Whether a Patent Right is a Public Right

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by Dennis Crouch

Another interesting en banc petition by Robert Greenspoon and Phil Mann: Cascades Projection v. Espon and Sony, Appeal No. 17-1517 (Fed. Cir. 2017).  The petition asks one question: “Whether a patent right is a public right.” Of course, the Federal Circuit has already decided this in MCM – which is why the petitioner is bypassing the initial appeal and asking directly for an en banc hearing.

[S]ince this Court has not had a chance (as a full court) to consider the exceptionally important constitutional question, since intervening decisions after MCM have encroached upon the MCM constitutional holding, since patentees continue to bring the same constitutional challenge in hopes of overturning the MCM constitutional holding, and since overturning the MCM holding will potentially reduce this Court’s ballooning USPTO docket, Appellant seeks initial en banc review.

The “public rights” issue is complicated, but the basic outcome is simple – if patents rights are not public rights (but instead private rights) then an administrative agency cannot lawfully revoke a patent once issued (without the permission of the patentee).

The Supreme Court appeared to speak directly on this issue in McCormick Harvesting Mach. Co. v. Aultman-Miller Co., 169 U.S. 606 (1898):

The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever, is vested in the courts of the United States, and not in the department which issued the patent. Moore v. Robbins, 96 U. S. 530, 533; U. S. v. American Bell Tel. Co., 128 U. S. 315, 364, 9 Sup. Ct. 90; Lumber Co. v. Rust, 168 U. S. 589, 593, 18 Sup. Ct. 208.

Although the direct case is 100+ years ago, we’re still working with the same United States Constitution that protects private property rights against governmental intrusion that violate due process and equal protection principles.

In MCM, the Federal Circuit distinguished these old cases by noting that patent office cancellations were not authorized by Congress: “McCormick … certainly did not forbid Congress from granting the PTO the authority to correct or cancel an issued patent.” MCM (opinion by Judge Dyk, joined by Judges Prost and Hughes).  The petition offers several responses: (1) McCormick does not actualy provide the ‘statutory caveat’ but instead limits PTO authority “for any reason whatever.” (2) The reissue statute in force in McCormick did expressly authorize examiners to reject the issued claims – whether original or amended. Thus, the McCormick decision did limit the power of Congress to increase PTO power.

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One of the petitioner’s justifications for en banc review here is that it might allow the court to limit its docket.  In the process, the petition cites my recent Wrongly Affirmed Without Opinion article for the proposition that the court’s opinion writing docket may soon be further ballooning. “If Professor Crouch is right, it could be serendipitous if the Court overrules MCM, thus reducing docket load through reduction of incentives of patent owners to appeal.”

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The public/private divide is, in reality, a false dichotomy since the Court is comfortable with the notion of “quasi-private right” — which has the aspects of a private property right, but which can be subjected to administrative agency control.  A key recent opinion on point is B&B Hardware (2015) – albeit the dissent by Justice Thomas (with Scalia):

Trademark registration under the Lanham Act has the characteristics of a quasi-private right. Registration is a creature of the Lanham Act, which “confers important legal rights and benefits on trademark owners who register their marks.” Because registration is merely a statutory government entitlement, no one disputes that the TTAB may constitutionally adjudicate a registration claim.

By contrast, the right to adopt and exclusively use a trademark appears to be a private property right that “has been long recognized by the common law and the chancery courts of England and of this country.” In re Trade–Mark Cases, 100 U.S. 82, 92, 25 L.Ed. 550 (1879). As this Court explained when addressing Congress’ first trademark statute, enacted in 1870, the exclusive right to use a trademark “was not created by the act of Congress, and does not now depend upon it for its enforcement.” Ibid. “The whole system of trade-mark property and the civil remedies for its protection existed long anterior to that act, and have remained in full force since its passage.” Ibid. Thus, it appears that the trademark infringement suit at issue in this case might be of a type that must be decided by “Article III judges in Article III courts.” Stern, 564 U.S., at ––––, 131 S.Ct., at 2609.

B & B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1317, 191 L. Ed. 2d 222 (2015) (Thomas, J. Dissenting).

About Dennis Crouch

Law Professor at the University of Missouri School of Law. Co-director of the Center for Intellectual Property and Entrepreneurship.

105 thoughts on “Whether a Patent Right is a Public Right

  1. MCM makes much of the fact that Congress enacted a process to invalidate a patent through the PTO, and that the PTO should be given Chevron deference, does not adequately address the underlying issue of whether such a process is a taking of property without compensation or due process.

    BRI, without the opportunity to amend, and weak estoppel provisions are very far from the rights available in court doesn’t meet proper due process protection in current IPR proceedings, IMO.

  2. In my opinion, the petitioner and the Federal Circuit in MCM v HP have wrongly framed the IPR constitutionality question as “whether a patent right is a public right,” where the term “patent right” is indefinite. The “public” vs. “private” right issues that determine the constitutionality of IPRs must be decided by answering a different and more precise question. According to the Supreme Court, in deciding whether the adjudicated right is “private” or “public,” “the Court must examine both the nature of the action and of the remedy sought.” Tull v. United States, 481 U.S. 412, 417 (1987) (emphasis added); Curtis v. Loether, 415 U.S. 189, 195 (1974) (“a jury trial must be available if the action involves rights and remedies of the sort typically enforced in an action at law”) (emphasis added); Ross v. Bernhard, 396 U.S. 531, 538 (1970) (“The Seventh Amendment question depends on the nature of the issue to be tried rather than the character of the overall action.”) (emphasis added).

    IPR adjudications involve traditional legal claims of patent invalidity and the actual rights adjudicated in IPR are not the patent enforcement rights. Those “patent rights” are adjudicated in the federal courts which are empowered to award damages and grant equitable relief against infringers.

    Rather, the ”issue to be tried” in an IPR adjudication is the cancelation of patent claims that voids the exchange of rights in the patent bargain, but without restoring to the inventor the common law private secrecy rights, which became publicly available upon patent grant. Instead, upon claim cancellation, the inventor’s private right is necessarily dedicated to the public (including to the petitioner challenging the patent). Indeed, the “remedy sought” by the petitioner in an IPR is to cancel patent claims, in order to obtain the private right to practice the invention. Thus, in an IPR proceeding in which claims are cancelled, the petitioner receives private benefit, the right to exploit the inventor’s published description of an invention that would otherwise enjoy private rights of secrecy, and the inventor incurs a net loss of that private right because the loss of secrecy (by publication of the patent) is irreversible. It is this economic transfer of a private right to the petitioner at the expense of a net loss to the inventor’s private right that is at the heart of IPR adjudications. The Federal Circuit failed to address the real nature of the action and of the remedy sought” in IPRs in its decision.

    See my full legal and historic analysis in the Amicus Brief I authored on behalf of IEEE-USA and filed in support of the MCM’s cert petition at link to bit.ly.

    1. Ron, the action scire facias was a form of action that had specific legal relief — the revocation of a patent for invalidity. It had a right to a trial by jury. I argued this point extensively, particularly in oral argument.

      The problem was that the Patlex court had held that patents were public rights and that this somehow negated the patent owner’s 7th Amendment right to a jury trial in a court of law. We had to address that issue as well.

      The MCM court followed Patlex.

      In the end, the Federal Circuit has ruled that patent owners have a 7th Amendment right to a jury trial for validity (Lockwood) and at the same time do not have a 7th Amendment right to a jury trial for validity (Patlex, MCM). They seem comfortable that their views will not be considered by higher authority because of policy reasons.

      1. Reminds me (granted, a bit tangentially) of the Supreme Court spiderman web shooters case.

        The Supreme Court took their typical anti-patent position, and even acknowledged the error in the case law used, but deigned not to disturb the lower court’s holding because of “policy.”

        The High Court has far too much of an addiction to the power of setting policy. Especially when it comes to the statutory laws of patent law.

        1. ps – and it is precisely this addiction why the only real long term solution is for Congress to exercise its Constitutionally granted power of jurisdiction stripping to strip the non-original jurisdiction of hearing patent appeals from the Supreme Court and in maintaining the judicial review portion of Marbury, creating a new (untainted) Article III court as a true last word on patent law.

          Funny that for all the attempts at belittling this suggestion, no one has yet advanced a plausible legal rationale as to why this could not be done.

          No one – not hear, not anywhere.

          1. Because if there isn’t a “legal” argument against doing something, then it’s definitely worth discussing the awesomeness of doing it, especially if the discussion is with a path 0 l0gically l y in g narcissist.

            That’s why Donald Trump is so popular, after all.

    2. Ron Katznelson Instead, upon claim cancellation, the inventor’s private right is necessarily dedicated to the public

      If the claim is invalid in view of the prior art, then the “right” belonged to the public before the application was filed. Everyone is free to practice the method “privately”, of course, if that’s what turns their crank. Go craaaaaazy!

      Key point to remember here: Ron Katznelson is a self-dealing hack with really really silly “arguments”.

      Please go back to writing your whiny baby letters to Barack Obama, Ron. He needs them now more than ever because his daughter has a pet parakeet.

      1. MM,
        I suggest you refrain from personal attacks, take a course in civility, and a basic course in logic. You do not address the question at hand: whether the rights are “public” or “private” because under your infirm logic, every patent is invalid. However, whether or not an issued patent is valid is only determined at the end of the adjudication process. Under § 282, a patent is presumed valid going into an IPR. Thus, the rights to be adjudicated are (a) whether the petitioner should gain a private right to practice the invention which he is not entitled under the presumption of patent validity, and (b) whether the patentee should retain the benefit of disclosing trade secrets (which are private common law rights) – a retention to which he is entitle under the presumption of patent validity. In either outcome, private rights are at stake.

        1. Ron,

          All three of your suggestions have been repeatedly made over the course of the last eleven years by many many many people.

          The blight remains unchecked.

  3. Is this request tied to a case or controversy? The court should only decide if it is a public or private right to answer a particular question, not just opine the general nature of the patent without more, correct?

  4. My recollection is that the early cases on fraud on the Patent Office (the cases back in the 1930’s and even the CCPA case Norton v. Curtiss from the early 1970’s) mentioned that the duty of disclosure arises because “patents are affected with the public interest.” Assuming my recollection is correct, how, if at all, does this affect the private right/public right debate?

    1. Also more recently (2014) the Supreme Court has reiterated in Medtronics v. Mirowski:

      the “public” also has a “paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U. S. 806 (1945).

      It’s very easy to understand why this is the case: every improvidently granted patents unlawfully takes from the entire public its right to freely engage in the invalid/ineligible activities described by the improvidently granted claim.

      1. Translation: “wah”

        From the self-appointed watcher of the “public” playing in the Fields of Rye.

        Tell me something Malcolm, aside from your feelings concerning software or business methods, do you have anything constructive to suggest to the Office so that it can do its “Fn job right the first time.” (That last bit being of course my emphasis)

      2. And so, MM, shortly before the creation of re-examinations the Supreme Court ruled that the government has authority to challenge the validity of patents in court as a necessary part of challenging monopolistic conduct by a patent owner.

        But the Supreme Court affirmed the long-standing rule that not even the government had a right to challenge a patent in court unless it had standing. This standing did not include the right to defend the public interest against invalid patents, only the right to defend itself against patent challenges, or to sue the patent owner if the patent owner had obtained a patent by defrauding the government.

    2. American Cowboy, it affected somewhat because Patlex originally created the idea that patents are public rights not only because they were created by statute but because the public as an interest that patents be valid.

      “In contrast with the private rights at issue in Northern Pipeline, the grant of a valid patent is primarily a public concern. Validity often is brought into question in disputes between private parties, but the threshold question usually is whether the PTO, under the authority assigned to it by Congress, properly granted the patent. At issue is a right that can only be conferred by the government. See Crowell v. Benson, 285 U.S. at 50, 52 S.Ct. at 292. Thus we find no constitutional infirmity, under the analysis suggested by Northern Pipeline, in patent reexamination by the PTO.”

      Patlex at 604. link to scholar.google.com

  5. Can someone more conversant than am I with the public rights case law answer a question that troubles me: if patents are public rights, does that mean that Congress could (if it chose) remove them entirely from judicial supervision? That is to say, right now, one can appeal and adverse IPR decision to the CAFC. Assuming for purposes of this question that patents are public rights, is that right of appeal to the CAFC a pure act of legislative grace, or is there some other legal doctrine that compels even public rights disputes to be subject at some level to judicial supervision?

    1. is there some other legal doctrine that compels even public rights disputes to be subject at some level to judicial supervision

      At some level, due process and equal protection concerns may lead to “judicial supervision.”

      1. Even just at the statutory level, there’s the A.P.A. for example that doesn’t allow arbitrary decision-making by any administrative agency.

        So presumably, this means we’d always need at least enough judicial oversight to make sure that the administrators are in fact being non-arbitrary.

        1. Even just at the statutory level, there’s the A.P.A. for example that doesn’t allow arbitrary decision-making by any administrative agency.

          Ah, but that is my question. Could Congress amend the IPR statutes to say “notwithstanding any provision of Title 5, the exclusive remedy for a party disatisfied with the PTAB’s judgment shall be to seek reconsideration from the PTAB”?

          The APA is not binding on Congress. The APA is merely a default rule that Congress has provided. Congress is free to create special provisions that supplant the APA in any given statutory scheme.

          I think that due process and equal protection do constitute an answer to my question, but the APA does not.

          1. We get back to the separation of powers infinite loop….Essentially no one branch may deny any of the other branches their ultimate interests in legislating, executing, and interpreting anything that the government may do.

            Turtles all the way down, or politics depending on your philosophy of the finite.

          2. I’d have to remember my fed courts, but I think under Crowell, if a right is public, the rule is “Congress giveth, and Congress may taketh away”. If it’s public, no Article III review is required beyond that necessary to safeguard due process.

          3. Probably unconstitutional on separation of powers grounds. You can’t take away the power of judicial review for due process and constitutionality of the statute.

            Now the only remedy in enforcing the patents, and where to get damages, ect… yes, that can be confined to an administration, just like Worker’s Compensation, for example.

            1. Probably unconstitutional on separation of powers grounds. You can’t take away the power of judicial review for due process and constitutionality of the statute.

              Agreed.

              Now the only remedy in enforcing the patents, and where to get damages, ect… yes, that can be confined to an administration, just like Worker’s Compensation, for example.

              This seems really strange to me. Enforcing a patent is precisely the aspect of the patent that seems most like land, and therefore the most like a matter for the courts of common law. I have a hard time wrapping my head around the idea of a non-Art. III tribunal that is empowered to decide infringement and award damages.

              Indeed, this is where the analogy to Workers Comp really breaks down. The Workers Comp board can award you a payment out of the government treasury. It most definitely cannot order the employer to pay the injured worker. Similarly, the Workers Comp board has no injunctive powers.

              To my mind, the public rights aspect of patents is the question of validity. Congress can assign the assessment of validity to an Art. I agency (indeed, it has done so for hundreds of years now—the PTO). Congress cannot assign the enforcement of patents to any tribunal other than an Art. III tribunal, because enforcement applies to the private property aspects of patents.

              1. Greg, the defendant has right to trial by jury in a court of law before his property – his money – is taken from him. If this is true, why is not the owner of a patent recorded the same constitutional protections before his property is taken from him?

                1. Ah, but that answer assumes the very point in debate—are patents wholly analogous to personal property, such as the cash in your example? It seems clear to me that the answer is no.

                2. But, under controlling SC case law, a right for a fixed period IS property. See, e.g., Marbury v. Madison.

                  It is constitutionally mandated that the exclusive rights be for a limited period, right?

                3. Ned,

                  I have put the same foundational case to Greg in a slightly different manner and have received the same insightful non-response.

                  He must be stumped.

                  Albeit not nearly as virulent as Malcolm, I believe that what is stumping Greg is his evident Leftist leaning belief system.

              2. I just don’t think patents are at all like real or tangible property.

                And I think that the employer’s of the state, in one way or another, pay into the worker’s compensation fund.

                I just don’t know if that’s true. Many agencies can adjudicate legal issues between private parties.

                1. J,

                  Please flesh this out a little bit more:

                  I just don’t think patents are at all like real or tangible property.

                  How much “like” do you have to be in order to inure the other Constitutional protections for protecting against takings by the government?

                  Does your “thinking” preclude these other Constitutional protections?

    2. Assuming for purposes of this question that patents are public rights,

      Maybe you glossed too quickly over the many items that I have pointed out that will unravel because of “public rights”…

      1. I suppose that would be one way to enact an “Eliminate the Supreme Court from hearing Patent Appeals” methodology….

        (I like my idea of jurisdiction stripping of the non-original jurisdiction of patent appeals, coupled with a new Patent Article III Court much better)…

        1. Wouldn’t it just be easier to change the patent statute to go around the Supreme Court interpretations?! It’s not like the Supreme Court invalidates patents on constitutional grounds.

      2. Do you mean “altogether” in the strong sense, or “altogether (except for the exceptions that everyone knows about)”?

        I assume that if patents are held to be public rights, and if Congress decided to entrust their disposition entirely to an Art. I agency—with no appeal to the CAFC—but it was found that this agency always cancels claims in patents with Jewish inventors, that there would still be equal protection review, no?

    3. Greg, if patents were public rights Congress could both grant and revoke a patent at its discretion. Obviously, if it had that right itself, it could delegate that discretionary power to the executive.

      In England, all patents until 1903 included a clause allowing the privy Council to revoke a patent for convenience – the convenience of the public of course. The validity of patent still was litigated in court. But if the public was inconvenienced by the patent, the Crown retained the right to revoke it.

      But you will note that this prerogative is not granted to Congress in the Constitution. Congress is authorized only to grant exclusive rights for limited times. If Congress retains the right to revoke a patent at any time for any reason, there is some question about whether it is exceeding its power because the grantee has not been given an exclusive right for a limited time.

      1. But you will note that this prerogative is not granted to Congress in the Constitution. Congress is authorized only to grant exclusive rights for limited times.

        I am not sure how this argument is supposed to work. Congress is also not accorded the power to exclude computer implemented inventions from eligibility. Congress is not accorded the power to require one to obtain a foreign filing license before filing on an invention invented in the U.S. Congress is not accorded the power to institute a body to examine applications prior to grant.

        In other words, almost every aspect of our patent system goes beyond that which is explicitly permitted in the constitution. Nobody, however, supposes that foreign filing licenses or pre-grant examination is unconstitutional, and only cranks argue that judicial exceptions to subject matter eligibility are unconstitutional. From this it follows that we all understand that Congress’ powers to grant, revoke, and condition go far beyond that which is explicitly set out in the constitutional text.

        1. Greg,

          Your argument here is a fallacy. Most of what you say is not there, is in fact, there (through the power of creating laws FOR a patent system, which is what the allocation of authority of the Constitutional phrase provides).

          Throwing CRP against the wall to see what sticks seems to be what you are doing here…

          1. That is transparent special pleading, no? Silence is significant when it suits my purpose for it to be significant, but not significant when it suits my purpose for it not to be?

        2. Greg, the counter examples you cite pertain to before a patent is granted. Regardless of the merit of such matters, the fact remains that AFTER a patent is granted it is arguably another matter because a new property right has been vested…

  6. The US signed the TRIPS agreement which explicitly recites that patents are private rights, a statement that was inserted to make clear that individual signatory countries would not have the obligation (and expense) to enforce/defend patents of its citizens in other signatory countries. If patents were public rights, the US should indeed be obligated to enforce/defend US patents in other countries at its expense.

    1. A few responses:

      (1) It is not possible to enforce U.S. patents outside of the U.S. It really would not matter if Uncle Sam were willing to pick up the tab or not, if you show up in a Mexican court with a U.S. patent, you are not going to get anywhere.

      (2) It is perhaps unfortunate that the “public” rights are called that. It is a category error to suppose that “public” here means “opposite of private.” There is no inconsistency with patents being both public rights and private property.

      (3) TRIPS is not a self-executing treaty. For purposes of U.S. law, what matters is what our domestic legislation and case law says. It is possible that we are out of compliance with our TRIPS obligations (indeed, I feel certain that Myriad put us out of compliance), but this does not create any sort of legally enforceable obligation that can be brought against the U.S. gov’t in U.S. courts. In fact, U.S. patent holders have no enforceable rights under TRIPS. The U.S. government can bring an enforcement action at the WTO against another government if it thinks that the other government is not honoring its TRIPS obligations, but mere corporations and citizens have no standing to sue in the WTO. In other words, if you really think that you have found a way to make Uncle Sam pay to enforce Apple Computer’s Chinese patent rights, you need to convince France, or Brazil, or some other TRIPS signatory to bring that action against the U.S.

    2. “If patents were public rights, the US should indeed be obligated to enforce/defend US patents in other countries at its expense.”

      Not only that – but a recent cert petition by Oil States Energy makes the interesting argument that if patents were public rights then the government would be responsible to actually police them (even just domestically) rather than making the patentee actively sue, etc.

      (I don’t know enough public rights law to have an opinion on that aspect.)

      1. Sure. Someone can make that argument, but it is silly. The reason why some people are so hung up is that they see the words “public” and “private,” and they think “must be one or the other, but not both.” This is just a false choice. Patents are both public rights and private property. Government is not responsible for searching out and stopping infringement because the enforcement of patents is the part that implicates their private property aspect. Government is responsible for policing the validity of patents, however, because that is the aspect that implicates their status as public rights.

        1. Selectively saying “that part” is a private property part, while turning around and not providing Constitutional protection to A property by saying “well, that part is NOT a private property part – absolute “silliness.”

          You are trying for a “little bit pregnant” routine.

    3. That too was one of the tidbits that I presented… (although I thank you for adding the international treaty obligation part, as I had forgotten to add that)

  7. Dennis, I think you’re exactly right on the quasi-public/private right. At least with trademarks, there’s been a history of common law trademarks. Is common law patents even a thing? It’d be very easy for the court to say that as part of your bundle of rights with a patent, you get the private right to enforce, but the patent right itself is subject to review and cancellation by ALJs, etc. I don’t see the court overturning years of PTAB/re-exam/etc. on the basis that patents are a private right.

    Also, would this actually reduce the Fed. Cir.’s workload? Isn’t it far more likely that their workload would increase given the lack of other avenues of review for patents?

    1. [W]ould this actually reduce the Fed. Cir.’s workload?

      Prof. Crouch can correct me if I am misunderstanding, but I think that what he is trying to say is that if the en banc CAFC reverses MCM and declares that patents are not part of a public rights scheme, then it follows that IPRs are unconstitutional. If IPRs are unconstitutional, then the CAFC will no longer have to hear IPR appeals from the PTO (because there will be no more IPRs). The disappearance of IPR appeals would constitute a significant shrinkage in the CAFC’s docket.

      1. I would clarify that further as IPR’s – as currently legislated – would be unconstitutional.

        Congress could always “try again” (but respect the other Constitutional protections afforded property.

    2. RN . I don’t see the court overturning years of PTAB/re-exam/etc. on the basis that patents are a private right.

      That’s because it’s not going to happen. And if it were to happen, rest assured the blowback to the rest of the system would be extreme.

      The people who rail most strongly against the Constitutionality of PTO review of granted patents fall mainly into two classes: (1) the maximalist whiners who rail against literally everything that decreases the value of a patent by whatever amount; and (2) fake Constitutional concern tr0llers who see a Constitutional problem with pretty much everything they don’t like. With respect to this latter class, you can smell them a mile away because their obsession with the Constitution disappears when the junk patent is improvidently granted. Even worse, if you should dare to bring up the Constitution in the context of challenging a patent’s eligibility you’ll be accused of senility. That’s what happened to Judge Mayer over at the Puppydog Patent Klub.

      would this actually reduce the Fed. Cir.’s workload?

      In the immediate aftermath it would but that’s about it. It’s a pretty ridiculous argument, though. “Hey, you guys can get out of doing your job if you subscribe to our ridiculous argument. Think about it!”

  8. I think it’s clear that the Court isn’t going to junk the myriad post-issuance procedures a patent can go through at the office. With respect to the 7th Amendment issue, the history seems murky enough to let the Court uphold adjudication of validity in an administrative context, which would mean finding them public rights I think.

    I actually wrote a somewhat contrarian article awhile back that argued that they were best considered public rights from an historical and logical perspective, and should be considered in the administrative context akin to regulations. In any case, as patents get fully drawn into the maw of administrative law, there will be many questions to answer, especially at the PTAB.

    “Patents as Regulations: How the America Invents Act and the Seminole Rock Doctrine Could Change Claim Construction After Teva v. Sandoz.” 97 JPTOS 307 (2015).

    1. I think it’s clear that the Court isn’t going to junk the myriad post-issuance procedures a patent can go through at the office.

      Exactly. That is the hardest part of the constitutional challenge to believe. If the challengers are correct about IPRs, it follows that not only are IPRs illegal, but so are ex parte re-exams without the patent owner’s consent. That is sort of like discovering that the manufacture of pistachio ice cream is unconstitutional. Sure, it is possible that such is the case, but decades of pistachio ice cream manufacturing without a problem make the contention highly implausible.

      1. Didn’t they say the same thing (b-b-but decades) about the meaning of the False Marking statute (which saw the huge and frenzied drive to include that change in the AIA…

        It is a bit dangerous to rely on the logic of “that’s always the way it’s been done”.

      2. Finding agency review of granted patents to be unconstitutional would create absolute chaos. That would be true even if we weren’t faced with a historically massive mountain of ineligible and improvidently granted g@r bage.

        We could, of course, step back a moment and ask: who would benefit from that chaos? The answer: the people with the money, i.e., the same entitled people who were milking the patent system like there was no tomorrow and who just can’t get over the fact that nobody likes them.

        Everybody else loses. That would be pretty much every business, big and small, that doesn’t want or need patents, the people who work in this businesses, and everybody who uses a computer for anything. In other words: just about everybody.

        1. Your cl@ss w@rfare meme lacks credibility as you have never explained your feelings against the lowest cost form of innovation (the anti-one-preventers, if you would)…

          More likely than not, you just don’t like the idea of personal property…

          1. you have never explained your feelings against the lowest cost form of innovation

            Actually I’ve done that many, many, many times. Thanks for proving to the world again what we already knew: you’re a path 0l0 gical li @r who will do and say literally anything if it reinforces your fantasy worldview. Say hi to Dandy Donald for me.

            1. Your “explanation” does not fit the proper reply parameters of being inte11ectually honest.

              As to actually squaring the dichotomy in that meaningful manner, no Malcolm, you have never done so.

              Not sure about the Donald reference – are you confusing me with Ned?

  9. “The “public rights” issue is complicated, but the basic outcome is simple – if patents rights are not public rights (but instead private rights) then an administrative agency cannot lawfully revoke a patent once issued (without the permission of the patentee).”

    Yeah that’s not exactly correct.

    “The public/private divide is, in reality, a false dichotomy since the Court is comfortable with the notion of “quasi-private right” — which has the aspects of a private property right, but which can be subjected to administrative agency control. ”

    That’s more correct. The patent itself is a private right. But there is nothing to stop CONGRESS (not the PTO) granting everyday citizens a public right to challenge a given patent (in the PTO or anywhere else).

    1. There are in fact things that WILL stop those Congressional actions that do not conport with other Constitutional protections of property though, 6.

      Think eminent domain.

      Sure, the government can engage in takings – provided the government acts in accord with certain protections.

      It has been noted that the initiation decision of the IPR expressly lacks such accord, involving a taking of sticks from the bundle of property rights with ZERO recompense and with no right of review (with the law as written BY Congress).

        1. That’s not what I mean.

          And your “mocking” is rather meaningless.

          Maybe instead (yay ecosystem), you might actually do something (anything) other than mock…?

    2. In that case, the Court will have likely found that the Seventh Amendment grants a jury trial right for claims of patent invalidity. (Lemley wrote a great article about the history of this). Hello Article III court.

      1. I agree that Prof. Lemley’s patents-and-the-VII-amendment article was a good one, but he concluded that there is no basis for VII amendment challenge if you do not get a jury trial in your patent revocation. I am not following your “hello Article III court” conclusion.

        1. I agree. I was just saying that if the Court falls on the private right side of this dispute, they will likely also decide that it is a private right existing in 1791 (or whenever), which is the touchstone of a Seventh Amendment right to a jury trial.

  10. The public/private divide is, in reality, a false dichotomy since the Court is comfortable with the notion of “quasi-private right”

    This is a very good point, and very aposite to the issue of IPRs. It seems to me that the right way to understand patents is that they are private property as to enforcement, but public as to validity. In other words, the Congress can properly entrust the business of determining validity to a non-Art. III agency*, but cannot task the PTO with determining infringement (at least not without moving the PTO out of the Commerce Dept, and turning it into an Art. III court).

    * Indeed, everyone seems to agree on this point. If it really were unconstitutional for a non-Art. III body to assess claim validity, the entire examinational system of the last two centuries would be illegal.

    1. Greg – you are repeating a mistake I corrected the last time you tried to equate an ungranted application with a granted patent.

      Think inchoate rights.

    2. That’s a great way to look at it. I reserve judgment on the infringement side, but certainly validity should be determinable by the same agency that granted the patent in the first place.

      I consider the system holistically. Examination is a sliding scale. You can have a cursory examination with little presumption given to granted patents. You can have completely exhaustive examination with bulletproof granted patents. Or you can have something in the middle, like we currently have.

      If patent owners want bulletproof patents that aren’t reviewable, ok, but then they have to pay for it. Examination would become much more expensive and time consuming to ensure nothing slips through the cracks. Patent applications would go down as the time and expense goes up. This would particularly affect small businesses and startups with limited resources, driving them to seek other forms of protection.

      I think our current system strikes a better balance. Give a fairly thorough but not foolproof examination. Have a more thorough review process for patents that mistakenly slip through the cracks, with costs high enough to only review patents with commercial validity. Encourage more patenting on the front end, as people are developing their technology and exploring its potential. Make up the costs on the back end with maintenance fees, when owners have determined which patents are valuable enough to invest the capital in.

      The real fiction is that one-size-fits-all rules work for everyone. Track 1 allows accelerated examination for those willing to pay more for it. Likewise, owners should be able to choose different levels of examination thoroughness with different presumptions of validity for the resulting patent. What works for a big pharma company’s flagship product isn’t necessarily the right solution for an internet startup. But we’re stuck with the system we have, so we muddle through these compromises that suit no one optimally. C’est la vie.

      1. KnowBuddy, interesting thought piece.

        You argue that there is a trade-off between an exhaustive examination, which is expensive, but that provides a bulletproof patent, and a less vigorous examination that provides less certainty for the patent owner. Ideally, this should be the choice of the patent owner as to how much he wants to put into examination versus his risk of invalidity.

        Now if he chooses to reduce costs in the first place by choosing a less vigorous examination, such as by not paying for a European search report before U. S. examination begins, then he should be offered an opportunity at a later date, post grant, to again conduct examination to achieve the degree of bulletproofness that he desires if it turns out that his patent is valuable and justifies the costs.

        Historically, we see that the patent owner has had an opportunity to file a reissue to conduct a second examination. But this required the assertion of error in the patent. Thus Congress created reexaminations for the benefit of the patent owner that he might re-examine his patent if, upon demonstration, there was a substantial new issue of patentability.

        But, Congress made a mistake. It allows anybody to file a request for reexamination. It soon happened that most every litigation also involved a collateral attack on the patent in the patent office. Often courts delayed patent cases pending reexamination, which could take years, sometimes even a decade. All the time, patent term was wasting.

        The abuses that soon erupted around re-examinations are legendary if one actually talks to patent owners as opposed to the infringer lobby. Even the presence of the re-examination system severely harmed patent owners.

        But the infringer lobby did not like the fact that they could not speak up in reexaminations and throw mud at the patent as best they could. Thus they invented inter partes re-examination that proved to be very unpopular if for no other reasons that an examiner was present who had his own views. Furthermore, inter partes re-examinations took forever, which was no good to the patent infringer if the court case was over by the time the re-examination was completed.

        Thus they invented IPRs, the ideal vehicle to hammer the patent owner in the patent office and take validity out of the courts.

        Thus we see one small effort to help the patent owner turn into a system which systematically undermined the patent owner’s right to enforce his patent and have validity decided by in a court of law where there was an independent judge and a right to a jury. Instead, the patent owner found himself in a hostile environment, the PTO, biased against him in favor of the petitioner for any number of reasons. In addition, the standard of proof of invalidity was lowered to preponderance. The use of broadest reasonable interpretation, a type of construction that is justifiable prior to a patent issuing, further undermined patent validity.

        There is no justification for this kind of system to the extent that one believes that it is the patent owner should have the right to choose how much examination he needs, that it is the patent owner that has a right to an independent judge, that it is the patent owner that has a right to have his case heard by a jury, and that it is the patent owner who has the right to have his patent considered valid until proven not valid by clear convincing evidence where reasonable doubts are resolved in his favor.

        The system is broken and now is an alien system hostile to patent rights. We know where this hostility came from – it came from certain big businesses that did not like the fact that they were being sued by small fry inventors or by failed startups. Then came State Street Bank and business method patents that gained the patent system even more hostility in the business and financial communities.

        Finally, we know that bad patents can issue and can be asserted. There are penalties for asserting bad patents, and that is attorneys fees can be awarded against the patent owner. As well, infringers have a right to a day in court just like the patent owner. Everybody has the same rights and the same expenses. The ground is neutral, independent judges preside, and the jury decides.

        We have to fix this. We have to restore a system where patents are respected and everybody has equal rights. Allowing endless games be played by infringers is harmful to the patent system. We all know that IPRs are and essential pillar to efficient infringement. That is why the infringer lobby will do anything to retain IPRs. But we have to be honest about what is going on here.

        1. Ned,

          I hope that you realize that this “against the patent holder” mindset you identify is lock, stock, and barrel synonymous with Malcolm’s “swagger”….

    3. If you follow the line of cases addressed by the Supreme Court under Article III, you will see a trend that a significant factor has always been consent. Tribunals have been found to be constitutional where the parties consent to the jurisdiction of that tribunal. I believe the estoppel provisions of IPR in combination with the lack of consent make this a very important question for the Federal Circuit to take on.

      I cannot think of an other legal proceeding where a district court can be divested of jurisdiction by a lower tribunal while the case is pending at the district court.

      1. Divested of jurisdiction? Where are you seeing this in the statute? Courts can stay a trial at their own discretion, but that is hardly jurisdiction divestment.

        1. Here is a scenario that the Justices took issue with in oral arguments for Cuozzo. Imagine a scenario where a patent is being litigated at district court for DJ or infringement action and the same patent is at the PTO for IPR (whether via a stay or some other party bringing a petition to the PTAB). If the Board cancels the patent the district court DJ/infringement case must be dismissed as there is no longer a patent to litigate. The district court would not have the power to reverse the Board’s legal conclusions in that proceeding. The adverse party would be left with appealing the Board’s decision directly.

          1. Ah, got it. I wonder if this is really so unusual as you suppose. Imagine that I have a broadcast license from the FTC. I believe that some local entity is taking actions inconsistent with my rights as a license holder, so I sue in Federal court. Meanwhile, control of the FTC changes hands and the new admin revokes my license. I believe (although I welcome correct) that this would divest the court of jurisdiction.

            In other words, I expect that nearly any regime administered by a federal agency is amenable to the situation you describe. I do not see this as an obvious absurdity. It just is as it is.

            1. Ah, Greg – here you omit the property aspect of the granted patent (and conversely highlight the importance of the Government’s taking of sticks out of the bundle of rights at the time of the initiation decision).

              You assume your own conclusion of “no foul” by assuming that the taking at the time of institution carries “no foul” when what happens there very much violates other Constitutional protections of the granted property right(s) – the (s) signifying that more than one property right exists in the bundle of the granted patent.

            2. Further, Greg, the very example you speak of (a change in regime revoking a license) can be directly analogized to a change in regime “revoking” a type of license as in a grant of a commission of a Justice of the Peace.

              See Marbury (and don’t forget the other Constitutional protections of property on any actions of the government vis a vis new regimes revoking anything).

  11. Dennis – wrong quote. B&B does not support your position in the least. In that dissent, the quasi private right at issue is the PRE ISSUANCE element of the granting process. Once granted, the TM right becomes private – as explained by Thomas in the excerpted text.

    I believe you meant to quote the Teva v Sandoz dissent. There, Thomas and Alito identified patents as mere “privileges” or “franchises.”

    This language I believe only finds support in Lemley’s 2013 UVA law review article. On this point, it is an interesting convergence of fringe libertarian and leftist academic thinking.

    I would challenge Lemley, Thomas, and Alito to find where, in the Court’s law, “privileges” or “franchises” are relevant to the public rights review. Murrays lessee? Granfinanciera, Stern?

    (Hint: they are uniquely English concepts)

    1. Anony – Can you say more here?

      My false-dichotomy point is that we really should not be talking about private rights vs public rights, but instead whether the issued patent (and the ability to cancel the patent) involves a private right or instead merely a quasi-private right.

      I agree that there are important distinctions between the trademark explanation by J. Thomas and the IPR regime.

      1. I think that quasi-private rights can certainly be part of the discussion, provided that they are used in their appropriate context: in this case, the administrative review process that predates the registration of the TM.

        Any argument that quasi private rights should apply only to pre-TM registration but to post issuance patent validity runs into McCormick, Am Bell, in addition to many land patent cases, as well as the more contemporary SCOTUS cases identifying patents as property generally.

        Additionally, the use of quasi private rights is not intended to create a third category. Instead, its usage applies to certain rights that, on their surface, appear to be private (for example, the legal review process of a pre issuance IP right) but nonetheless are public. If you review the public rights case law, you will see that question is in fact whether a right is public or private. There is no special third category for “quasi private rights” – offhand, I believe the Thomas decision explains this further.

        This is where the franchise and privilege distinction runs into a wall as well. It doesn’t exist in the US constitutional case law, and comes from an antiquated English system that predates the formation on our own.

        Some may argue that the public rights doctrine in fact was created in response to these vaguer elements empowering English totalitarian rule.

        1. There is no special third category for “quasi private rights”

          Sure there is.

          That’s the thing about abstractions: all you need to do is define them and voila! They “exist.”

          Rights that have features in common with private rights (e.g., you can transfer them) and features in common with public rights (e.g., the right can be taken away by the granting agency upon demonstration that it was improvidently granted) can fairly be called “quasi private rights.” You could also call them “blended rights”.

          Oh my! I just innovated all over the patent system. Maybe I should store the analysis on a computer and file a patent.

    2. Once granted, the TM right becomes private – as explained by Thomas in the excerpted text.

      I do not think that this is an accurate characterization of the cited text. Thomas does not distinguish between pre-grant and post-grant. He distinguishes between the exclusive right to use a mark, and the registration of that mark on the federal register. In other words, Congress can entrust the administration of a registration to the Art. III courts, or Congress can, at its discretion, entrust that matter to an Art. I agency, or Congress can entrust the question of registration to both.

      The only thing that Congress cannot do vis-à-vis trademarks is entrust the determination of an exclusive right to a mark to an Art. I agency.

      Applying the analogy to patents, Congress can entrust determinations of validity to an Art. I agency (validity being the analogous category to statutory registrability), but Congress cannot entrust determinations of infringement to an Art. I agency.

      1. The significance of the BB Thomas / Scalia dissent is that 2 Justices of the Court sua sponte raised TTAB constitutionality concerns.

        It is surprising that, in light of this dissent, no one on the TM side has raised the issue.

        1. The significance of the BB Thomas / Scalia dissent is that 2 Justices of the Court sua sponte raised TTAB constitutionality concerns.

          Once again, I cannot agree with this characterization of the Thomas dissent. Justice Thomas did not suggest that there is anything constitutionally infirm about having the TTAB decide registrations. Quite the contrary. He said that “no one disputes that the TTAB may constitutionally adjudicate a registration claim.” 135 S. Ct. at 1317.

          The only thing that he found constitutionally troubling was allowing the fact-findings from the TTAB to be binding on Art. III courts under preclusion doctrines. As long as TTAB fact-findings do not impinge on Art. III courts, Justice Thomas considers the TTAB to be right as rain.

          Once again, to extend the analogy to patents, this would imply that Justice Thomas would be fine with the PTAB determining patentability, so long as its fact-findings about the meanings of claim terms (or suchlike) was not binding on Art. III courts that might be handling infringement cases. As it happens, PTAB claim construction is explicitly not binding on Art. III courts, even under B&B Hardware, so this is not much of a concern (although I cannot agree with Justice Thomas’ concerns in any event. I thought that Justice Alito got B&B Hardware correct).

          1. Greg – I think we are in agreement. Thomas explains that though the resignation process has the appearance of a legal proceeding between an individual and an agency, this “quasi private right” is nonetheless a public right and thus Article I adjudication is fine at the registration stage.

            Post registration infringement (which was at issue in BB) however is – per at least Scalia and Thomas – questionably before the TTAB.

  12. The issue does not go away, Dennis, because it is manifest that the Federal Circuit once again is refusing to follow controlling Supreme Court authority.

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