On May 11, 2017, the United States Court of Appeals for the Federal Circuit issued an order denying the en banc petition filed by Cascades Projection LLC. See Cascades Projection LLC v. Espon America, Inc. Cascades asked the Federal Circuit to bypass panel consideration and take this matter immediately en banc to once and for all decide whether it is constitutional for the Patent Trial and Appeal Board (PTAB) to invalidate patents granted by the United States Patent and Trademark Office (USPTO).
The request of Cascades seeks to overturn a panel decision in MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015), cert. denied 137 S. Ct. 292 (2016). Judge Newman voted to deny en banc hearing, preferring the case to proceed first to a three-judge panel. Judge Newman did, however, say: “There is no doubt that a patent is a property right, with the attributes of personal property.”
Judge O’Malley and Judge Reyna both voted to proceed directly to en banc consideration. Judge O’Mally concluded her brief dissent saying: “Because these issues are complex and could have far reaching consequences, they deserve the attention of the full court.” Judge Reyna’s dissent, a forceful and compelling dissent that deserves fuller treatment in a future article, raises significant questions that will no doubt eventually be addressed by the Federal Circuit en banc at some point. Both O’Mally and Reyna see the Supreme Court’s decision in McCormick Harvesting Mach. Co. v. C. Aultman & Co., 169 U.S. 606, 609 (1898) as dispositive, and standing for the proposition that Article III courts alone can invalidate patents. Judge Reyna also explained that he sees significant separation of powers issues, as well as inconsistent Federal Circuit precedent that requires immediate en banc consideration.
Not surprisingly, the three judges who were responsible for MCM Portfolio — Chief Judge Prost, Judge Dyk and Judge Hughes — believed that they were correct then and now, and there is no need to reconsider what is already decided; namely that Congress can allow an Article I tribunal adjudicate public rights. This trio filed a concurring opinion, authored by Judge Dyk, which understandably attempts to defend MCM Portfolio, but which makes several inaccurate claims that deserve exposure.
First, Judge Dyk wrote:
“In Patlex, the court upheld the constitutionality of ex parte reexaminations conducted by the PTO. In doing so, the court expressly affirmed the power of an Article I tribunal to adjudicate, in the first instance, the validity of an issued patent.”
Not true. In Patlex the Federal Circuit said that the reexamination statute “carries no insult to the Seventh Amendment and Article III.” The Federal Circuit did NOT say that an Article I tribunal can adjudicate a patent as being invalid, as Judge Dyk incorrectly asserts. In fact, as I’m sure Judge Dyk is well aware, the decision-maker in reexamination is a patent examiner. Reexamination is an examination conducted by examiners who are taking a second look at an issued patent when it has come to the attention of the Office that there is a substantial new question of patentability. Reexamination is, in fact, examination, not adjudication. Reexamination is not an administrative trial proceeding conducted by an Article I tribunal. There is no Article I tribunal making any determination in reexamination. Therefore, Judge Dyk is wrong.
Second, Judge Dyk wrote: “Patlex and MCM did not differ in their interpretation of McCormick Harvesting Machine Co. v. Aultman, 169 U.S. 606 (1898).”
This statement is pure nonsense. One might be able to say that Patlex did not differ with McCormick, and is a logical extension of McCormick, but MCM is an absolute departure and at direct odds with McCormick. McCormick dealt with the then reissue statute. The Supreme Court explained: “The object of a patentee applying for a reissue is not to reopen the question of the validity of the original patent, but to rectify any error which may have been found to have arisen from his inadvertence or mistake.”
The Supreme Court in McCormick also explained:
It has been settled by repeated decisions of this Court that when a patent has received the signature of the Secretary of the Interior, countersigned by the Commissioner of Patents, and has had affixed to it the seal of the Patent Office, it has passed beyond the control and jurisdiction of that office, and is not subject to be revoked or cancelled by the President or any other officer of the government. It has become the property of the patentee, and as such is entitled to the same legal protection as other property.
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. And in this respect a patent for an invention stands in the same position and is subject to the same limitations as a patent for a grant of lands.
(internal citations omitted).
Patlex, which dealt with reexamination of applications by an examiner — not by an Article I tribunal — could be considered a next step beyond McCormick. MCM, however, simply cannot be viewed as consistent with either Patlex or McCormick on any level. Indeed, the Supreme Court was abundantly clear in McCormick, which remains good law. The courts of the United States (i.e., Article III courts), not the department that issued the patent, is the only entity vested with the authority to set aside or annul a patent right. Since the PTAB is not a court of the United States, it has no authority to invalidate patent rights. It is just that simple.
In other words, the PTAB has been and continues to clearly and directly operate in violation of the Supreme Court’s easy to understand mandate announced in McCormick.
Clearly, the object of a post grant petition is precisely to reopen the question of the validity of the original patent in front of an Article I tribunal, and not to rectify any error. Therefore, MCM fundamentally contradicts and misinterprets McCormick. In fact, the PTAB refuses to allow amendments despite the seemingly clear language of 35 U.S.C. 316(d), which says that 1 amendment is allowed. The PTAB does this by arriving at the ridiculous interpretation that 316(d) only provides the right to ask for an amendment and not the right to actually amend. The net effect is the PTAB is foreclosing the patent owner’s ability to rectify an error by refusing amendments, which means the Article I tribunal is reopening the question of patentability in an adjudicative manner without an ability to rectify an error. That fundamentally, directly and rather conclusively violates the express holding of the Supreme Court in McCormick.