CPIP Founder Adam Mossoff filed an amicus brief today on behalf of 27 law professors in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, a patent case pending in the Supreme Court. Oil States is challenging the constitutionality of proceedings at the Patent Trial and Appeal Board (PTAB) to determine the validity of an issued patent. The challenge is based on the use of executive branch judges and the lack of a jury to adjudicate private property rights.
The adversarial proceedings at the PTAB include inter partes review, post grant review, and covered business method patent review. Each of these proceedings begins when a private party petitions the PTAB to cancel some or all of an issued patent’s claims. If instituted, proceedings run through a “trial” in front of Administrative Patent Judges (APJs). Trials resemble court litigation in many aspects, including discovery, depositions, and oral hearings, but lack many of the procedural protections found in federal court. As a recent white paper co-authored by Professor Mossoff explains, the differences between the proceedings further demonstrate how the PTAB systematically undermines the rights of patent owners.
Importantly, the PTAB is a part of the Patent and Trademark Office, an executive branch agency. It is not part of the judicial branch established by Article III of the Constitution. Historically, the validity of an issued patent—a private property right—could only be challenged in an Article III court. When Congress created the PTAB in 2011, it undermined the long-standing protections afforded to private property owners by the Constitution by sending these disputes to an executive branch body.
The law professors’ brief details the historical precedent demonstrating that patents are private property rights. Patents were understood as private property rights when the Constitution was adopted, and that understanding continues to this day. This has important implications for the constitutionality of PTAB proceedings. In particular, private property owners have the right to have their disputes decided by a jury in front of an Article III judge. The PTAB offers neither a jury nor Article III protections, and it is therefore unconstitutional.
The summary of argument from the amicus brief is copied below. To read the amicus brief, please click here.
SUMMARY OF ARGUMENT
The decision by the Court of Appeals for the Federal Circuit directly contradicts this Court’s longstanding case law that secures constitutional protections for private property rights in patents. The Petitioner fully addresses the specific legal and constitutional issues concerning these private property rights protected under the Seventh Amendment. Amici offer additional support by identifying the substantial case law from this Court and lower federal courts reaching back to the early American Republic that patents are private property rights secured under the Constitution. Thus, the Federal Circuit is mistaken in concluding that patents are “public rights” that exist solely at the administrative prerogative of the sovereign, a key legal premise in this case and in many others since the Federal Circuit’s decision in MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1293 (Fed. Cir. 2015). This mistake has infected many of the Federal Circuit’s decisions affirming actions by the Patent Trial & Appeal Board (PTAB) at the United States Patent & Trademark Office. This is a predicate issue underlying whether the Seventh Amendment or any other constitutional provision or doctrine applies to the private property rights in patents, and thus it must be resolved in this case.
This Court has long recognized and secured the constitutional protection of patents as private property rights reaching back to the early American Republic. Just two terms ago, this Court confirmed the continuing vitality and relevance of the revered legal proposition that patents are private property rights in Horne v. Department of Agriculture, 135 S. Ct. 2419, 2427 (2015) (Roberts, C.J.), in which the Court approvingly quoted one of its own nineteenth-century decisions that “[a patent] confers upon the patentee an exclusive property in the patented invention which cannot be appropriated or used by the government itself, without just compensation, any more than it can appropriate or use without compensation land which has been patented to a private purchaser” (quoting James v. Campbell, 104 U.S. 356, 358 (1882)). This Court also held seventeen years ago that patents are property rights secured under the Due Process Clause of the Fourteenth Amendment. See Fla. Prepaid Postsecondary Educ. Expense Bd. v. Coll. Sav. Bank, 527 U.S. 627 (1999) (holding that patents are property rights secured under the Due Process Clause of the Fourteenth Amendment).
To establish the extensive and binding historical case law that supports this Court’s recent decisions affirming the private property rights in patents under the Constitution, amici detail these nineteenth-century cases. These decisions are overwhelming evidence for the public meaning in early American courts that patents are private property rights protected by the Takings Clause and Due Process Clause. See Adam Mossoff, Patents as Constitutional Private Property: The Historical Protection of Patents under the Takings Clause, 87 B.U. L. Rev. 689, 700–11 (2007) (discussing this case law). Congress explicitly endorsed this case law in the 1952 Patent Act in codifying the legal definition of patents as “property” in 35 U.S.C. § 261. See Adam Mossoff, Exclusion and Exclusive Use in Patent Law, 22 Harv. J. L. & Tech. 321, 343–45 (2009) (discussing the text and legislative history of § 261 as “codify[ing] the case law reaching back to the early American Republic that patents are property rights”).
Respondent and its supporting amici will likely argue that the public (or its delegated agents in the government) has an interest in the validity of a patent given that it is a property right granted and secured under federal law, and that this interest is sufficient to classify it as a “public right” on par with other modern regulatory entitlements. See MCM Portfolio, 812 F.3d at 1292-93 (citing only modern administrative law cases). But this assertion proves too much; it is a truism about all private rights. As James Madison recognized in The Federalist No. 43, “the copyright of authors had been solemnly adjudged, in Great Britain, to be a right of common law,” and that the “right to useful inventions seems with equal reason to belong to the inventors.” The Federalist No. 43, at 271-72 (James Madison) (Clinton Rossiter ed., 1961). As with all private rights, such as the rights to liberty, property, and contract, Madison concluded that “the public good fully coincides in both [patents and copyrights] with the claims of individuals.” Id. at 272.
Any appeal to a highly generalized “innovation policy” goal in the patent system is not a coherent ground in policy or law for defining an entire class of private property rights as “public rights.” First, it directly contradicts the weight of this Court’s longstanding decisions to the contrary, holding that patents are private property rights. Second, it contradicts this Court’s recent discussion in Stern v. Marshall, 131 S. Ct. 2594, 2612 (2011), that the “public rights exception” does not apply to matters of “private right, that is, of the liability of one individual to another under the law as defined” (quoting Crowell v. Benson, 285 U.S. 22, 50 (1932)). In their alienation in the marketplace (via license or assignment) and in their enforcement, patents are quintessential property rights in which rights and liabilities exist solely between individuals “under the law as defined.” Id. The fact that patents are uniquely federal property rights, whereas most other “property interests are created and defined by state law,” Butner v. United States, 440 U.S. 48, 55 (1979), is a distinction without a difference under this Court’s binding case law reaching back to the early American Republic.
The Federal Circuit’s decision in this case directly conflicts with both modern and long-established decisions on the constitutional protection of patents as private property rights. The result of this contradiction with this Court’s jurisprudence on patents has a far-reaching, negative impact for the protection of all “exclusive property” under the Constitution. James, 104 U.S. at 358. The Court should reaffirm expressly its extensive case law that patents are private property rights, which are secured as such under the Constitution, and reverse the Federal Circuit’s contrary decision.