Conflicting Precedent for the Supreme Court in American Axle

“It is difficult to explain why the Court’s rationale in Schein should not also apply to the patent statutes, and the judicially created exceptions of abstract ideas, laws of nature and natural phenomena.”

https://depositphotos.com/86267474/stock-photo-precedent-concept.htmlThe U.S. Department of Justice is encouraging the Supreme Court to grant certiorari to American Axle to clarify U.S. patent eligibility law. Thus, it appears that the chances are better than ever for this issue to get some much-needed attention.

American Axle & Manufacturing, Inc., v. Neapco Holdings LLC involves a decision by the U.S. Court of Appeals for the Federal Circuit, finding that U.S. Patent No. 7,774,911 was invalid as being directed to a natural law, and nothing more, and thus was ineligible for patent protection under 35 U.S.C Section 101. The claims of the ‘911 patent are for a method of manufacturing automobile drive shafts. In denying a rehearing, the en banc Federal Circuit issued five concurring and dissenting opinions, including six judges in dissent, with the entire court begging the Supreme Court to clarify patent eligibility. (See Solicitor’s brief at page 20). American Axle filed a petition for writ of certiorari to the Supreme Court, which then invited the Solicitor General to express the views of the United States.

After more than one year of waiting, the Justice Department filed their amicus brief on May 24, 2022. The Solicitor unequivocally stated that the Federal Circuit’s holding that the ‘911 claims are patent ineligible “is incorrect,” and that the appellate decision reflects “substantial uncertainty about the proper application of Section 101.” The Solicitor also noted that the Alice two-part test for patent eligibility enunciated by the Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014), has produced confusion in lower courts, and has “fractured” the Federal Circuit. (See Solicitor’s brief at page 19). The Solicitor also acknowledged the admitted difficulty for the U.S. Patent and Trademark Office (USPTO), inventors, businesses, and other patent stakeholders, in applying the Supreme Court’s precedents consistently with regard to patent eligibility under Section 101.

The Solicitor urged that the Section 101 inquiry be guided by historical practice and judicial precedent. But Supreme Court precedent appears to be irreconcilable.

The Henry Schein Factor

On one hand, as acknowledged by the Solicitor, the judicially created exceptions to patent eligibility (laws of nature, physical phenomena, and abstract ideas), date back more than 150 years. Bilski v. Kappos, 561 U.S. 593, 601-02 (2010) and have been reaffirmed by the Supreme Court in several decisions over the past decade. See, for example, Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012).

On the other hand, more recent Supreme Court precedent holds that there can be no judicially created exceptions to statutes enacted by Congress. This precedent is not discussed in the Solicitor’s brief.

On January 8, 2019, the U.S. Supreme Court decided Henry Schein, Inc. v. Archer & White, Inc., 139 S.Ct. 534 (2019). This was not a patent case, but rather a case involving the Federal Arbitration Act. The Arbitration Act, signed into law in 1925, allows parties to agree to submit disputes to arbitration, rather than litigating in court. Sometimes parties disagree as to whether an arbitration clause in a contract applies to a particular dispute. Even when the contract delegates this initial threshold question to the arbitrator, some federal courts apply a “judicially created exception” and decide themselves if the argument that the arbitration clause applies is wholly groundless, so as to prevent frivolous attempts to transfer disputes from courts to arbitration.

With the circuit courts split on this “wholly groundless” exception, the Supreme Court granted certiorari to decide the question of whether the exception is consistent with the Arbitration Act. The Supreme Court reasoned that Congress designed the Act in a specific way, and it is not the Court’s role to redesign the statute. Noting that the Act contains no “wholly groundless” exception, the Court explained that they could not engraft their own exceptions onto the statutory text. More specifically, the Court stated, “We may not rewrite the statute simply to accommodate that policy concern” of preventing frivolous motions to compel arbitration. In Schein, the Supreme Court concluded that public policy cannot supersede statutory text approved by Congress to support a non-statutory exception.

What it Means for American Axle

So, if certiorari is granted in American Axle, will the Supreme Court follow the longstanding, historical, judicially-created exceptions to patent eligibility, or its recent precedent prohibiting such exceptions? It is difficult to explain why the Court’s rationale in Schein should not also apply to the patent statutes, and the judicially created exceptions of abstract ideas, laws of nature and natural phenomena. Since there is no basis in the patent statute for these exceptions, these exceptions appear to be an impermissible “redesign” of Section 101. If so, it seems that the historical exceptions to patent eligibility should be declared dead.

Additional Supreme Court precedent raises a more basic question of whether there is a need for any exceptions. Section 101 provides for any new and useful process, machine, manufacture, compositions of matter, or improvements thereof. The Court acknowledged in Bilski that the exceptions are “not required by the statutory text.” Bilski, 561 U.S. at 601 (2010).

As the Solicitor’s brief described, a “process” has been interpreted to include “a mode of treatment of certain materials to produce a given result” or “an act, or a series of acts, performed on the subject matter to be transformed and reduced to a different state or thing.”  Diamond v. Diehr, 450 U.S. 175, 183 (1981), quoting Cochrane, v. Deener, 94 U.S. 780,788 (1877). Thus, a process is not a law of nature, or an abstract idea, and if it happens to be a natural phenomenon, then it is not new. So, exceptions are not needed for inventive processes.

More than 150 years ago, the Supreme Court defined the term “machine” as “a concrete thing, consisting of parts, or of certain devices and combinations of devices.” Burr v. Duryee, 68 U.S. (1 Wall.) 531, 570 (1863). Thus, machines are not a law of nature or physical phenomena, nor is a machine an abstract idea if description is sufficient to enable a person skilled in the art to make and use the machine, as required by Section 112 .

The Supreme Court has defined “manufacture” (in its verb form) as “the production of articles for use from raw or prepared materials by giving to these materials new forms, qualities, properties, or combinations, whether by hand-labor or by machinery.” Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980) (quoting American Fruit Growers, Inc. v. Brogdex Co., 283 U.S. 1, 11 (1931). In the noun form used in Section 101, “manufacture” refers to “articles” resulting from the process of manufacturing. The dictionary the Supreme Court relied on for defining the verb “manufacture,” also defines “article” as “a particular substance or commodity: as, an article of merchandise.” 1 Century Dictionary 326 (William Dwight Whitney ed., 1895). These definitions address “articles” of “manufacture” as being tangible objects or products. Thus, a manufactured article is not a law of nature, a physical phenomenon or an abstract idea.

“Compositions of matter” has been defined by the Supreme Court to mean “all compositions of two or more substances and all composite articles, whether they be the results of chemical union, or of mechanical mixture, or whether they be gases, fluids, powders or solids.” Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980). Accordingly, a composition of matter is not a law of nature, is not new if it is a physical phenomenon, and is not abstract if the composition is described so that a person skilled in the art can make the composition, per Section 112.

The Conclusion Seems Clear

In view of the Supreme Court’s definitions of the categories of patentable subject matter under Section 101, there does not appear to be a need for the judicially created exceptions.

So, despite the long history of the non-statutory exceptions to patentable subject matter, the Supreme Court’s analysis in Schein and its definitions of such subject matter lead to the conclusion that the exceptions to the statutory subject matter should be abandoned, as the claims for the five categories set forth in Section 101 can be evaluated under Sections 102, 103 and 112.

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16 comments so far. Add my comment.

  • [Avatar for concerned]
    concerned
    June 10, 2022 11:39 am

    JM:

    Thank you for your interest!

    Patent application 14450042.

    Budman York Mathis (B) is my attorney and he has written about my situation here on IPWatchdog. I also have an article on IPWatchdog: “Can I hold on long enough until the madness stops?”

    I am also in the book “Plight of the Patentee.”

    The USPTO has conceded that I have solved a longterm problem, but it was a business solution. So what?

    The PTAB said I met the law as written but not their “secret” version. “B” has asked everyone’s brother and cousin what are the “secret” definitions of inventive concept and significantly more to no avail. No one will answer “B.”

    PTAB changed rejection theory to mental steps because I had evidence from every Medicaid authority in the nation, all 50 of them, to show no one uses my process. My process is not routine, it is not well understood and it is not conventional. Not praxis as you would say.

    One judge at the oral CAFC hearing threw his hands up and said “B” should be presenting these arguments to SCOTUS. I did not get a Rule 36 and the ruling is still pending. A 28 brief should be forthcoming by “B” regarding recent SCOTUS decisions.

    Posters on this forum read my claims and say mental steps. Even the two USPTO examiners did not go down that road. When I offered a $500,000 challenge that my steps cannot be performed in the mind, no takers from the posters. A person evaluating my claims has to look at the specs and the evidence, not a two minute reading of the claims and expect to understand what was read. My provisional specs are 92 pages alone, which specs were incorporated into the non-provisional filing at [0032 or 0034].

    The challenge: We go to New Hampshire, I pick 10 Social Security Offices at random, then I pick one name from a telephone book at each Office, and the challenger has to get the Social Security personnel to release highly confidential personal information from just a “consent” request from the challenger’s mind, with no knowledge from the actual random person in question.

    It takes a dedicated machine/network in a highly secured environment, plus other inventive steps, to make my claims happen. A problem of 67 years is not going to be solved by mental thoughts when millions of working professionals and experts have looked at the problem and they are aware of the problem: Two university studies are also entered into the record from me.

    Your comments are welcome. Thank you.

  • [Avatar for Joachim Martillo]
    Joachim Martillo
    June 10, 2022 10:39 am

    @concerned, The CAFC is split 50-50. Any SCOTUS ruling would have an effect. Is there a link to your patent application?

  • [Avatar for concerned]
    concerned
    June 10, 2022 08:36 am

    Anon: Good Call.

    B: Of course I agree with your comments.

    Will the lower courts and USPTO follow any new decisions from SCOTUS? I’m very skeptical.

    In Alice, SCOTUS said abstract ideas are still patentable if a new and useful result occurs. Of course, those types of outcome should be patentable. I contend my process is not abstract, however, it should not matter.

    My claimed process corrects oversights that have been occurring by millions of working professionals and experts since the inception of the Congressional program in 1956. That kind of process is about as useful as it gets.

    The very fact that my process finds an oversight, meaning the Social Security application was already adjudicated probably by a disability attorney (a law degree type of person) and a working person from the Social Security Administration, suggest a meaningful event occurred by my process. It is self evident.

    Yet for 8 years I have been fighting to get my patent. Either the people prosecuting my application are extremely obtuse or there is a hidden agenda. My first examiner in a telephone conversation told me it was the latter, too bad those conversation are not recorded.

  • [Avatar for B]
    B
    June 9, 2022 04:27 pm

    @ Anon “I do believe that I was the very first in the blogosphere to seize upon Schein as one of the two shears that make up my “Kavanaugh Scissors” meme.”

    The SCOTUS has actually produced a few additional relevant decisions, and Dobbs will be KILLER

  • [Avatar for Anon]
    Anon
    June 9, 2022 02:09 pm

    I do believe that I was the very first in the blogosphere to seize upon Schein as one of the two shears that make up my “Kavanaugh Scissors” meme.

    If these scissors are eventually used to cut through the Gordian Knot created by the Supreme Court in regards to eligibility and 35 USC 101, you can be certain that I will be taking due credit.

  • [Avatar for Impressed]
    Impressed
    June 9, 2022 11:49 am

    Mr. Hartung – you appear to have hit on the silver bullet that can kill this Alice monster if the Supreme Court takes the case. In that event, American Axle’s brief, and many amicus briefs, should echo your argument based on the Schein decision.

  • [Avatar for Joachim Martillo]
    Joachim Martillo
    June 9, 2022 07:09 am

    When I read the patent eligibility decisions, I find them hopelessly confused with respect to the definitions of:
    natural law (e.g., Maxwell’s Equations),
    natural principle (e.g., Hook’s Law),
    natural phenomenon (e.g., Gold), and
    praxis (“well-understood, routine, conventional activity”).

    In Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 132 S. Ct. 1289, 182 L. Ed. 2d 321, 23 Fla. L. Weekly Supp. 189 (2012), SCOTUS addressed a treatment method consisting of giving a patient a well known drug and then adjusting the dosage according to patient response (praxis). The treatment method should have been considered eligible but obvious.

    In Rubber-Tip Pencil Company v. Howard, 87 U.S. 498 (1874), SCOTUS addressed an aggregation that consisted of a pencil and of an eraser. The pencil and eraser were joined by an engineering fit (praxis). The invention was eligible but obvious.

    In American Axle v. Neapco [20-891], the method applies a natural principle but not according to a praxis. There should be no question of eligibility. The only remaining question is patentability according to 35 U.S. Code § 112 – Specification.

  • [Avatar for concerned]
    concerned
    June 9, 2022 06:30 am

    MaxDrei:

    Let Congress rewrite 102, 103 and 112 if those sections do not have enough punch.

    In the meantime, facts and evidence should be applied to those sections of law, not “secret” definitions that the USPTO, PTAB and the Solicitor refuse to define.

    Even my attorney feels that a mental steps exclusion would be appropriate to patents, however, that is a “true” mental steps exclusion. Not an exclusion where a person feels it is mental steps after reading the claims, but does not look at the specs and evidence and has no knowledge of the field.

    A process that requires a dedicated machine (not an off the shelve computer) in a very secured environment to effect the result is not mental steps. Evidence and specs matter, not a two minute reading of the claims.

  • [Avatar for MaxDrei]
    MaxDrei
    June 8, 2022 05:27 pm

    The argument for binning the exceptions strikes me as very persuasive. But what will be the consequence if that happens? How else shall the public be protected from the “due” issuance of a flood of cleverly scrivened claims which enjoy a presumption of validity but which any reasonable and well-informed bystander can see have been improvidently allowed through to issue and so are egregious, oppressive and industry-damaging blackmail-nurturing obstacles to trade and innovation? Do sections 102, 103 and 122 as they are now understood pack enough punch to do the job? I wonder.

  • [Avatar for C. Whewell]
    C. Whewell
    June 8, 2022 03:57 pm

    Agree completely, those needless exceptions cause only confusion. Any perceived “need” for them is artificial. They’re skew redundancies.

  • [Avatar for Pro Say]
    Pro Say
    June 8, 2022 02:56 pm

    Superb, logic-and-reason-based exposition Kirk.

    One well worth SCOTUS, the CAFC, District Courts, and the PTO embracing.

    Despite the privacy-invading, innovation-stealing, money-over-morals caterwauling of Big Tech.

  • [Avatar for mike]
    mike
    June 8, 2022 01:38 pm

    Amen Kirk! Jeff Hardin discussed this very thing 3 years ago. Watch: https://youtu.be/IeWxA7C5IZg?t=31

    Essentially, this:

    • The Constitution provides that Congress has the power to create patent law.
    “The Congress shall have Power … To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” U.S. Founders — US Constitution, Article I, Section 8, Clause 8

    • Congress specified what is patent eligible in 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.” The People’s Congress — 35 USC § 101 – Inventions patentable

    • The Supreme Court engrafted exceptions onto the § 101 statutory text, despite that Congress has repeatedly codified the same text since 1952.
    See paper “Unconstitutional Application of 35 U.S.C. §101 by the U.S. Supreme Court” by Knowles and Prosser at https://repository.law.uic.edu/ripl/vol18/iss2/2/

    • But the Supreme Court says they can’t do that.
    “…the Act contains no ‘wholly groundless’ exception. This Court may not engraft its own exceptions onto the statutory text.” J. Kavanaugh, Henry Schein, 2019

    We need predictability. Per Schein, the Supreme Court needs to undo Mayo/Alice and their ancestry. SCOTUS never had that Power. Knowles’ paper shows that SCOTUS simply gave it to themselves without any congressional rationale or historical basis. The Constitution specifically gave that to the People’s Congress, and Congress has already spoken.

  • [Avatar for David Lewis]
    David Lewis
    June 8, 2022 01:33 pm

    Thank you for your article. To point out the obvious, Schein would suggest that the judicially created double patenting doctrine is improper.
    Somehow I don’t see the Supreme Court expressly determining that the judicially created double patenting doctrine is improper, but you never know.

  • [Avatar for B]
    B
    June 8, 2022 10:22 am

    Great article, Kirk

    I will take issue with one sentence, i.e., “In view of the Supreme Court’s definitions of the categories of patentable subject matter under Section 101, there does not appear to be a need for the judicially created exceptions.”

    Specifically, I’m not saying you’re right or wrong, but there’s possible room for an exception to claims that rely on true mental steps.

    The other exceptions are pure garbage as you appear to know

  • [Avatar for PA Crier]
    PA Crier
    June 8, 2022 08:50 am

    Nice analysis. Simple and direct enough for the layman.

    It seems to me that first there is scientific discovery and 30 years latter applications of that discovery to products used by humans e.g. technology. For American Axle it’s more like 100 years.

    Thanks

  • [Avatar for concerned]
    concerned
    June 7, 2022 06:36 pm

    My CAFC blue brief includes Schein and the PTAB stated I met the law as expressly written.

    However, I did not meet the USPTO, PTAB and Solicitor “secret” definitions of significantly more and inventive concept, although my attorney has repeatedly asked for said definitions to no avail.

    The Dodd leaked memo also states the court has no authority to engraft their words upon the statutory text.

    Let’s hope SCOTUS tosses those judical exceptions to s101. If Congress wants those definitions, so should Congress write.

    In the meantime, I met the law as written per PTAB. I have no 102, 103 or 112 rejections. Give me my patent!

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