Zoltek Patent Takings Rehearing Denied: No Fifth Amendment Protection

Zoltek v. U.S. (Fed. Cir. 2006, en banc denied).

Just last week, Patently-O highlighted Professor Mossoff’s historical analysis of patent-takings jurisprudence.  That article took the CAFC to task for its continuation of the untrue myth that “patents were never secured as constitutional private property in the nineteenth century.”  In fact, argues Mossoff, “nineteenth-century courts applied the Takings Clause to patents, securing these intangible property rights as constitutional private property.” “It is time to set the historical record straight.”

Mossoff’s article was prompted by the April 2006 decision in Zoltek v. U.S. In that case, the CAFC found itself bound by the 1894 case of Schillinger v. United States where the Supreme Court ruled that a patent holder could not sue the government for patent infringement as a Fifth Amendment taking.

In Schillinger v. United States, 155 U.S. 163 (1894), the Supreme Court rejected an argument that a patentee could sue the government for patent infringement as a Fifth Amendment taking under the Tucker Act. Schillinger remains the law.

 With a petition for rehearing, Zoltek gave the CAFC another shot.

Without opinion (as is usual in denials), the petition for rehearing was denied.  However, two opinions were released.  Judges Dyk and Gajarsa filed a concurring opinion arguing first that there is no need for a taking claim because private parties already have a right to sue the government for unauthorized patent infringement under 28 U.S.C. § 1498. Second, the two judges argue that because patent rights are created by relatively recent federal statute, it is difficult to characterize limitations of those rights as a “taking of established property rights.”  

In dissent, Judge Newman laid out the holding in simple terms:

The panel majority holds that there is no jurisdiction [in any court] of a Takings claim for compensation for unauthorized use by the government of a patented invention. This ruling is contrary to decision, statute, policy, and constitutional right. I must, respectfully, dissent from the court's endorsement of this ruling.

 Judge Newman finds that the majority decision only makes sense if we reject the premise that patents are property.

Supreme Court Next: Judge Newman’s set this case up nicely for Supreme Court review on the issue of takings and more broadly what is meant by intellectual property.


15 thoughts on “Zoltek Patent Takings Rehearing Denied: No Fifth Amendment Protection

  1. 15

    Is it a taking if the USPTO fails to protect the file during a district court hearing and 50+ pages are purged from the file, thereby denying due process to the patent holder?

  2. 14

    At this point, I am not necessarily convinced that Judges Newman’s and Plager’s views of Zoltek’s Fifth Amendment implications are on target.

    But I am disappointed at the very least that the concurring and majority opinions never even once mention 35 U.S.C. 261 (“patents shall have the attributes of personal property”), let alone come to grips with its possible implications as to Zoltek.

  3. 13

    Concuring with MS,I again bring attention to another pesky little statutory word “others”,as in “the right to exclude others from making, using..” and so on . It’s also there right on the cover of the patent. Not “most” others, or “some” others but “others”(which I assume includes everyone other than the patent holder, and that includes Uncle Sam).
    Funny, I don’t see the asterisk.

    Perhaps I ought to go into the landlord business, renting an apartment (exclusive rights to inhabit) but allow me, and only me, the right to crash there on nights I can’t make it home.

  4. 12


    Yes, there are those “legal eagles” who equate the mere existence of 1498 as proof of a statutory hold-back of “rights” for the benefit of Uncle Sam. Unfortunately, they keep overlooking that pesky little word “exclusive” in Article I, Section 8.

  5. 11

    In response to MR’s post, I concede that the rules for intellectual property are difficult to fully analogize. Your point is that the government has not fully taken away the entire right, that is, the government is not claiming that it can exclude everyone else and that you cannot. The government is taking, if you will, only a small stick in the bundle of sticks — the specific right to exclude the government.

    The immediate example that comes to mind for your test is regulatory takings. The government can regulate the use of your land (by zoning laws, for example), without a takings claim, unless the regulations are so intrusive that they destroy all economic value for the land. But patent infringement is not like a regulatory taking.

    Rather, patent infringement is very much like a physical invasion of physical property. It is as if the government regularly takes your car for a drive or camps in your yard. That would be common law trespass–also a tort. But in takings law it is clear that a physical invasion, even if confined to government agents, is also a taking of the property in addition to a tort. The government cannot avoid a takings claim by saying that only government employees camp out in your yard and you can exclude anyone else you wish.

    Zoltek, it appears, rests on the premise that the patent, when granted by the government, always reserved the right of government agents to camp out over the patented property.

  6. 10

    To respond to both commenters who disagree with me, I stand by my comment (subject to my clarification about use of the patent – obviously the patent is not a right to use).

    The reason I stand behind my comment is that while I believe patents, copyrights, and other IP are “property” for the purposes of takings, the exclusive rights are statutory because there is no other way to have exclusivity of an intangible asset.

    As a result, infringement is not theft, it is a tort. There are rules that govern the tort, such as where the steps in a method are performed, such as intervening rights, such as use by doctors, such as fair use. Are these rules a taking? Of course not.

    Thus, when someone infringes, it does not diminish the right to enforce those rules against others. Sure, there may be damage due to the infringement, but the “property right” is still there to enforce against others.

    As a result, one must completely (or nearly completely, perhaps) remove the right to enforce the patent in order to have a taking. Simple infringement just won’t do it.

  7. 9

    A few responses:

    1. “Infringement does not diminish use or ownership by the owner”. This sentence makes a common mistake in understanding what a patent is. A patent is not the right to use the invention, it is solely the right to exclude others from using the invention. You can be blocked from using your own invention if someone has a patent over an underlying step or component.

    Viewed in this lens, of course government infringment diminishes the property. Instead of excluding everyone in the US, you exclude everyone less the government.

    2. There is a Supreme Court patent state sovereign immunity case. It was from Florida.

    3. The takings clause applies to personal property.

    4. We can never know for sure what the en banc vote was. But my guess is that Judge Newman was the only person who voted for it. Judge Plager is listed but only active judges vote on en banc petitions.

  8. 8

    Does anyone know whether the Takings Clause applies to personal property in addition to real property. If the Takings Clause applies to personal property, then it may apply to intellectual property. If the Takings Clause does not apply to personal property, then the basis for not applying the Takings Clause to personal property may also be the basis for not applying the Takings Clause to intellectual property.

  9. 7

    I wish they’d publish the vote count in the en banc vote. I’d be interested in knowing how many votes the petitioners got.

    Obviously, they got Judge Newman’s vote. Judge Plager dissented from the original opinion, so he may have voted for rehearing en banc.

    As for the others, with the exception of Judges Gajarsa and Dyk, I don’t think we’ll ever know, unfortunately.

  10. 6

    To clarify, published applications, under the AIPA, can be used as prior art as of their earliest filing date. It has always been the case that publicly available publications have been considered prior art, but only issued patents were prior art from their filing date. Under the AIPA, published applications can be used as a prior art reference from their filing date regardless of whether they ever mature into patents.

  11. 5

    Q: When is property not really property?

    A: When it is intellectual property.

    Yet another case eroding the rights of intellectual property owners.

  12. 4

    A profound example of a 5th amendment taking, as it relates to patent law, is the little-known change that was made to the American Inventor Protection Act (AIPA) in an amendment to the law signed in late 2002. Essentially, what the amendment did (among other things) was to retroactively apply the new class of 102(e) prior art (published applications) to patents that were pending when the original AIPA went into effect two years earlier.

    The problem is that patents that were pending when the original AIPA went into effect, were specifically exempted from having this new type of prior art (created by the AIPA) used against them. In fact, those who had pending applications at that time, were given the option to have their applications voluntarily published, in which case they would be entitled to retroactive royalties from the publication date (if the patent ultimately got issued with the claims intact) but, in agreeing to the voluntary publication, they would also be agreeing that this new class of prior art could be used against their application. Those who did not voluntarily publish could not receive retroactive royalties, nor could published applications be use against them as prior art. In other words, they were grandfathered under the old rules.

    Two years latter, buried in a technical amendment, was language that went back in time and “ungrandfathered” those applications REGARDLESS of whether or not they were voluntarily published. This has created a situation in which patents that issued on applications that were pending in November of 2000, could have been perfectly valid under the law that was in place when the patents issued, but became invalid as a result of a new law that went into effect LONG AFTER the applications were filed, and as long as TWO YEARS AFTER THE VALID PATENTS WERE ISSUED. That is because the law was retroactively applied to them. This created a statutory basis to revoke an existing private property right without compensation.

    Introducing the novel concept (and oxymoron) of FUTURE PRIOR ART! Not to be confused with secret or unknown prior art, future prior art DID NOT EXIST as statutory prior art when these applications were filed, and could not be used against these patents when they issued. Talk about changing the rules AFTER the game has been played!

    And what was the overriding public interest served by this change in the law? No longer would the patent office need to distinguish between the “grandfathered” applications filed prior to the AIPA, and the applications filed after the AIPA, when applying a 102(e) reference against a patent or an application. In other words, it just made them feel better to be able to apply a 102(e) reference equally to every application and every existing patent.

    If this is not a law that unconstitutionally creates a legal basis to revoke an existing property right…then what is? I hope and expect that this blatantly unfair law will be shot down by the courts when challenged.

  13. 3

    I cannot grasp what Michael’s point is. Infringement doesn’t diminish the patent? By what reasoning? This is a confusion between the actual invention and the patent, only the latter of which can be infringed.

    When the patent protected monopoly is compromised, the patent is inherently diminished and with that its value is diminished. Everything about a patent is securing that monopoly. I guess it all comes down to what the definition of “diminish” is…

    I am not sure the use of “taking” should be taken so literally (pun intended). One can take something from someone in the abstract, leaving that person either still in possession of that thing (or not) or leaving the taker in possession of that thing (or not). Think of issues of water rights in the past for the former, while for the latter the taking of civil rights, where the taker however does not own what is taken (nor can use it).

  14. 2

    Clarification – by “use” I don’t mean literally the right to use (for a patent at least) since that is not an enumerated right, though the use right would apply for copyrights.

    Instead, I mean it’s a public goods problem – infringement doesn’t diminish the original, though there may be damage in other ways.

  15. 1

    I’ll have to read Professor Mossoff’s article, but so far I’m not buying the argument that government infringement is a taking.

    1. Infringement does not diminish use or ownership by the owner (which is why we have to have intellectual property in the first place). Thus, citation to Ruckelshaus is inapposite – there, the disclosure of the information destroyed the trade secret altogether, and even in that case the court ruled that certain disclosures were not a taking.

    2. There is a remedy for infringement by the government. If the governmental use isn’t infringement, why should it be a taking?

    3. The takings view cannot be reconciled with precedent that states are immune from copyright infringement liability (not sure if there is a patent case).

    4. How do you value the fair value of the property is the taking is incomplete?

    All this said, I suspect that you could have a taking of a patent – the government could condemn the patent and take away ALL rights of the patentee, which would be a real taking.

    Just my first reaction – don’t know if it holds up to scrutiny.

Leave a Reply

Your email address will not be published. Required fields are marked *

You can click here to Subscribe without commenting

Add a picture