McClurg v. Kingsland, 42 U.S. 202 (1843) – Shop Rights and Retroactive Patent Statutes

by Dennis Crouch

In Arthrex, Inc. v. Smith & Nephew, Inc., 935 F.3d 1319 (Fed. Cir. 2019), the patentee (Arthrex) argued that the inter partes review is an unconstitutional due process violation when applied retroactively against pre-AIA patents. The Federal Circuit rejected the basis for the argument — Although Arthrex filed its patent applications prior to passage of the AIA, the patent issued afterward. In somewhat cryptic analysis the court worte:

That Arthrex filed its patent applications prior to passage of the AIA is immaterial. As the Supreme Court has explained, “the legal regime governing a particular patent ‘depend[s] on the law as it stood at the emanation of the patent, together with such changes as have since been made.’” Eldred v. Ashcroft, 537 U.S. 186, 203 (2003) (quoting McClurg v. Kingsland, 42 U.S. 202, 206 (1843)). Accordingly, application of IPR to Arthrex’s patent cannot be characterized as retroactive.

Id. The two cases cited by the Federal Circuit here are interesting.

McClurg is best known as the case establishing “shop-rights doctrine.”  In the case, the inventor (Harley) created a mold for casting metal cylinders so that the strongest material was toward the outer wall. Harley made the invention while on the job for the defendant Kingsland and Kingsland continued to use the invention for some time with without objection from Harley. Meanwhile, Harley obtained a patent and assigned it to McClurg who later sued Kingsland for infringement. The Supreme Court explained that such a situation created an implied license:

The Circuit Court … held that the defendants might continue to use the invention, … that they might presume a license or grant from Harley.

McClurg v. Kingsland, 42 U.S. 202 (1843).

In Arthrex, the focus on McClurg is for a different reason — congressional plenary power to legislate in the area of patent law — even retroactively.

The inventor in McClurg (Harley) obtained his patent in 1835 – a few months before passage of the Patent Act of 1836 that constituted a major revision of U.S. Patent Law.  By its terms, the new law applied to old patents (with a few exceptions) but the case challenged whether Congress had the power to take such action.  And the Supreme Court offered strong words allowing for Congress modify the law of patents without any restraint:

Whether [the appeal is] well taken or not, must depend on the law as it stood at the emanation of the patent, together with such changes as have been since made; for though they may be retrospective in their operation, that is not a sound objection to their validity; the powers of Congress to legislate upon the subject of patents is plenary by the terms of the Constitution, and as there are no restraints on its exercise.

Id. This is the portion of the decision that is quoted by the Supreme Court in Eldred and again in Arthrex. I should note that the court actually goes on to put a pretty big caveat on congressional plenary power (as mentioned justice Stevens dissent in Eldred):

… so that they do not take away the rights of property in existing patents. . . . This repeal, however, can have no effect to impair the right of property then existing in a patentee, or his assignee, according to the well-established principles of this court in 8 Wheat. 493 [a real property case]; the patent must therefore stand as if the acts of 1793 and 1800 remained in force; …

Putting these two portions of the case together, it becomes clear that Congress is free to change the laws, and have those laws be retroactive nature so long as it does not impair the property right already granted.  This caveat is a substantially more nuanced than what the Federal Circuit decided in Arthrex.

Patentee Cannot Escape Estoppel via Pre-IPR-Institution Disclaimer

The Federal Circuit decided this case in August 2019.  Arthrex recently petitioned for en banc rehearing raising again the constitutional question and noting that Eldred + McClurg were focusing on permissible retroactive congressional expansion of rights, not impermissible degradation.

18 thoughts on “McClurg v. Kingsland, 42 U.S. 202 (1843) – Shop Rights and Retroactive Patent Statutes

  1. 6

    Retroactivity goes back further than 1843. See U.S. v. The Schnoor Peggy, 1 Cranch 103 (1801), which is cited in a footnote on that point vis a vis suspension of habeus corpus during the Civil War in the 1973 2nd edition of Hart & Wechler’s text on federal jurisdiction.

    1. 6.1

      A (very) late edition here (hung up in editorial controls…?), this post dated Oct 25 only shows up on Nov 2.

      Sorry Colton, your post is just not likely to generate any discussion now.

  2. 5

    Those 19th century cases have new lives with new times. I wonder where Alice will be in 2114.

    1. 5.1

      ” I wonder where Alice will be in 2114.”

      Long dead, gone, and forgotten.

    2. 5.2

      …running joke of how a the Judicial Branch can get all out of control.

  3. 4

    In this case, the patent owner itself gave up its patent rights in its claim disclaimers. Should not the issues here include asking what is the legal effect or PTO policy [besides Rule 56] re claim disclaimers in a patent on similar claims in related pending applications when there is no IPR? In particular, where the disclaimer was in response to prior art uncovered by a potential licensee or D.C. defendant and disclosed to the patent owner?

    1. 4.1

      Paul,

      You ask an excellent question with:

      what is the legal effect [ ] re claim disclaimers in a patent on similar claims in related pending applications ” (leaving out Executive Branch policy which carries no substantive weight).

      On the one hand, in a dogmatic sense, every claim may stand on its own (within a patent, let alone across patent family members), but on the other hand, in a pragmatic sense, the “smoking gun art” still exists no matter the claims or family structures.

      I suppose that it would come down to a mix, with the dogmatic foreclosing any “per se” application of the “smoking gun” art and directing an analysis of level of nuances in the sets of similar claims.

      The existence and level of the presumption of validity necessarily comes into play as well, which then would be evaluated against the specific words (and scope) of the disclaimer.

      Such may or may not be a protracted battle.

  4. 3

    While the article discusses Congressional plenary power (based on the direct Constitutional allocation of authority), one has to wonder in this modern age if there is a “nuance” of Judicial Plenary power directly in view of patent law.

    (but take this in view of Separation of Powers – a concept that does seem to get in the way of several of those who don’t care about proper Means in order to get to a desired Ends)

  5. 2

    I should note that the court actually goes on to put a pretty big caveat on congressional plenary power: [protections in the Constitution for real property]”

    As has been noted previously.

  6. 1

    How do you guys think it’d affect patent/prosecution quality if RCEs were handled by fresh examiners? Here are some potential impacts I see.

    -Prosecution should be somewhat more expensive (RCEs have some marginal cost savings for the PTO).
    -The incentive for examiners to push for RCEs would be eliminated.
    -Fresh examiners would be more likely to do a complete new search during RCE.
    -Fresh examiners would be less likely to perpetuate bad rejections and more likely to catch a previously missed proper rejection.
    -Examiners would know that a peer will be reviewing EVERY application which goes to RCE.
    -In practice, examination quality might go down from each examiner having less time with a given application under RCE, and less overall time from the elimination of RCEs padding examination time for other cases (But this contradicts fundamental PTO dogma: the balanced disposal credit is sufficient to fully examine an application. So it doesn’t count!).
    -Office wide patent quality consistency should increase (Assuming there is a spectrum of examiner stringency, exposure to multiple examiners during prosecution should narrow the window of aggregate results.).

    Seems like a net benefit from the limited effects I could think of. What am I missing? Should the PTO make this change?

    1. 1.1

      Is this something actually under consideration in the Office, Ben?

    2. 1.2

      The patent applicant should be given a limited-time choice (say, 30 days) to specify whether to have the current examiner handle the RCE, or for it to be assigned to another.

      In this way, if the applicant believes an allowance is or may be close at hand, working with the current examiner — who knows the case intimately — is the best path for both parties.

      But if the applicant believes that an allowance is highly unlikely to be obtainable with the current examiner, than fresh eyes would be the best way forward — for both applicant and the patent office.

      1. 1.2.1

        That would give applicants an overt ability to reward/punish examiners, which goes a bit far I think. Wouldn’t it be enough of an improvement to get a second set of eyes on the second round? Nothing will get done as long as everyone is being Veruca Salt.

        I think this could be taken further. Have every action be assigned to random examiner in the appropriate AU. You could craft a system where examiners act as a quality check against other examiners. If I’m able to go final, the previous examiner gets some production credit. If I go final without additional search/art, even better! If I’m unable to go final, previous examiner gets no credit/loses credit, and you flag it as needing formal review. The count system would have to be significantly adjusted, and total examination time would probably go up a bit. But I think it would greatly improve quality!

        Doesn’t seem to be much interest in the idea though.

        1. 1.2.1.1

          That sounds more like “scratch my back and I will scratch yours as a group of foxes are asked to watch the henhouse together.

          1. 1.2.1.1.1

            That is a reasonable initial criticism, but I think upon further consideration is should be set aside.

            The proposed system is contrasted by the current system where only a tiny fraction of actions are reviewed. Don’t let “perfect” be the enemy of “better”. In no way should this reduce current oversight of examiners.

            If only 30% of examiners acted in good faith (which seems absurdly pessimistic to me) there would be a massive increase in work product review. I suspect that many more than 30% of examiners would be vigorous in their reviews because ultimately they have to put their names on the new office action. “The previous examiner did it…” would not be an excuse for subsequent examiners.

            1. 1.2.1.1.1.1

              Except it would be — which is rather the point of the “scratch back” trade-off comment.

              Your request to set aside is not granted. The point very much remains on the table.

              1. 1.2.1.1.1.1.1

                anon: “Nuh-uh”.

                Thanks for reminding me to ignore you for a bit.

                1. You choose to ignore someone that points out that your counter is deficient…

                  Your tendency to build your own little bubble land of confirmation bias is noted.

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