Federal Circuit (Again) Hands Down Revised Opinion in Response to Petition for Rehearing
By Kevin E. Noonan --
Recently the Federal Circuit has begun a practice of withdrawing an original opinion and handing down a substitute opinion in response to a petition for rehearing and rehearing en banc (see "IIllumina, Inc. v. Ariosa Diagnostics, Inc. (Fed. Cir. 2020)"). The Court followed this practice in what is perhaps its most confusing and controversial application of the Supreme Court's subject matter eligibility jurisprudence under Alice Corp. Pty. Ltd. v. CLS Bank International by reissuing its decision in American Axle & Mfg. v. Neapco Holdings LLC (prior decision discussed here).
To recap, American Axle sued Neapco Holdings for infringing claims of U.S. Patent No. 7,774,911, directed to methods for manufacturing driveline propeller shafts that "attenuate[e] . . . vibrations transmitted through the shaft assembly." Claims 1 and 22 are representative according to the majority in the Federal Circuit's opinion; Judge Moore dissented, even as to this characterization:
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 granted summary judgment that these claims, and all other asserted claims, were invalid under Section 101 for being directed to a natural law (at least Hooke's law and "friction damping") and did nothing more than instruct the skilled worker to "apply" that law, in contravention of the patent eligibility requirements for satisfying Section 101 set forth in Mayo Collaborative Servs. v. Prometheus Labs., Inc. The District Court's basis for arriving at this conclusion was that the '911 specification did not provide a "particular means of how to craft the liner and propshaft in order to do so." American Axle appealed.
As it had in the earlier-issued decision, the Federal Circuit affirmed, in an opinion by Judge Dyk joined by Judge Taranto; Judge Moore filed a vociferous dissent. In its earlier opinion, the majority set out its understanding of the invention and the basis for the District Court's decision to invalidate. According to the opinion, the way propshafts in automotive drivetrains are constructed can in their use cause three modes of vibration: bending, torsion, and shell modes, specifically, taken from the '911 patent specification:
Bending mode vibration is a phenomenon wherein energy is transmitted longitudinally along the shaft and causes the shaft to bend at one or more locations. Torsion mode vibration is a phenomenon wherein energy is transmitted tangentially through the shaft and causes the shaft to twist. Shell mode vibration is a phenomenon wherein a standing wave is transmitted circumferentially about the shaft and causes the cross-section of the shaft to deflect or bend along one or more axes.
Each of these vibration modes has a different frequency, according to the majority. An important component of the majority's analysis (contradicted in Judge Moore's dissent) was that the prior art addressed the vibration problem using liners, defined in the opinion as "hollow tubes made of a fibrous material (like cardboard) with outer resilient members that 'frictionally engage the inner diameter of the [propshaft].'" These liners also vibrate, so careful matching of propshaft and liner can result in damping the vibration of the propshaft, and this matching can be "tuned" by varying "certain variables" of the liner. According to the majority, "[i]t was known in the prior art to alter the mass and stiffness of liners to alter their frequencies to produce dampening. Indeed, this was sufficiently well known that prior art patents disclosed the use of particular materials to achieve dampening."
Turning to specifics, the majority identified two relevant types of attenuation of these vibrations: resistive attenuation ("a vibration attenuation means that deforms as vibration energy is transmitted through it . . . so that the vibration attenuation means absorbs . . . the vibration energy ") and reactive attenuation ("a mechanism that can oscillate in opposition to the vibration energy [of the propshaft] to thereby 'cancel out' a portion of the vibration energy"). The '911 specification (according to the majority) discloses that the prior art contained means and methods for attenuating each of the three propshaft vibration modes, but were limited insofar as they could not attenuate two vibration modes simultaneously; the specification identified a "need in the art" to dampen shell mode and bending mode vibrations simultaneously (which American Axle contended below and at the Federal Circuit comprised the "inventive concept" required by Supreme Court precedent to make their claim patent eligible). While recognizing these assertions, in the majority's view the '911 specification does not disclose how to achieve these goals (this being the basis for finding the claims were not patent eligible).
While putting their decision in the context of the two-step test for patent eligibility announced in Mayo and further clarified in Alice Corp. Pty. Ltd. v. CLS Bank International, the majority appeared to anticipate the furor their decision would engender, saying that "[t]here is no legal principle that a claim to a method of manufacturing cannot be directed to a natural law, nor are there any cases saying so." The majority based its opinion on its belief that according to the '911 "most aspects of the '911 patent were well known in the art" and thus failed the inventive concept requirement of the Supreme Court's Alice test. The majority opinion was explicit regarding its reliance on this principle, saying the "the patent claims do not describe a specific method for applying Hooke's law in this context. They simply state that the liner should be tuned to dampen certain vibrations," which in their view was equivalent to the sort of directive prohibited by the Supreme Court in Mayo—i.e. 'simply stat[ing] a law of nature while adding the words ''apply it'":
This case might well be significantly different, if, for example, specific FEA [finite element analysis] models were included in the claims. But, the claims' general instruction to tune a liner amounts to no more than a directive to use one's knowledge of Hooke's law, and possibly other natural laws, to engage in an ad hoc trial-and-error process of changing the characteristics of a liner until a desired result is achieved.
The majority expressly based its opinion on Supreme Court precedent such as Le Roy v. Tatham, 55 U.S. (14 How.) 156, 174–75 (1853), and particularly Parker v. Flook considered in contrast with Diamond v. Diehr.
The majority's most recent iteration of its decision is different from its earlier one, albeit arriving at the same conclusion; one important difference to the parties is that the majority affirm-in-part, vacate and remand-in-part rather than affirming the District Court in toto. This version is much less reliant on the factual bases for its opinion and attempts to hie more closely to adherence to Supreme Court principles. There is much less of the type of analysis illustrated below (i.e., not present in this opinion, but was an asserted basis for the earlier opinion):
One prior art method of attenuation involved the use of liners. Liners are hollow tubes made of a fibrous material (like cardboard) with outer resilient members that "frictionally engage the inner diameter of the [propshaft]." . . . Liners, like propshafts, vibrate at different frequencies, and depending on the frequencies at which they vibrate, may damp the vibration of the propshaft into which they are inserted. When certain variables related to the liner are changed (i.e., when the liner is "tuned"), the frequencies at which that liner vibrates, and therefore the liner's ability to damp the vibration of that propshaft, changes. . . . It was known in the prior art to alter the mass and stiffness of liners to alter their frequencies to produce dampening. Indeed, this was sufficiently well known that prior art patents disclosed the use of particular materials to achieve dampening.
* * *
Other prior art methods of dampening also existed, including the use of weights. For example, the '911 patent describes plugs or weights that are inserted to frictionally engage a propshaft and act as resistive attenuation means to damp bending mode vibrations. . . . The patent also discloses a prior art damper that is inserted into a hollow shaft and frictionally engages the inside of the shaft by using a pair of resilient members [citations omitted].
Including reference to what the majority apparently believes are "admissions" by the patentee that support its conclusion, such as:
AAM agreed that "[t]he methods for determining natural frequencies and damping are well known in the art." . . . Some of these are described in the specification. Those techniques include "the use of weights and liners." . . . Elaborating, the patent first describes the use of "plugs or weights" that are inserted to frictionally engage a propshaft to damp certain vibrations. . . . It then describes several prior-art dampers and "hollow liners." . . . The specification describes prior art hollow liners as tubes made of a fibrous material (like cardboard) with outer resilient members . . . .
The opinion sets forth, in slightly different wording, the basis for the District Court's decision, perhaps more directly tracking the Step 1/Step 2 Alice test in assessing that basis, and emphasizing that the District Court's construction of the claim term "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 opinion) (but again noting that the parties did not dispute the District Court's construction); this is the distinction the majority uses to vacate the District Court's invalidation of claim 1 under Section 101. This opinion similarly emphasizes that the invention is based on Hooke's law (rather than considering that it is an application of Hooke's law, as patent-eligible even under the Supreme Court's most stringent application of its precedent). The failure of the majority to even acknowledge this is the following statement newly arising in this opinion:
We conclude that independent claim 22 of the '911 patent is patent ineligible under section 101 because it simply requires the application of Hooke's law to tune a propshaft liner to dampen certain vibrations. Independent claim 36 and asserted claims that depend from claim 22 are also ineligible. Because claim 1 also requires "positioning" in addition to tuning and may reflect a broader definition of tuning, we remand to the district court to address the eligibility of claim 1 and its dependent claims in the first instance [emphasis added].
Breathtaking. In a footnote, the majority cited dicta from Alice ("The fact that a computer 'necessarily exist[s] in the physical, rather than purely conceptual, realm,' is beside the point. There is no dispute that a computer is a tangible system (in § 101 terms, a 'machine') . . . .") and cite O'Reilly v. Morse, 56 U.S. (15 How.) 62, 113 (1853), in support of this idea. And as noted in Judge Moore's dissent, the majority's definition of the natural law as being limited to Hooke's law is contrary to their earlier opinion as well as testimony and argument from both parties.
The majority opinion is also focused on what it perceives to be AAM's reliance on unclaimed aspects of the invention, bringing to mind the Court's inability to draw a proper line between the rubric that claims must be construed in light of the specification and the counter rubric that limitations in the claims cannot be imported from the specification (see "Claim Construction at the Federal Circuit: A District Court Judge's View").
Perhaps equally troubling is language from the opinion suggesting that patent eligibility depends (or is influenced by) a patent applicant "discovering" a new law of nature ("[i]n contrast to a number of other natural law cases, the patentee here does not even claim to have discovered a previously unknown natural law") rather than discovering a new application of a natural law, in frank conflict with the Supreme Court's Diehr decision and a sentiment that should surprise the patentee in Ariosa v. Sequenom, which relied on Justice Thomas's dicta in Myriad that patentability does not necessarily lie for even groundbreaking discoveries.
The majority does set forth the basis for its decision:
What is missing is any physical structure or steps for achieving the claimed result. The focus of the claimed advance here is simply the concept of achieving that result, by whatever structures or steps happen to work.
And further:
Claiming a result that involves application of a natural law without limiting the claim to particular methods of achieving the result runs headlong into the very problem repeatedly identified by the Supreme Court in its cases shaping eligibility analysis [citing Mayo].
But this merely identifies the doctrinal basis for the error, and does not justify it. In Mayo, the issue was that the claim encompassed identifying a medical condition (caused by activities known in the prior art) without providing any limitation regarding what should be done about it. Here, by applying inter alia Hooke's law, claim 22 directs how to make an axle having improved properties. But the panel majority does not recognize this distinction as mandating a different outcome. This deficiency in reasoning is further illustrated in the statement that "[as] reflected repeatedly in our cases," to avoid ineligibility, a claim must "ha[ve] the specificity required to transform [the] claim from one claiming only a result to one claiming a way of achieving it," citing SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1167 (Fed. Cir. 2018), which ignores the fact that claim 22 is a method claim reciting how to achieve the claimed result. In another footnote the majority asserts that the specification does not provide enablement for producing the tuned liners as claimed but that deficiency seems better addressed under Section 112(a) than Section 101.
In a paradoxical decision in view of the majority's reasoning regarding claim 22, the Court vacates and remands the District Court's decision regarding claim 1, on the grounds that claim 1 is "more general" and that the majority "cannot conclude that it is merely directed to Hooke's law." "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," according to the majority. This decision seems to be procedural, insofar as the argument regarding whether the claim is directed to an abstract idea was not litigated below.
One other way the opinion differs from the earlier one is that, rather than leaving the majority's explanation of and justification over its differences with Judge Moore's dissent, they set forth their own putatively brief reply (an analysis of which is set forth below).
Judge Moore's dissent in this version of the opinion is no less forthright than in the earlier opinion, based on her belief that "[t]he majority's decision expands § 101 well beyond its statutory gate-keeping function 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." The Judge identifies three errors that the majority's opinion "inflate[] § 101 beyond the statutory language and Supreme Court precedent":
• First, the majority finds claims directed to natural laws, yet they clearly contain no such natural law. The majority creates a new test for when claims are directed to a natural law despite no natural law being recited in the claims, the Nothing More test. . . . The majority instead holds that we appellate judges, based on our background and experience, will resolve questions of science de novo on appeal. We will determine whether Hooke's law and nothing more results in a reduction of two types of vibration in a propshaft. The majority reaches this conclusion despite all of the briefing and record evidence contradicting it.
• Second, the majority refuses to consider the unconventional claim elements.
• Third, the majority has imbued § 101 with a new superpower—enablement on steroids. The majority's blended 101/112 analysis expands § 101, converts factual issues into legal ones and is certain to cause confusion for future cases.
Moreover, in Judge Moore's view "[t]he majority claims this is a narrow decision—I think not. 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."
Much of Judge Moore's dissent is based on her different reading of the facts and arguments advanced (or not advanced) by the parties, and a detailed explication of her reasoning is beyond the scope of this post. But the Judge's conclusions about the consequences of the majority's decision, and her brethren's refusal to rehear the case en banc, bear repeating:
• (with regard to the differences in which natural law or laws form the basis of the majority's original opinion and this revised opinion) Attempting to revise history is not good: "The past was erased, the erasure was forgotten, the lie became the truth." GEORGE ORWELL, 1984
• 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. The majority's only citation in support of this dramatic expansion of our law is an English case from 1841, Neilson v. Harford, Webster's Patent Cases 295, 371 (1841). There was no claim in Neilson as claiming practice did not exist and the English court actually held the patent eligible: "the plaintiff does not merely claim a principle, but a machine embodying a principle." I cannot discern the logic in the majority's suggestion that this English case supports its decision to depart from existing U.S. precedent. It cannot be that a claim is directed to a natural law when there is no specific natural law discernable in the claim or even the specification. All physical methods must comply with, and apply, the laws of physics and the laws of thermodynamics. The fact that they do does not mean the claims are directed to all such laws.
• The majority's Nothing More test, like the great American work The Raven from which it is surely borrowing, will, as in the poem, lead to insanity. The majority has concluded that on appeal, as a matter of law, we judges can decide as a matter of physics whether claim 22's results—attenuating two types of vibration—are accomplished by Hooke's law and nothing more. To say this feels like a bit of an overreach is an understatement. Today, contrary to all arguments in the case, the record, the district court's decision, and its own prior opinion, the majority concludes that claim 22 is directed to "Hooke's law and nothing more," to accomplish the claimed results of reducing two kinds of vibrations.
• Rather than address these, the parties' arguments, as we are bound to do as appellate judges, the majority recasts these arguments as "the dissent's arguments" and dismisses them in conclusory fashion. The majority claims that the "most one can say about friction damping in the language of claim 22" is that it is merely "involved" in the claimed method. Not only can the parties and the district court say more, they did. The parties and their experts uniformly agree that the claims are not directed to Hooke's law and nothing more. The majority's conclusion to the contrary, without so much as acknowledging the parties' arguments or evidence, casts a cloud of confusion not just over the bounds of this case, but over our role as judges. The majority's conclusion that Hooke's law and nothing more reduces two types of vibration in propshafts amounts to a clear rule of law—judges, not experts, will determine as a matter of law, when claims are directed to a natural law and nothing more. We are the scientific experts now. Whether Hooke's law and nothing more achieves reduction in two types of vibration in propshafts should be a question of fact, but the majority concludes otherwise. It decides this question of physics as a matter of law on appeal in the first instance even at summary judgment [emphasis added].
• Future cases will use this case as a template for how judges can determine as a matter of law when a claim invokes an unmentioned natural law and nothing more. All aspects are henceforth a question of law and the record is irrelevant. We are the experts and we will determine when a claim invokes an unmentioned natural law and when nothing but that natural law is necessary to achieve the claimed results.
• To hold claim 22 ineligible, the majority holds that claim 22's inserting limitation is not equivalent to claim 1's positioning limitation "and AAM never argued otherwise." . . . The majority is sua sponte interpreting undisputed, unappealed claim terms with reference to nothing. They do not cite the patent, the prosecution history, or any briefs. Neither party ever suggested that the inserting and positioning limitations had different meanings. Claim 22 requires tuning and inserting wherein the liner will function as a tuned resistive absorber (damp shell mode) and a tuned reactive absorber (damp bending mode). . . . The majority's sua sponte appellate claim construction is improper, unfounded and unsupported by the record. It is not our job on appeal to create our own claim construction issues to hold claims ineligible specially when they were never briefed or argued by the parties.
• The majority never addresses whether a claim to using a physical, hollow liner inserted inside a hollow drive shaft to attenuate bending mode vibrations in the shaft (yes these are all express claim limitations), was conventional. Much less whether a claim to using the same physical liner to attenuate both bending mode and shell mode vibrations was conventional. The result is not, as the majority claims, a tuned liner; the result is the reduction of vibration in the propshaft. And these claims expressly require the reduction of bending mode and shell mode vibrations employing a liner positioned inside the hollow shaft, which according to AAM had never been done before. Goodness sakes, the dependent claims held ineligible by the majority specify the material the liner must be made of (cardboard or plastic or fiberglass or metal (claim 31)) and the actual physical form it must take (extending helically (claim 27), with fingers (claim 33), circumferentially wrapped (claim 29) or over-molded (claim 32)) and the place the liners must be positioned ("symmetrically about a bending anti-node" (claims 34, 35)).
Finally, the Judge believes the majority's errors deny patentee due process (an argument that might provoke the Supreme Court to (finally) consider what it hath wrought regarding subject matter eligibility):
Finally, though not a legal question, I am troubled by the deprivation of property rights without due process. The majority declares claims representative despite the fact that no party argued below or to this court that there were representative claims, and AAM argued the import to the § 101 analysis of dependent claim limitations throughout these proceedings. And the majority finds against the patentee by reaching a claim construction issue of the majority's own creation. The majority concludes, though no party argued it at any point in this litigation or appeal, that the claim terms "positioning" and "inserting" have different meanings. And only because of its newly proffered, completely sua sponte construction, claim 22 is deemed ineligible. There is simply no justification for the majority's application of its new Nothing More test other than result-oriented judicial activism. This is fundamentally unfair. I dissent from this unprecedented expansion of § 101.
And Judge Moore concludes:
Our job, our mandate from Congress is to create a clear, uniform body of patent law. Our inability to do so in the § 101 space has not been a mess of our making. But, the unfairness, confusion and uncertainty that will be caused by this opinion is all us. Today, we make a choice. I dissent from this choice to extend the notions of ineligibility and to extend the role of the appellate court. Section 112 adequately protects for exactly the concerns the majority expresses, though honestly, I see no enablement problem and none was raised by the defendant. I dissent from the majority's chimeric approach to § 101 which is inconsistent with precedent, a vast expansion of § 101, and bound to cause confusion in future cases.
Rather than attempting to rebut their colleague's argument in dissent in footnotes, as they had in the earlier opinion, here the majority address the bases of her objections in the body of the opinion. Alas, all this section of the opinion engenders is a belief that the majority and their dissenting Judge were looking at the same body of fact and law and coming to opposite conclusions, which usually indicates that the predominant basis for the opinion was the biases brought to bear on the question before the Court.
What remains crystal clear is that there is a desperate need for the Supreme Court to clarify the patent eligibility standard it recited (murkily) its Mayo and Alice decisions. When a specialized appellate court, created by Congress to harmonize and clarify U.S. patent law, can find a method of manufacturing a propshaft for an automobile to be ineligible under Section 101 as a natural law, it is clear that the Court, and as a consequence the rest of us, has clearly lost its way.
American Axle & Mfg. v. Neapco Holdings LLC (Fed. Cir. 2019)
Panel: Circuit Judges Dyk, Moore, and Taranto
Opinion by Circuit Judge Dyk; dissenting opinion by Circuit Judge Moore
Judge Moore: "All that you have done is recast and dismiss."
Welcome to our world, Judge Moore. This is what we practitioners face every day in dealing with the patent office.
To play my Yogi Berra of mixed metaphors, the Gordian Knot of 101 Jurisprudence has become a snowball rolling down a hill, into a full blown avalanche.
To those that this decision merely reflects a desired ends (and sees no problem), that avalanche is coming to your door next.
Posted by: skeptical | August 10, 2020 at 08:37 AM
Yep. A great deal of "new" 101 jurisprudence simply renders fact-bound obviousness questions into questions of law suitable for dismissal at 12(b)(6) or summary judgment stage. This is more of the same, with the addition of fact-bound enablement issues.
Terrible.
Posted by: Fat Bastard | August 10, 2020 at 01:39 PM
Yogi Berra was so wise. I miss him. It ain't broke, don't fix it. It's been 22 years since State Street v. Signature Financial. There's still no end in sight. It just gets worse and worse.
Posted by: Edward C Kwok | August 11, 2020 at 12:37 AM