High Court is Poised to Un-Muddy the Section 101 Waters Nearly Seven Years After Alice

“The fact that several prominent IP organizations and big names in patent law have supported American Axle’s petition, that the Supreme Court requested a response from Neapco, as well as the views of the Solicitor General, and that the Federal Circuit broke in half on the issue of a rehearing, all underscore the broad interest in clarifying Section 101.”

https://depositphotos.com/35440567/stock-photo-ineligible-warning-road-sign-illustration.htmlCould the United States Supreme Court once again weigh in on Section 101 subject-matter eligibility? With the Court having asked for the views of the Solicitor General yesterday, it seems increasingly likely.

Late in 2020, patentee American Axle & Manufacturing, Inc. (American Axle) petitioned the Supreme Court for writ of certiorari, arguing that the Federal Circuit is “at a loss as to how to uniformly apply § 101.” Pet. for Writ of Certiorari at 3 (Dec. 28, 2020). Organizations such as the New York Intellectual Property Law Association, the New York City Bar Association, and the Intellectual Property Law Association of Chicago have all submitted amicus briefs supporting American Axle’s ask. On March 1, former USPTO Director David Kappos, former Federal Circuit Chief Judge Paul Michel, and Senator Thom Tillis from North Carolina also jointly filed an amicus brief, arguing that the “disparate and inconsistent application” of the current Section 101 jurisprudence has led to “an unpredictable and unstable” patent system. Br. in Support of Am. Axle’s Pet. for Writ of Certiorari at 5 (Mar. 12, 2021).

Although accused infringer Neapco Holdings LLC (Neapco) initially did not plan to respond to the petition, it changed course after the Court requested a response in late January. Neapco responded on March 31. In its Opposition, Neapco argued that this case does not present any important issues under Section 101 that require clarification because the Federal Circuit’s ruling is limited to “the narrow circumstances of this case.” Neapco’s Br. in Opposition at 10 (March 31, 2021). Further, Neapco asserted that the current Alice test is working exactly as intended, with the Federal Circuit affirming 91% of Section 101 decisions since Alice (often without issuing a written opinion). Id. at 1. Perhaps among the few to publicly do so, Neapco praised the Alice test as providing a flexible, context-driven methodology, rather than a rigid rule that would be insufficient to address the infinite complexity of the patent system. Id.

A Refresher on the Facts

American Axle’s patent covers a multi-step industrial process for making automobile driveshafts. A split three-judge panel of the Federal Circuit found certain claims directed to patent-ineligible subject matter. Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 967 F.3d 1285 (Fed. Cir. 2020). The circuit court split again (6-6) on whether to rehear the decision en banc. Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 966 F.3d 1347 (Fed. Cir. 2020).

Pleading for the High Court’s guidance to bring uniformity to an increasingly “panel-dependent body of law,” Pet. for Writ of Certiorari at 3, American Axle’s petition seeks certainty on an issue that has been in flux since 2010’s Bilski v. Kappos ruling, which dealt a blow to former Chief Circuit Judge Michel’s machine-or-transformation test. The machine-or-transformation test was a two-step inquiry where a patentee could show that a process claim satisfies § 101 either by showing that the claim is tied to a particular machine or by showing that the claim transforms an article into a different state or thing. In re Bilski, 545 F.3d 943, 961 (Fed. Cir. 2008).

In his Bilski opinion, then-Chief Circuit Judge Michel explained that “the use of a specific machine or transformation of an article must impose meaningful limits on the claim’s scope to impart patent-eligibility” and that “the involvement of the machine or transformation in the claimed process must not merely be insignificant extra-solution activity.” Id. at 961-62.

After granting certiorari in Bilski v. Kappos, the Supreme Court held that, although the machine-or-transformation test may provide a “useful and important clue” as to subject-matter eligibility, it was not the sole test for evaluating patentability under § 101. Bilski v. Kappos, 561 U.S. 593, 604 (2010). A trio of decisions from the Supreme Court from 2012 to 2014 culminated in the two-step Alice test—the current framework for determining whether § 101 bars patent protection. See Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014); Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012).

At step 1 of the Alice test, courts consider “whether the claims at issue are directed to one of those patent-ineligible concepts.” 573 U.S. at 217. If not, the invention is patent eligible. If the claims are directed to one of those patent-ineligible concepts, courts move onto step 2 of the Alice test to determine whether the claims provide an “inventive concept,” one that “‘transform[s] the nature of the claim’ into a patent-eligible application”—i.e., “an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’” Id. at 217-218 (quoting Mayo, 566 U.S. at 73).

After Alice

Since the Alice ruling, however, both the Federal Circuit and district courts have struggled to apply this test. While judges are tasked with deciding whether an invention is an abstract idea, the Supreme Court has yet to define or clarify precisely what sort of subject matter falls into a patent-ineligible category. Id. at 221 (“In any event, we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.”). And, as the Supreme Court itself admitted, “[a]t some level, ‘all inventions. . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.’” Id. at 217. Without a clear understanding of what falls into the abstract idea category, district courts have strained to consistently conclude what additional elements would be sufficient to constitute an inventive concept.

In the nearly seven years following its Alice ruling, the Supreme Court has remained silent on subject-matter eligibility. Since then, district courts and the Federal Circuit alike have wrestled with how to consistently apply the Alice framework. See, e.g., SecureNet Solutions Group, LLC v. Senstar Corp., No. 19-cv-02913, 2020 WL 2557625, at * 9 (D. Colo. May 20, 2020) (“Determining whether a claim is directed at an abstract idea, and is therefore not patent eligible under § 101, seems almost like the ‘know it when I see it’ definition of obscenity, but transposed to the patent context.”); United Cannabis Corp. v. Pure Hemp Collective Inc., No. 18-cv-1922, 2019 WL 1651846, at *5 (D. Colo. Arp. 17, 2019) (“[T]he proper application of the Supreme Court’s Alice standard is an evolving and sometimes hazy area of law. Deciding whether a patent claim is ‘directed to’ a law of nature is not as straightforward as the Supreme Court makes it sound in Alice itself.”); Interval Licensing LLC v. AOL, Inc., 896 F.3d 1335, 1354-55 (Fed. Cir. 2018) (Plager, J., concurring-in-part and dissenting-in-part) (“There is little consensus among trial judges (or appellate judges for that matter) regarding whether a particular case will prove to have a patent with claims directed to an abstract idea, and if so whether there is an ‘inventive concept’ in the patent to save it.”); Location Based Servs., LLC v. Niantic, Inc., Case No. 17-cv-04413 NC, 2018 WL 7569160, at *2 (N.D. Cal. Feb. 16, 2018) (“The law under [Section] 101 is developing and quickly changing, and the question of whether a patent is directed at an abstract idea or whether it discloses an innovative concept is not easy to answer.”); YYZ, LLC v. Pegasystems, Inc., Civ. No. 13-581-SLR, 2016 WL 1761955, at *1 (D. Del. May 2, 2016) (“[T]he [Section] 101 analysis is an evolving state of the law and a difficult exercise[.]”).

The USPTO’s 2019 “Revised Patent Subject Matter Eligibility Guidance” attempted to offer insight into the often-conflicting landscape of § 101 that arose since 2014, 84 Fed. Reg. 50 (Jan. 7, 2019), but the Federal Circuit subsequently held that the USPTO’s Guidance had no binding authority, In re Rudy, 959 F.3d 1379, 1382-83 (Fed. Cir. 2020). Thus, the line between patentable and unpatentable subject matter remains unclear in practice.

A Plea for Clarity

Patent stakeholders have expressed a need for more clarity and predictability in the application of the Alice test. For instance, in her American Axle dissent, Judge Moore lamented 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.” Am. Axle, 967 F.3d at 1319 (Moore, J., dissenting). In a later concurring opinion on whether to stay the Federal Circuit’s mandate pending American Axle’s petition for writ of certiorari, Judge Moore called out to the Supreme Court for help: “As the nation’s lone patent court, we are at a loss as to how to uniformly apply § 101. All twelve active judges of this court urged the Supreme Court to grant certiorari in Athena to provide us with guidance regarding whether diagnostic claims are eligible for patent protection.” Id.

The fact that several prominent IP organizations and big names in patent law have supported American Axle’s petition, that the Supreme Court requested a response from Neapco, as well as the views of the Solicitor General, and that the Federal Circuit broke in half on the issue of a rehearing, all underscore the broad interest in clarifying Section 101. As stated by Judge Moore in her concurrence, “[i]f a circuit split warrants certiorari, such an irreconcilable split in the nation’s only patent court does likewise.” Am. Axle, 977 F.3d at 1382 (Moore, J., concurring).

Watch closely for the Supreme Court’s decision on American Axle’s petition later this term. The case is Case No. 20-891 in the United States Supreme Court.

Image Source: Deposit Photos
Author: alexmillos
Image ID: 35440567 

The Author

Bryan Nese

Bryan Nese is a partner in the Intellectual Property group of Mayer Brown's Washington DC office. His practice focuses on patent litigation, both in district court and at the International Trade Commission (ITC). Bryan has been a crucial part of trial teams before juries and at the ITC and has assisted in all aspects of discovery, trial preparation, and post-trial filings. Bryan also has experience with inter partes review (IPR) proceedings at the Patent Office.

Bryan Nese

Alison Gelsleichter is an associate in Mayer Brown’s Washington DC office and a member of the Intellectual Property practice. She focuses primarily on intellectual property litigation, including patent, trademark, and trade secret infringement.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 32 Comments comments.

  1. Bemused May 4, 2021 8:24 pm

    “I’m confident that the Supreme Court will take the case and issue an opinion that supports the US patent system and the rights of inventors,” said no one ever.

  2. Concerned May 5, 2021 6:31 am

    I hope the possible SCOTUS decision is helpful.

    In the prosecution of my application, SCOTUS decisions in support of the application were simply ignored, never addressed.

    The USPTO and PTAB said I met the colloquial definition of Section 101, solved a very long time problem, then proceeded to use their own SCOTUS cases to reject the application.

    When we countered that their SCOTUS cases were off point, that their cases did not rise to the level of what was accomplished in my application, and the courts have never rejected a process so substantial as mine, the PTAB simply stated my process did not accomplish the benefit that was claimed. This revelation was the first time anyone disputed what the process accomplished, the PTAB had to ignore two university studies and documents from the administering agency submitted into the official record, and frankly the PTAB position is not factual. No evidence was offered by the PTAB to support their allegation.

    Part of PTAB’s view is other things had to occur before my results happened. Well yes, the caseworker has to wake up, get out of bed, get to work, turn the office lights on, make coffee, etc. I imagine when brakes for cars were invented, the person has to still get in the car, start the car, put the car in motion, then step on the brake to achieve the claimed result.

    Memo to the PTAB: Read the official record. The benefit claimed in my process is automatic, no discretion, no choice, operation of law, illegal to do otherwise once my claim process identifies the oversight.

    Accordingly, unless the SCOTUS decision leads to the abolishment of both the USPTO and PTAB, I see nothing changing as there is no rule of law, the bias will continue to be reject at all cost using any possible reason no matter how ridiculous. That I could add any possible new SCOTUS decision to our arguments and it will also be ignored or the PTAB will state the new SCOTUS decision was simply a colloquial view.

    At least if the USPTO and PTAB were abolished, I will officially know there are no patent rights.

  3. Pro Say May 5, 2021 10:15 am

    How right you are, Concerned.

    In America’s critically-important realm of patenting, the rule of man has usurped the rule of law.

  4. TFCFM May 5, 2021 11:37 am

    It might be useful to have another Supreme Court case on use of functional language in claims, but I’m skeptical it would differ much from O’Reilly v Morse or Halliburton v Walker.

  5. Curious May 5, 2021 11:53 am

    It might be useful to have another Supreme Court case on use of functional language in claims
    Yeah … there are too many functional terms like light, switch, fastener, radiator, resistor, computer, distributor, semiconductor, accelerometer, A/D converter, amplifier, controller, voltage regulator, compressor, sander, grinder, miller, collar, coupling, rocker arm. I could go on and on but you get the point.

    Describing things by the function they perform should be outlawed [smh].

  6. B May 5, 2021 2:12 pm

    @TFCFM “It might be useful to have another Supreme Court case on use of functional language in claims, but I’m skeptical it would differ much from O’Reilly v Morse or Halliburton v Walker.”

    Morse was a 112(a) issue, not so much functional language. Halliburton was a 112(f) issue overturned by the 1952 Patent Act. Not relevant except to the point that the CAFC doesn’t know the difference b/t 101 and 112.

    That said, if the SCOTUS takes American Axle, there’s 90% chance they’ll make things worse under 101.

  7. ipguy May 5, 2021 2:20 pm

    I think we all remember helpful SCOTUS opinions like KSR that totally clarified everything and wasn’t even remotely abused by the USPTO.
    [sarcasm off]

  8. B May 5, 2021 2:52 pm

    ipguy @ 7

    Yes, examiners started asserting everything was common knowledge and common sense. It took Apple v. Arendi SARL b/f the PTO stopped with some of the nonsense, and even then the MPEP got it mostly wrong

  9. Kevin E Noonan May 5, 2021 5:16 pm

    Respectfully, no. The only benefit is delaying the decision until Justice Breyer has a chance to retire

  10. Anon May 5, 2021 9:07 pm

    Dr. Noonan — I may well be skeptical, but I can see no difference hinging upon a Breyer retirement. Can you explain further?

  11. Kevin E Noonan May 5, 2021 10:06 pm

    Justice Breyer has almost single-handedly created the current Section 101 regime (admittedly aided and abetted by the Federal Circuit). If his voice is in the room it is likely that he will continue to be persuasive to his brethren that the course they have embarked on is correct. Maybe I’m wrong.

  12. Anon May 6, 2021 9:05 am

    Dr. Noonan,

    While I certainly see Justice Breyer as one of the stalwart “anti-patent” Justices, he is by no means the only one (and across ‘party lines’), AND his retirement (with the current President – or whoever is pulling the strings) will likely bring about a replacement of like temperament.

    I would go further and posit that Breyer is not even the internal Leader of the faction of the Court on such views — I believe someone you are familiar with has that power: Justice Sotomayor. I also believe that she would be the mentor of the next new Justice, thereby even more muting a ‘different voice’ on the Bench – in a Breyer replacement scenario.

    (I will give you credit though for considering the makeup of the Court — many tend to take a monolithic approach and there certainly are Justice-to-Justice dynamics involved)

  13. B May 6, 2021 1:26 pm

    @ Kevin Noonan “Justice Breyer has almost single-handedly created the current Section 101 regime (admittedly aided and abetted by the Federal Circuit).”

    Actually, Justice Stevens is the moron responsible for most of the nonsense going back to the 1970s. Apparently, he was incapable of reading a statute or any case law written after 1947.

    Breyer is no more culpable than Thomas.

  14. Anon May 6, 2021 2:24 pm

    B,

    It is NOT an historical accident that when Justice Stevens came onto the Bench, his designated mentor was Justice Douglas.

    Take a wild guess whose mentor was Justice Sotomayor’s when she came onto the Bench.

    (Hint: it is the Justice who was slated to have Patent Law cases as bookends to his career, but who ended up losing the majority position in the Bilski case).

  15. Paul Cole May 6, 2021 3:13 pm

    It is rather a pity that the quality of the disclosure in the patent in issue does not rise to the high quality of some of the amicus briefs. There are many more deserving cases where certiorari has been denied. Nevertheless the arguments for separation of section 112 from section 101 are compelling and it is to be hoped that if certiorari is granted the eventual outcome will be clear and favourable.

  16. Night Writer May 6, 2021 3:29 pm

    @B

    J. Stevens believed we had a spirit where our thinking occurred. His beliefs were right out of the early 19th century.

    I agree that it is unlikely they are going to clear up anything.

    Actually, my quick look at this tells me that this might just come out like Diehr where the Scotus just says that a practical application of a law of nature is eligible.

    Probably the most likely outcome.

    Breyer’s biggest problem is his ego and that he doesn’t care about hindsight. He talks about Pharaohs and imagines that he could have done that. Total w a n k. He needs a warm towel and soap to finish the job back in his office after imagining what a great genius he is.

    Thomas is a thug in the IP realm.

    The rest are basically worthless.

  17. B May 6, 2021 6:18 pm

    @ Paul Cole “There are many more deserving cases where certiorari has been denied.”

    True, and the American Axle claims are problematic for reasons having nothing to do with 101.

    “Nevertheless the arguments for separation of section 112 from section 101 are compelling and it is to be hoped that if certiorari is granted the eventual outcome will be clear and favourable.”

    The SCOTUS has already been presented with several of Taranto’s abominations mixing 112 and 101, and declined cert. If the SCOTUS takes this case, it’s because: (1) American Axle represents the natural outcome of Taranto’s insanity, i.e.., any patent claim associated with a natural law of physics is somehow patent ineligible, and (2) no one not wearing a black robe is stupid enough to believe that a tuned liner to a car axle is somehow “abstract.”

    Taranto a few others have led the CAFC into the charge to be the biggest embarrassment in the U.S. judicial system.

    Oh, and forget the due process violations of the Taranto/Dyk majority in AA. Appellate courts are allowed any violation of due process they want, and the SCOTUS has not and never will hold that an appellate court cannot violate due process at their whim.

  18. B May 6, 2021 10:39 pm

    @ Night Writer “Actually, my quick look at this tells me that this might just come out like Diehr where the Scotus just says that a practical application of a law of nature is eligible.”

    Practical application? Maybe, but it would require the SCOTUS to give up the idiotic invention / inventive concept b.s. that so permeates Alice Corp. Granted, this happened in 1966 with Graham v. J. Deere, but can you imagine the months of careful penning that will be required to shift blame from themselves? Alice Corp. could have been invalidated under 103, and the entire world would have agreed. Well-known method using a computer without unexpected advantage? Instead, the SCOTUS painted themselves into a corner using an incomprehensible standard and are too arrogant to say, “Oooops, we screwed up!”

    Does anyone believe the SCOTUS will admit to violating the Constitution by re-writing statutes from the bench?

    The SCOTUS had this uncontrollable need to create groundbreaking jurisprudence using the amazing powers of their super-awesome combined intellect to influence technology, and not a single best and brightest Harvard/Yale/etc. law grad on the bench or working in the back offices had the intelligence to ask, “Is this constitutional?” or “What the heck IS an ‘inventive concept’?”

    Nothing has changed.

    Even if Alice is reversed, the question is not whether “invention” will be resurrected but when and under what section of Title 35.

  19. concerned May 7, 2021 9:14 am

    B: You stated that if my application was rejected, 75% of the claims would need to be tossed and that people in authority would have to be untruthful.

    Have you ever thought about a career in forecasting the future? The USPTO and their PTAB never cease to amaze me in their desire to reject at all cost. You have been very accurate on many levels and views stated on this forum.

  20. B May 7, 2021 1:09 pm

    “The USPTO and their PTAB never cease to amaze me in their desire to reject at all cost.”

    95% of the time, it’s not the Examiners. It’s the worthless bureaucrats. I had a previous case under 3600 that was rejected forever, then suddenly allowed once the examiner made primary.

    Most examiners are reasonable people trying to do a good job.

    The PTAB, however, is another animal. They know the Alice test is idiotic, but lawlessly rejecting claims, outright lying, writing incomprehensible and self-contradictory babble, and violating due process have no consequences.

    The CAFC could have minimized the Alice/Mayo nonsense, but unfortunately there’s ALMOST no adult supervision there, and most of the judges (I am convinced) never read half of the opinions they supposedly authored. Further, what exactly are the consequences of misbehavior by CAFC judges?

  21. Concerned May 7, 2021 5:26 pm

    My first examiner was a decent person. Said I deserved a patent, but the higher ups are blocking approval.

    The second examiner was probably given the same marching orders.

    However, the written rejections are shameful and directed to an end result, law or truth be dammed.

  22. B May 7, 2021 9:11 pm

    @ Concerned “Have you ever thought about a career in forecasting the future?”

    It’s really easy to be right most of the time.

    Assume that 90% of the PTAB’s core of APJs are worthless drones who cannot understand simple logic, follow basic law, and adhere to due process, and assume that the CAFC will do dishonest and intellectually stunted work 90% of the time, and that the 100% of the CAFC are so feckless they won’t call out their fellow judges’ misconduct.

    Today’s CAFC bench is the most worthless of all time.

    BTW, you should talk to some of the attorneys who appear before the CAFC representing veteran’s cases. Think they’re any more impressed with the CAFC?

  23. concerned May 8, 2021 6:57 am

    I am heading to the CAFC. I will make them compromise themselves.

  24. concerned May 8, 2021 11:27 am

    B:

    I just sent you an email regarding representation at the CAFC. Hope to hear from you soon. Thank you.

  25. Model 101 May 8, 2021 4:23 pm

    Sounds like a big deal about nothing.

  26. B May 8, 2021 9:30 pm

    @ concerned “I am heading to the CAFC. I will make them compromise themselves.”

    I’m happy to work with you in any capacity. I’ll pull your records tomorrow

  27. concerned May 9, 2021 7:02 am

    B:

    Received your email. I will correspond back to you on Monday regarding next steps.

    Thank you for all your support and assistance!

  28. Night Writer May 10, 2021 11:48 am

    @18 B

    I think it is easy for them to reverse and just say that Diehr is good law and ignore all the issues you raise.

    It just be a simple reversal citing Diehr.

  29. Anon May 10, 2021 1:51 pm

    Night Writer,

    Sorry, but your path is just nonsense (and MORE of nonsense that refuses to recognize that a Gordian Knot has been created).

    In addition, the Court could NOT “just” make a statement without creating a bigger Gordian Knot.

    Bottom line here is that this is just NOT a simple fix (other than full retreat and actual cutting of the Gordian Knot.

  30. B May 10, 2021 2:21 pm

    @ Night Writer

    That’s a possibility – a good one. However, the Supreme Court will still need a fall guy to deflect from their incompetence. That fall guy will be the Federal Circuit – the decisions of which the S.C. has ignored since Breyer vomited up his Mayo decision.

  31. Anon May 10, 2021 5:34 pm

    B,

    I hear what you are saying, but have to disagree – in the same sense that I have pointed out to Night Writer that with more than 50 rejected certs, IF the Supreme Court wanted to reign the CAFC on what the CAFC has done with the ‘gift’ from the Supreme Court, we would have likely already seen it.

    I do provide that there is some small stance that the Court does something different here (based at least in part on cries from all three branches of the government), and I humbly suggest that I have provided a precision tool for the Court to cut the Gordian Knot, but with THIS case, I simply do not expect anything good to come from the Court.

    (and your comment on Breyer is part of that – Breyer remains with a hand on the fire hose used to train the simians of the CAFC)

  32. B May 10, 2021 8:12 pm

    @ Anon “I hear what you are saying, but have to disagree”

    I don’t think we disagree at all. I don’t think the SC will take cert, BUT if they do it’ll be one dopey opinion blaming the CAFC. Plus, as in Deere, IF they get the law right, it’ll be framed with “Once upon a time . . . ”

    “but with THIS case, I simply do not expect anything good to come from the Court.”

    You, me, and 99% of attorneys following Alice/Mayo.