Will Cruz act to protect property rights, Constitution at Supreme Court?

By Gene Quinn
January 19, 2016

Ted CruzOur founding fathers deemed patent rights so vitally important to the success and stability of our new country that these rights were written into the Constitution, a document not generally known for its length and specificity. Indeed, James Madison noted in Federalist Paper No. 43, the usefulness of the power given the Congress to award patents “will scarcely be questioned.” Moreover, President George Washington during his first State of the Union speech, which was a mere 1,096 words, implored Congress to pass the nation’s first Patent Act with all due haste.

The Patent Act itself clearly and unambiguously states that patents are property. See 35 U.S.C. 261. Unfortunately, this property right of Constitutional significance has increasingly come under attack over the last decade. While one may be able to debate substantive patent law changes as being good or bad, numerous procedural laws and regulations have struck at the heart of fundamental fairness to the point where the due process rights of patent owners have been significantly impaired if not completely eroded.

During the Republican Presidential Debate on Thursday, January 14, 2016, Senator Ted Cruz (R-TX) said that throughout his career he has steadfastly defended the Constitution before the Supreme Court and promised to continue that defense at all costs. With the Supreme Court accepting Cuozzo Speed Technologies v. Lee, there is an opportunity for Senator Cruz to take a pro-patent, pro-property right stand at the Supreme Court.

Cruz, a former Texas Solicitor General, has not been bashful about participating in Supreme Court cases, having authored more than 80 Supreme Court briefs, while arguing nine cases before the Supreme Court. One of those cases Cruz argued was a patent case in which he successfully represented a patent owner in an infringement matter against the supplier of a knock-off product. See Global-Tech Appliances, Inc. v. SEB S.A. The ideologically conservative Cruz prevailed for the patent owner 8-1, even managing to persuade Justices Breyer, Ginsburg, Sotomayor and Kagan, all whom are his ideological opposites. Only Justice Kennedy dissented.

The issues that will be decided by the Supreme Court in Cuozzo relate to the new administrative procedures created by the America Invents Act (AIA), which have made it easier to strip patent owners of issued patent rights without any of the safeguards guaranteed to the patent owner in a federal district court proceeding. The AIA, supported and signed by President Barack Obama, created the Patent Trial and Appeal Board (PTAB), which is an administrative tribunal at the United States Patent and Trademark Office (USPTO). This administrative tribunal has striped patent property rights away from patent owners to the point where some have characterized PTAB as a “death squad.”

The first Chief Patent Judge of the PTAB publicly wore this “death squad” moniker as a badge of honor, telling the Patent Public Advisory Committee that if the PTAB were not “doing some death squadding” they would not be doing their job. Given that judges, including Article II administrative judges, are supposed to be impartial, this candid admission has to call into question the impartiality of tribunals and processes in place at the USPTO.

In proceedings at the PTAB patent owners are given no presumption of validity, in direct violation of 35 U.S.C. 282, which promises a presumption of validity for issued patents. Patent claims are also interpreted using the broadest reasonable interpretation, which is the standard used during examination of an application prior to issuance of a patent as a property right. Even more disturbing, when patent property rights are being striped in these one-sided post grant trials they are being taken away by an Article II tribunal with certain of the decisions made by that Article II tribunal insulated from judicial review. See e.g. 35 U.S.C. 314(d). Insulating executive decisions from judicial review at the very least violates the spirit of checks and balances embodied in the Constitution, and should raise serious Constitutional questions when property rights are at stake.

These and many other procedural peculiarities make the PTAB an extremely inhospitable forum for those who own property. For example, it is difficult to comprehend under what authority the PTAB refuses patent owners the right to amend in an inter partes review (IPR) when 35 U.S.C. 316(d) specifically grants the right to amend. Similarly, 35 U.S.C. 313 gives patent owners the right to file a preliminary response to an IPR, but the USPTO prohibits the submission of testimonial evidence and confines patent owners to the record submitted by the challenger seeking to strip the property right away from the patent owner. Indeed, at every turn the regulations are written to favor the challenger and not the owner of the property right that is statute supposed to be presumed valid.

Without either substantial legislative fixes, or a new Administration that orders a new Director of the USPTO to rewrite post grant regulations, no single case could undue the significant damage that has been done to the U.S. patent system by the creation of the PTAB and post grant proceedings. That being said, Cuozzo does offer an excellent opportunity to say enough is enough and fight to protect a Constitutionally critical property right our most respected Founding Fathers thought to be absolutely critical.

If this type of fundamental unfairness can be exerted by the federal government on behalf of a handful of tech companies that are well-known financiers of the Obama campaign, where will it end? The patent system needs a strong Constitutional conservative to stand up and fight the good fight.

The skeptical among us might ask: Why would someone running for President fight for a patent issue at the Supreme Court? The answer is simple. A principled Constitutional conservative fights government overreach wherever it is and whenever it happens.

Senator Cruz was not yet elected to the Senate when the AIA passed, so he did not have an opportunity to fight for patent property rights then. Cruz has since voted against currently pending patent reform on the Senate Judiciary Committee. “We have in our economy a particular obligation to protect innovators, the little guy inventing the next great invention that will change the world,” Cruz said during a hearing on the bill on June 5, 2015.

The patent system needs a champion who isn’t afraid to stand up and fight. Senator Cruz has a history of fighting to defend the Constitution. Will he do that once again, this time fighting for the patent system Madison and Washington knew America needed? Will he fight for patent rights so that they might, in the words of Abraham Lincoln, continue to add “the fuel of interest to the fire of genius”?

Call me crazy, but I have a strange feeling we may see an amicus filing by Senator Cruz in Cuozzo.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 29 Comments comments.

  1. Curious January 19, 2016 4:12 pm

    Call me crazy, but I have a strange feeling we may see an amicus filing by Senator Cruz in Cuozzo.
    It may be something you ate. Cruz is not filing an amicus brief. Cruz is doing the job of a politician — getting elected. While the issues of patent rights are important to those of us that frequent this Board, Cruz’s amicus filing (or lack thereof) while make a miniscule impact on Cruz’s ability to (i) secure the Republication nomination and (ii) win the general election.

    However, I will grant you that this article is written so as to be read by the “right” eyeballs.

  2. Gene Quinn January 19, 2016 4:20 pm

    Curious-

    Thanks for the last part of your comment.

    I’ll take Senator Cruz at his word until proven otherwise. In the debate he promised to continue to go to the Supreme Court and fight on matters of constitutional importance. Well here is one. Patents are property rights. The statute says it, and the Supreme Court has said it repeatedly. In fact, in the late 1800s the Supreme Court equated issued patents to property ownership in land. The Supreme Court also said that only an Article III court could strip patent rights away. Further, the Supreme Court has said that patents could not be taken without just compensation, similar to land.

    So this is a put up moment for Cruz. It is right up his alley and a very easy decision for a conservative to come out with a pro-property right position. And the spin from Cruz could be — I’m even willing to fight for a patent issue.

    -Gene

  3. BR January 19, 2016 6:37 pm

    Interesting thoughts Gene. Thanks.

  4. step back January 19, 2016 6:45 pm

    Gene @#2

    Wishful thinking.

    Just as wishful as when Prez Obama tells Biden to “make it so” in his Spirit of Innovation speeches.

    Just as wishful as when Justice Kennedy tells his hypothecated 2nd year engineering student to “make it so” (apply it) during the Alice oral arguments segment.

    The public doesn’t care about inventors or patents or reality. They don’t care about how the magic of technology appears at their local Walmart big box store. They just want to consume and be happy. They want the tech geeks to remain invisible and yet “make it so”.

    http://patentu.blogspot.com/2016/01/2016-spirit-of-innovation-includes-aia.html

  5. staff January 19, 2016 7:02 pm

    ‘this candid admission has to call into question the impartiality of tribunals and processes in place at the USPTO’

    Their impartiality should be no less questioned as a result of the secret SAWS program recently uncovered at the PTO which sought to delay and block issue of select patent applications. Obviously, the PTO is not impartial and cannot be trusted -certainly not to objectively rule on patent validity post grant.

    For more information please visit us at https://aminventorsforjustice.wordpress.com/category/our-position/
    or, contact us at tifj@mail.com

  6. step back January 19, 2016 7:42 pm

    Hey Staffer @#5

    Thanks for reminding us about the unlawful SAWS program carried out in secrecy at the USPTO.

    Some organizations are said to be “too big to fail” –and too powerful to jail.

    Other organizations are said to be “too expert and fair” to be reviewed (non-reviewable autocratic power) even if that means violating all the provisions in the US Constitution.

    It’s time for the voters out there to say, We the People, not you you and you self-anointed self-aggrandizing bureaucrats.

  7. Dave January 20, 2016 8:18 am

    In my view, the AIA passed and the USPTO in efforts to generate rules looked first to their workload and fees. They decided to go with extremely high fees and justified these high fees based on prior inter partes reexaminations. In their proposals, they looked to the workload of the CRU, which was based on reexamination in which 10, 20, even 100 new claims were added. Responses with exhibits exceeded 1000 pages in some instances. So, they justified the high fees. The USPTO also looked to curtail the practices that increased their workload during reexamination – lengthy responses and multiple new claims.

    The result, an expensive and severely limited proceeding favoring potential infringers.

    Prior to IPRs, a small innovator had some negotiating power based on potential District Court damages. Now, they face an strong and imminent threat at the USPTO.

    We need a leader that recognizes what our founders recognized.

    Couple this with Alice’s impact on software innovation – it’s a real mess. Alice?? Really? Have we have a problem with patent holders tying up mental, abstract ideas, mathematical formulas – No! Patent holders only assert against those making real product with actual damages. The 101 issues should be handles on the backend when the mere use of an abstract idea is challenged.

  8. Edward Heller January 20, 2016 12:38 pm

    Gene, haven’t you heard, patents are not property. They are public rights. So sayeth the Federal Circuit.

  9. Edward Heller January 20, 2016 2:41 pm

    Gene: “Patents are property rights. The statute says it…”

    In all seriousness, if the status of being property depends upon an act of Congress, then that which Congress creates, Congress can destroy. That is actually the thinking of the Federal Circuit in MCM Portfolio LLC v. Hewlett-Packard.

    But consider the Article I, Section 8, which says that Congress has the power to protect discoveries of inventors with exclusive rights.

    Exclusive rights. Exclusive rights are the pith and essence of property, because a right in property is the right to exclude.

    Thus the only power to Congress has when it creates a patent that covers an invention is to create an exclusive right, and that exclusive right is the property of its owner.

    Under the consistent jurisprudence of the Supreme Court, Congress does not have the power to assign to a legislative tribunal the adjudication of the validity of a legal right, property. That is exclusively a matter for the courts.

    Also, the Supreme Court is already held that the adjudication of the validity of a patent for the purposes of revocation has a right to a trial by jury. Administrative revocation without access to a jury necessarily denies this jury trial right.

    Needless to say, I think patents are property because that is what the Constitution intended. Congress does not have the power to create anything other than property rights when protecting inventions.

  10. Anon January 20, 2016 4:49 pm

    Mr. Heller,

    Actually your statement is incorrect.

    There was no change in law at point of the property aspect of patents in the AIA, and you neglected to make that argument at any time in the MCM Portfoliio case.

    As I recall, this was pointed out to you both before and immediately after your oral arguments.

    Yes, you did talk about other things concerning property, but you did not discuss (and thus the court did not also discuss) 35 USC 261.

    Your views on those other things are explicitly not on point in the immediate comment.

  11. Edward Heller January 20, 2016 5:05 pm

    anon, the crafters of IPRs told Congress that patents were public rights and therefore the IPR procedure was constitutional. Perhaps all involved in that discussion did not understand that property rights and public rights are mutually exclusive. But that being said, the Federal Circuit is now three times ruled that patents are public rights.

    I hope you do understand that patents cannot be both private property and public rights at the same time. One has a constitutional right against taking by the government, the other does not. One has a constitutional right of enforcement in a court of law. The other does not. One has a jury trial right before it can be taken or revoked. The other does not.

    If a patent is property only at the say so of Congress, then it is a public right — and it has only the rights given by Congress and no constitutional rights at all.

  12. Night Writer January 20, 2016 5:05 pm

    Cruz will be bought off by big corporations like Google like all the other politicians. In fact, oddly, I think our only hope of a patent system is Sanders. He is the only one that gets that Citizens United is job one.

    Reality: money, money, money. Google is a monopoly. Google wants to stay that way.

  13. Edward Heller January 20, 2016 5:07 pm

    Night,, I could never trust a Socialist to care one bit about private property. Cruz would be crucified by his base if he did not support private property.

  14. Joachim Martillo January 20, 2016 6:01 pm

    I looked at the notes in the link to 35 U.S. Code § 261 – Ownership; assignment

    The first paragraph is new but is declaratory only. The second paragraph is the same as in the corresponding section of existing statute. The third paragraph is from the existing statute, a specific reference to another statute is omitted. The fourth paragraph is the same as the existing statute but language has been changed.

    What is the basis of this contention?

  15. Edward Heller January 20, 2016 6:20 pm

    Joachim, Marbury v. Madison, 5 U.S. 137, 2 L. Ed. 60, 2 L. Ed. 2d 60 (1803).

    “Where an officer is removable at the will of the executive, the circumstance which completes his appointment is of no concern; because the act is at any time revocable; and the commission may be arrested, if still in the office. But when the officer is not removable at the will of the executive, the appointment is not revocable, and cannot be annulled. It has conferred legal rights which cannot be resumed.

    The discretion of the executive is to be exercised until the appointment has been made. But having once made the appointment, his power over the office is terminated in all cases, where by law the officer is not removable by him. The right to the office is then in the person appointed, and he has the absolute, unconditional power of accepting or rejecting it.

    Mr. Marbury, then, since his commission was signed by the president, and sealed by the secretary of state, was appointed; and as the law creating the office, gave the officer a right to hold for five years, independent of the executive, the appointment was not revocable, but vested in the officer legal rights, which are protected by the laws of his country.

    To withhold his commission, therefore, is an act deemed by the court not warranted by law, but violative of a vested legal right.”

    Id. at 162.

    “In order to determine whether he is entitled to this commission, it becomes necessary to inquire whether he has been appointed to the office. For if he has been appointed, the law continues him in office for five years, and he is entitled to the possession of those evidences of office, which, being completed, became his property.”

    Id. at 155.

    “The question whether a right has vested or not, is, in its nature, judicial, and must be tried by the judicial authority. If, for example, Mr. Marbury had taken the oaths of a magistrate, and proceeded to act as one; in consequence of which a suit had been instituted against him, in which his defence had depended on his being a magistrate, the validity of his appointment must have been determined by judicial authority.”

    Id. at 166.

    https://scholar.google.com/scholar_case?case=9834052745083343188&q=Marbury+v.+Madison&hl=en&as_sdt=2006

    Until reexaminations, Congress had not granted the USPTO the power to revoke an issued patent. But, by that act, Congress took away what it had granted, a vested legal right in one’s patent. Now, can Congress do that? That is the question — and why Article I, Section 8 is important to this discussion.

  16. Anon January 20, 2016 6:40 pm

    Mr. Heller,

    You are still conflating different arguments – and thus missing the understanding of the singular position that I offered.

    Another point is that the government CAN engage in takings. That in and of itself is NOT a constitutional issue.

    Your attempt to cloud on that issue (by making this some type of constitutional imperative) is unhelpful – and misses the actual constitutional dilemma: a taking without remuneration of any kind, and a taking without due process (here, I fold in the commentary on what happens at the separate initiation phase of the IPR process, quite apart from any decision on the merits post-initiation).

    I do “get” your separate constitutional argument.

    I wish that you would “get” that it is a separate argument.

    Joachim,

    The reference to “declaratory only” as far as the property aspect goes merely means that Congress was making sure that everyone knew that patents were actually property. I think that you might be trying to read something else into the comment, but I am not sure where you want to go with your view.

  17. Anon January 20, 2016 6:42 pm

    Mr Heller,

    Further, do you have any backing of the statement of “ the crafters of IPRs told Congress that patents were public rights and therefore the IPR procedure was constitutional.“…?

    I cannot find such a view anywhere in the congressional record or the commentaries thereof.

    Is this something that you yourself are adding after the fact?

  18. Edward Heller January 20, 2016 6:46 pm

    It was in HP’s briefs.

  19. Edward Heller January 20, 2016 6:47 pm

    Anon, I still think you are assuming a patent is property independent of Congress’s say so. But why is that?

  20. Anon January 20, 2016 7:22 pm

    Mr Heller @ 19.

    Please stop trying to conflate the different arguments. Take each one on its own.

    Thank you for the HP brief lead – it is correct then to say that such is NOT in the congressional record or commentaries thereof, right?

    You will forgive me if I do not give much credence to anything that comes from a brief that is not supported by the direct sources that I have studied.

  21. Edward Heller January 20, 2016 7:52 pm

    From the HP brief:

    “Congress in enacting the statute considered whether inter partes reviews would violate Article III and the Seventh Amendment, and observed that inter partes reviews, like reexaminations, involve public rights. See 157 CONG. REC. S5,374-76 (daily ed. Sept. 7, 2011) (letter from Hon. Michael W. McConnell). In his letter, Judge McConnell, a former member of the U.S. Court of Appeals for the Tenth Circuit and the current director of the Constitutional Law Center at Stanford Law School, explained that the reasoning in Patlex applied equally in the inter partes review context since both reexamination and inter partes review exist to correct governmental mistakes. Id. Inter partes reviews, like reexaminations, are authorized by federal statute and involve public rights, and therefore comply with Article III and the Seventh Amendment, for the same reasons set forth in Patlex and Joy Technologies, which are discussed infra. See 157 CONG. REC. S5,374-76.

  22. Edward Heller January 20, 2016 8:25 pm

    From the Congressional record:

    “Challenges to the
    reexamination process proceed on the theory that a patent is
    a vested right, which once granted may not be taken away, at
    least not by the agency that granted it. This is a
    fundamental misconception. If a party is issued a patent that
    does not comply with the patent laws–and the patent is
    therefore invalid–it is not a “taking” for either a court
    or the PTO to determine that the patent is invalid. Just as
    it is not a taking to determine that a person occupying land
    has a defective title to it, it is not a taking to determine
    that a patent holder never had a right to a patent in the
    first place.
    Unlike many other familiar forms of property, the validity
    of a patent is never determined once and for all; members of
    the public with competing or adverse interests have long had
    a continuing right to demonstrate, through reexamination
    before the PTO, that a patent was invalidly issued. And a
    party threatened with a patent infringement action has always
    had the right to seek to demonstrate that the patent is
    invalid, regardless of whether the same issue has been
    previously litigated in a different case. In other words,
    there is no such thing as “adverse possession” in patent
    law. The only change wrought by the proposed Act is to expand
    the grounds under which such reexaminations are made by the
    PTO in the first instance. As a constitutional matter,
    Congress is entitled to allocate the responsibility of
    determining whether a patent was properly granted to the
    courts or to the expert agency, in its discretion. As long as
    interested parties have the ultimate right to challenge the
    agency’s decisions in court, the administrative nature of the
    proceeding has no constitutional significance. Moreover, I
    see nothing in sections 6 and 18 of the proposed Act that
    would alter or interfere with existing principles of res
    judicata or collateral estoppel in the context of a final
    judgment, much less allow the PTO to disturb the final
    judgment of a court.

  23. Edward Heller January 20, 2016 8:29 pm

    Contd…
    “The Framers were also painfully aware of
    the propensity of governmental agencies and bureaucracies to
    err. They would not, therefore, have been surprised by
    efforts to ensure that patent rights may be exercised only
    when the underlying patent claim is valid and the patent was
    properly issued. That is why, from the beginning, patents
    have never been regarded as a fully and irrevocably vested
    right. As the Supreme Court has explained, the Patent Clause
    of the Constitution “is both a grant of power and a
    limitation,” and Congress’ actions
    must be directed to striking the balance between encouraging
    innovation and stifling competition through the grant of
    patents that do not promote “the Progress of . . . useful
    Arts. This is the standard expressed in the Constitution and
    it may not be ignored.” Graham v. John Deere Co., 383 U.S.
    1, 5 (1966) (internal citations and quotation marks omitted);
    see also Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489
    U.S. 141, 146-47 (1989).
    Patents are unquestionably property rights. Consolidated
    Fruit Jar Co. v. Wright, 94 U.S. 92, 96 (1876). However,
    unlike many property rights, the right to exclude under a
    patent “is a right that can only be conferred by the
    government.” Patlex Corp. v. Mossinghoff, 758 F.2d 594, 604
    (Fed. Cir. 1985). A patent is not a natural right, but solely
    a product of positive law; its extent, duration, and validity
    is a matter that must be determined by the legislative
    branch. In contrast with purely private rights, “the grant
    of a valid patent is primarily a public concern.” Id. In
    assessing the validity of a patent, the “threshold
    question usually is whether the PTO, under the authority
    assigned to it by Congress, properly granted the patent.”
    Id. As the Supreme Court recently reaffirmed, the
    statutory presumption of validity found in 35 U.S.C.
    Sec. 282, is a reflection of the presumption of
    administrative correctness by the PTO. Microsoft Corp. v.
    i4i Ltd. P’ship, — U.S. –, No. 10-290, slip op. 16-17
    (2011).
    Patents are issued after a limited, ex parte process in
    which the public has no opportunity to participate. The PTO
    largely only has before it the information provided by the

  24. Edward Heller January 20, 2016 8:30 pm

    contd…

    “inventor’s attorney. As a result, as courts have recognized,
    the PTO may not have all of the material information at the
    time it issues a patent. Therefore, although patents are
    presumed valid, “if the PTO did not have all material facts
    before it, its considered judgment may lose significant
    force.” i4i, slip op at 17.
    The validity of a patent is not a matter that is ever fully
    and finally settled. Rather, it remains “ever-present,”
    Patlex Corp., 758 F.2d at 600, because any defendant may
    assert an invalidity defense in patent litigation–even if
    the same issue has been previously litigated by another
    defendant. Prior to 1980, the only means by which a party
    could challenge the validity of a patent was through
    litigation in court. In 1980, however, Congress created an
    administrative reexamination procedure, designed to weed out
    patents that are invalid because they did not meet the
    requirements for patentability set forth in the Patent Act.
    See Public Law No. 96-517. Under these procedures, “[a]ny
    person at any time may file a request for reexamination by
    the [PTO] of any claim of a patent on the basis of any prior
    art” that was published. 35 U.S.C. Sec. 302 (emphasis
    added).
    Since 1980, therefore, the validity of a patent may be
    challenged several ways: A party who is sued for patent
    infringement may assert a defense of invalidity, which must
    be proven by the higher standard of clear and convincing
    evidence (in deference to the presumed correctness of the
    PTO’s decision), or a patent’s validity can be reviewed
    through a reexamination proceeding. Upon reexamination, the
    PTO may confirm any patentable claim or cancel any
    unpatentable claim. Reexamination thus provides an
    opportunity for the PTO to review and correct its own work
    based on fuller information. As the Federal Circuit has
    described, “[t]he innate function of the reexamination
    process is to increase the reliability of the PTO’s action in
    issuing a patent by reexamination of patents thought
    `doubtful.’ ” In re Etter, 756 F.2d 852, 857 (Fed. Cir.
    1985).
    The reexamination process created in 1980 endured
    constitutional challenges similar to what opponents of the
    America Invents Act are marshalling today: the 1980
    reexamination procedure was challenged by patent holders as
    an unconstitutional taking, as a violation of due process, as
    a violation of the Seventh Amendment right to a jury trial,
    and as a violation of separation of powers. See Patlex Corp.,
    758 F.2d 598-599; Joy Technologies v. Manbeck, 959 F.2d 226
    (Fed. Cir. 1992). Each of these challenges was soundly
    rejected by the United States Court of Appeals for the
    Federal Circuit.

  25. Edward Heller January 20, 2016 8:34 pm

    contd.
    Nor is there any conflict between Section 6 and other parts
    of the Constitution such as Article III and the Seventh
    Amendment. The gist of the arguments suggesting a conflict is
    that the PTO would be permitted to “overrule” final
    judicial determinations made by an Article III court and/or
    jury of a patent’s validity. But these arguments fail to
    understand the nature of judicial review of patent
    validity and fail to recognize the body of precedent that
    has rejected these arguments as applied against the
    current legal regime.
    To begin, what exactly happens when issues of patent
    validity are litigated in district courts should be placed in
    proper context. As the Federal Circuit has explained,
    “Courts do not find patents `valid,’ only that the patent
    challenger did not carry the burden of establishing
    invalidity in the particular case before the court under 35
    U.S.C. 282.” Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1429 n.3
    (Fed. Cir. 1988) (emphasis original and internal quotation
    marks omitted). For this reason, “a prior holding of
    validity is not necessarily inconsistent with a subsequent
    holding of invalidity and is not binding on subsequent
    litigation or PTO reexaminations.” In re Swanson, 540 F.3d
    1368, 1377 (Fed. Cir. 2008) (internal citations and quotation
    marks omitted). In other words, a district court decision
    that a patent is “not invalid” merely means that the
    challenger did not carry his burden; it does not mean that
    the patent is valid.
    The existing reexamination procedures and the new post-
    grant review procedures proposed in the America Invents Act
    vest authority to determine validity upon reexamination in
    the agency entrusted by Congress with making the validity
    decision in the first instance–the PTO. It is entirely
    proper that this corrective action be taken by the PTO, with
    review 67 the Federal Circuit. It need not be limited to an
    Article III court in the first instance. “A defectively
    examined and therefore erroneously granted patent must yield
    to the reasonable Congressional purpose of facilitating the
    correction of governmental mistakes. This Congressional
    purpose is presumptively correct, and we find it carries no
    insult to the Seventh Amendment and Article III.” Patlex
    Corp., 758 F.2d at 604. In other words, under a well-settled
    body of case law, “the Constitution does not require that
    [courts] strike down statutes, otherwise having a reasonable
    legislative purpose, that invest administrative agencies with
    regulatory functions.” Id. at 604,305. That holding is just
    as applicable to Section 6 of the America Invents Act as it
    is to the original reexamination procedures adopted in 1980.
    Nor does it matter, for constitutional purposes, that the
    PTO may reconsider the validity of patents’ that are, or have
    been, adjudicated by district courts. In In re Swanson, 540
    F.3d 1368 (Fed. Cir. 2008), the Federal Circuit specifically
    considered and rejected the argument that Plaut v.
    Spendthrift Farm, Inc., 514 U.S. 211 (1995), prohibited
    reexamination of a patent by the PTO after that patent had
    survived an invalidity challenge in court. See Swanson, 540
    F.3d at 1378,79 (“[The patentee] argues that this reading of
    the statute–allowing an executive agency to find patent
    claims invalid after an Article III court has upheld their
    validity–violates the constitutionally mandated separation
    of powers, and therefore must be avoided. We disagree.”). As
    the Federal Circuit held, “the

  26. Edward Heller January 20, 2016 8:34 pm

    contd.
    court’s final judgment and the examiner’s rejection are not
    duplicative–They are differing proceedings with different
    evidentiary standards for validity. Accordingly, there is no
    Article III issue created when a reexamination considers the
    same issue of validity as a prior district court
    proceeding.” In re Swanson, 540 F.3d 1368, 1379 (Fed. Cir.
    2008) (citation omitted). Because Section 6 merely broadens
    the kinds of invalidity challenges that can be pursued during
    reexamination, that holding would apply to the America
    Invents Act as well. Plaut simply does not apply.
    Relatedly, invalidation of a patent by the PTO (or by a
    court, for that matter), after it has been adjudicated “not
    invalid” in one particular case, does not purport to undo a
    court’s judgment in an earlier case. The PTO has no authority
    to disturb a final judgment of a court, and nothing in the
    proposed Act would change that. Rather, it would remain
    within the discretion of the district court to determine
    whether relief from a final judgment was appropriate under
    Rule 60(b) based on changed circumstances. See Amado v.
    Microsoft Corp., 517 F.3d 1353, 1363 (Fed. Cir. 2008).
    Nothing in Section 6 purports to alter the standards under
    which a court determines whether to grant relief from a final
    judgment. Accordingly, there is no constitutional problem
    under Plaut.

  27. Edward Heller January 20, 2016 8:43 pm

    Plaut v. Spendthrift Farm, Inc., 514 US 211 – Supreme Court 1995

    Explains why we have separation of powers.

  28. Curious January 20, 2016 9:58 pm

    If a party is issued a patent that does not comply with the patent laws–and the patent is therefore invalid–it is not a “taking” for either a court or the PTO to determine that the patent is invalid.
    In other words, it is not a “taking” when what is being “taken” should have never been given in the first place. In still other words, it isn’t a “taking” to correct an error. Or at least that is how I’m reading the counter-arguments.

    Don’t get me wrong, I’m not supporting this side, but I’m having trouble poking a hole in the logic. I don’t know enough of “takings” law to identify an analogous context in which the Courts deemed that a “taking” took place.

  29. Edward Heller January 20, 2016 10:02 pm

    Curious, finding a patent invalid is not a taking. Taking is using the patent — infringement, or acquiring title.

    The professor sets up a strawman argument and knocks it down. The assertions in Patlex and in Joy about the constitutionality had nothing really to do with “taking.” They had to do with the structure of our government and about the right to a jury trial before one could revoke a patent for invalidity. See Marbury v Madison on this point.