Vibrations at the Federal Circuit: American Axle and the “New” “Nothing More” Test of Patent Subject Matter Eligibility

The Federal Circuit’s recent decisions in American Axle & Manufacturing, Inc. v. Neapco Holdings LLC have not clarified the standard for patent eligibility under 35 U.S.C. § 101 (see a previous analysis of § 101’s unpredictability here). In this case, significant differences among Federal Circuit judges turned on whether a patent claim that invokes a natural law, and nothing else, to accomplish a desired result is patent eligible under Section 101. Despite strong dissents regarding this “nothing more” test, the original and modified panel opinions and the 6-6 order denying rehearing en banc confirm that such a claim is not eligible.

American Axle & Manufacturing, Inc. (“American”), manufactures automobile driveline and drivetrain components and systems. American’s U.S. Patent No. 7,774,911 (the “’911 patent”) claims methods for manufacturing driveline propeller shafts that attenuate vibrations in propeller shafts. American filed suit in the District of Delaware alleging that Neapco infringed the ’911 patent, but the court held the asserted claims were ineligible under Section 101.

In October 2019, a Federal Circuit panel affirmed the District of Delaware’s judgment, and American petitioned for panel rehearing or rehearing en banc. On July 31, 2020, the panel issued a modified opinion in which it designated independent claims 1 and 22 as representative. The panel explained that both claims recite methods for manufacturing a shaft assembly of a driveline system and require the tuning of a liner, but claim 22 specifically called for “tuning mass and stiffness of at least one liner.”

The panel affirmed that claim 22 is invalid because it required the “use of a natural law of relating frequency to mass and stiffness— i.e., Hooke’s law” and merely instructed “the reader to tune the liner to achieve a claimed result, without limitation to particular ways to do so.” The panel noted that “nothing in claim 22 qualifi[ed] as an ‘inventive concept’ to transform it into patent eligible [subject] matter.”  In addition, the panel held that claim 36 is invalid for the same reasons, but it vacated the prior judgment regarding claim 1. The panel remanded to the district court because it acknowledged that claim 1 is “more general” and not simply directed to “Hooke’s Law” as in claim 22.

On the same day, the full Federal Circuit issued an order declining to review the panel’s decision. In the 6-6 decision, half of the Federal Circuit held that the panel’s decision merely applied settled law, with the other half arguing the majority created a “nothing more test” under Step 1 of Alice’s subject matter eligibility test (see here). Circuit Judges Dyk and Chen wrote concurring opinions, and Judges Newman, Stoll, and O’Malley wrote dissenting opinions.

Judge Chen, similar to Judge Dyk, stated that “[d]ifferences of opinion within our court on how to apply [patent eligibility] principles to a particular case inevitably arises from time to time, given the inherently imprecise nature of the legal framework” and that “today’s panel majority decision is consistent with both Supreme Court and our court’s precedent.” While those in dissent agreed that patent eligibility already is an uncertain area of law, the judges were concerned with the majority’s creation of the “nothing more” test under Step 1. Indeed, Judge Stoll wrote that the majority’s test “appears to be a new development with potentially far-reaching implications in an already uncertain area of patent law.” And Judge Newman stated that the ’911 patent’s claims clearly covered a driveshaft, but the majority’s holding that it covered a natural law, along with its “flawed Section 101 jurisprudence,” has “far-reaching consequences.”  In the end, because the full Federal Circuit split evenly on the en banc petition, the panel’s modified opinion stands.

This division at the Federal Circuit underscores the need for certainty in this area of law. But the Supreme Court denied certiorari on all petitions concerning patent eligibility for the upcoming term (see a related discussion here). And although Congress proposed a draft bill to amend Section 101 over a year ago (see here), it has not progressed. Until Congress or the Supreme Court addresses patent eligibility, practitioners should be mindful of the Federal Circuit’s applications of Section 101, “uncertain” as they may be.