejection, and potential arguments for traversing the rejection. Mr. Sheerin can be contacted by phone at 415-238-4007.