The Supreme Court is wrong, a patent is not a franchise

By Gene Quinn
May 1, 2018

The word franchise is defined as an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities.

The word franchise has taken on new meaning in the patent world over the last week since the Supreme Court declared that patents are a government franchise. The problem is the Supreme Court is wrong. There really isn’t any legitimate debate or discussion that can be had. A patent is not a franchise by any stretch of the imagination, and if the Supreme Court knew even the most basic and fundamental concepts pertaining to patent law they would have known better than to have used that word.

First, before proceeding to explain why the Supreme Court is wrong, it is worth noting that the Solicitor General is at least partly to blame for what is now one of the more embarrassing chapters in American patent law history. Throughout the brief filed by the Solicitor General it was argued that patents are a public right, but it was also specifically argued that patents are merely a government franchise. For example, the DOJ brief on pages 37-38 says: “Patents have always been understood as privileges or franchises.” The brief makes similar statements in the Summary of the Argument and elsewhere.


Patents have never been understood to be franchises, at least not in America. And it is astonishing that the Trump Department of Justice filed a brief in Oil States that would so fundamentally argue against property rights. President Trump was supposed to be a champion of property rights. His top officials in charge of patent policy — Commerce Secretary Wilbur Ross, USPTO Director Andrei Iancu, Assistant Attorney General for the Antitrust Division Makan Delrahim and Under Secretary of Commerce Walter Copan — are all on record over the past weeks and months talking about the need for strong patent rights, patents as property rights, and the need for certainty. Throwing out 225+ years of patent law and ignoring the patent statute that says patents are property does not strike me as fostering a fresh beginning where patent rights are strong, or particularly certain and stable. So, there is an obvious disconnect inside the Trump Administration on the issue of patents that absolutely needs to be sorted out.

Still, the Supreme Court should have known better. Even when advocates make silly, stupid, clearly erroneous arguments the Supreme Court is supposed to see through the subterfuge and get to the heart of the matter.

A patent is an exclusive right by nature. A patent does not give anyone the right to do anything other than to exclude someone else from doing something. By the terms of the patent itself, the patentee is granted “the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States of America or importing the invention into the United States of America…” It is patent law 101, black letter basic — a patent does not confer the right to do anything. Indeed, there may be other laws that prevent the making, using or selling of an invention, such as is the case with drugs, which require approval by the Food and Drug Administration prior to commercializing.

So how then can a patent be a grant from the government to carry out specified commercial activities? That is simply not what a patent is, it is not what the statute says, it is not the grant provided to the patentee. To put it point blank, the Supreme Court has fundamentally altered the nature of the patent grant without reason or authority.

 

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 73 Comments comments. Join the discussion.

  1. Paul Morinville May 1, 2018 9:18 am

    “To put it point blank, the Supreme Court has fundamentally altered the nature of the patent grant without reason or authority.”

    And without input from the public. The information they use to make their decisions is limited to the parties and those with enough money to submit amicus briefs. A court knows nothing outside of that input.

    So they venture into policy half cocked with knowledge but fully loaded with the power of law that in the end is backed by violence. These people are drunk with power disgracefully wielding their power against their own subjects.

  2. angry dude May 1, 2018 9:29 am

    I bet those scotus critters don’t understand the difference between e.g. pharma patents and tech patents at all

    Pharma patents usually cover a single drug
    so with all of the associated activities like fda approvals they sort of kind of remind (to ignorant scotus justices and lemmings) a government franchise – the right to produce something (although they are patents and not franchises as Gene notes)

    Tech patents are completely different in nature: each hi-tech product like smartphone involves hundreds if not thousands of hi-tech patents covering different aspects of technology (e.g. screens, LTE, wi-fi, battery etc etc)
    and each fundamental tech patent can be used in many diverse hi-tech products with completely different functionality
    So each tech patent by itself can be fundamentally useless and does not cover or provide the right to manufacture end consumer product – its a building block or some improvement to existing technology
    Calling tech patent a franchise is simply idiotic

    Can someone just explain this simple distinction to those senile citizens on scotus panel?

    Alas, it’s too late for that

    To the morgue !

  3. xtian May 1, 2018 9:37 am

    If a patent is a franchise, are my sublicensees, just other franchisees? Do I have to now provide my sublicensee the protections accorded a franchisee?

  4. Anon May 1, 2018 9:53 am

    Not to confuse the issue, but Greg DeLassus (over at the other blog has made a note that franchises – too – are a form of property:

    https://patentlyo.com/patent/2018/04/intellectual-franchise-rights.html#comment-407040

    I have been harsh on Greg for his stance related to the issue, but the notion that a franchise is a form of property probably should be recognized.

    And then distinguished. And distinguished it both must be and should be.

  5. Anon May 1, 2018 9:59 am

    I would also point out that the Oil States result simply cannot “fit” the Supreme Court’s own other patent holdings (including, but not limited to: Stanford v. Roche).

    I provide the Stanford case as an example of the necessary repercussions that must flow from taking a view that a patent is a “public right” as opposed to a personal property.

    And no, I have yet to see any cogent workings that would support a new “hybrid” – which includes ANY support for such reasoning, AND ANY support for the Court to have authority to create such a hybrid.

    Any of the “Oil States is correct” group – please step up.

  6. Anon May 1, 2018 10:06 am

    (by “hybrid” – I mean of course the proposition by some that a patent is a hybrid mix of both being a Public Right as well as being a Personal Property)

  7. American Cowboy May 1, 2018 10:33 am

    I agree that patents are property.

    But I am reminded of the old saying: “The Supreme Court is not final because it is infallible. It is infallible because it is final.”

    Or was that saying about the Pope?

  8. Night Writer May 1, 2018 11:24 am

    @7 American Cowboy (which seems to be redundant).

    Except that when a few of the justices are replaced they may flip-flop–again. Let’s hope for the sake of patent rights that Ginsberg and Breyer retire soon. Pretty disappointed in Alito not joining the dissent–very disappointed. Very poor selection by Bush.

  9. Anon May 1, 2018 11:40 am

    American Cowboy,

    Your humor touches upon one of the “hot spots” that I have in regards to certain attorneys regarding the word “Supreme” as placing anything done by the Supreme Court has beyond reproach.

    This “view” is reflected in a number of manners, from the “get over it” type of comment, to the views that may even align with the (singularly) odd State attorney oath for the Commonwealth of Massachusetts, which tends to treat the Court with “kid gloves” (as one might a client).

    Most all other State attorney oaths place the Court under the duty first to the Constitution, which reflects the fact that the Court is not above the Constitution, is not infallible, and that (most all) attorneys have in fact an ethical duty to challenge the Court.

  10. Paul Morinville May 1, 2018 11:46 am

    Anon @ 4. I don’t think you can equate property to franchise. One is the right to exclude the other is the right to do. They are opposites.

    One is protected by due process and a jury – a non-political court. The other is an administrative tribunal – a political court.

    While both can potentially transfer title to another, only one can attract investment. (please argue with me here)

  11. Tesia Thomas May 1, 2018 12:25 pm

    @Paul Morinville, 10,

    I’ll argue with you Paul!
    Through SBIR/STTR and other forms of federal grants the government invests in breakthrough technologies.

    (Oh wait those grants specifically state that you can’t list obtaining IF – not IP – on the proposal for use of funds for the the grant…Hmmm…)

  12. Luis Figarella May 1, 2018 12:51 pm

    Sad, sad, sad. I am a Natural Born US Citizen, my dad had an all-expenses trip to Korea courtesy of his ‘friends and neighbors’ and the US Army, and I lived the first 23 years of my life being protected by only those ‘parts’ of the Constitution selected by a Congress neither he or I were able to vote for…

    (Downes v. Bidwell and the other Insular Cases are the law for us ‘browns’ in Puerto Rico and the other territories. Mind you, I was born four years after ‘separate but equal’ was ended in the mainland).

    Now, I have a Patent System that feels more and more as that of a LatAm ‘Banana Republic’.

    The patent issued to my client turns out to be a LOAN (‘Gracias SCOTUS’), to be killed by a ‘death squad’ (aka PTAB) run by the executive branch (‘Gracias’), having an 80% invalidity verdict rate? (‘Gracias’ Congress).

    Sad… In case you’ve not read the ‘Banana Republic book’, the next step is when your local police chief places you under arrest for trumped up charges and you ‘donate’ you house to him or the judge. Can’t wait to see what that assignment document reads like…Sad.

  13. Greg DeLassus May 1, 2018 12:51 pm

    “Patents have never been understood to be franchises, at least not in America.”

    Bloomer v. McQuewan, 55 U.S. 539, 549 (1853):

    “The ***franchise*** which the patent grants, consists altogether in the right to exclude every one from making, using, or vending the thing patented, without the permission of the patentee. This is all that he obtains by the patent. And when he sells the exclusive privilege of making or vending it for use in a particular place, the purchaser buys a portion of the ***franchise*** which the patent confers” (emphases added).

    As one can see, U.S. law quite definitely *has* regarded patents as a species of franchise. Incidentally, the whole disquietude concerning the idea that categorizing patents as “franchises” somehow diminishes the concept of patents as “property” is simply misbegotten. Franchises *are* property at common law. Just read Blackstone (III:16): “When a man has… any… species of franchise whatsoever; and he is disturbed or incommoded in the lawful excercise thereof… there is an injury done to the legal owner; his ***property*** is damnified, and the profits arising from such his franchise are diminished. To remedy which as the law has given no other writ, he is therefore entitled to sue for damages by a species action on the casé…” (emphasis added).

    There is nothing new here, nor any particular cause for alarm or upset. Everything that you thought that you understood about patents before last Tuesday, you can still trust that you understand. Patents are not *newly* become franchises. They have been recognized in our law as franchises since at least 1853. Meanwhile, they are still personal property because (West River Bridge Company v. Dix, 47 U.S. 507, 534 (1848)) “[a] franchise is property, and nothing more; it is incorporeal property,… occupying the same position, with respect to the paramount power and duty of the State to promote and protect the public good, as does the right of the citizen to the possession and enjoyment of his land…”

  14. Tesia Thomas May 1, 2018 12:57 pm

    Well, you’re a uni lobbyist.
    Issues with Bayh-Dole aside…why even have it now? Why bring up these points?

    SCOTUS just told you that the government owns the IP. Period. Done.
    Why finagle ownership with Bayh-Dole? – it’s an obvious ruse.

    Whether the government supports the R&D or not, it owns the IF (not IP.)
    Lucky for unis that they at least get some of their IF paid for by the ‘lawful’ owner.

  15. Tesia Thomas May 1, 2018 12:57 pm

    Whoops wrong blog post.

  16. The Time Is Now To Act May 1, 2018 1:02 pm

    Indeed, the Trump administration must get behind its own words of late and get behind the right bill to fix of decades of Frankensteining the Patent Property Right.

    They need to elevate and get behind this issue in the same manner Obama got behind health care reform.

    A harder to access PTAB trial for petitioners is not even close to the fix to OUR Crown Jewel.

  17. Curious May 1, 2018 1:05 pm

    Sad… In case you’ve not read the ‘Banana Republic book’, the next step is when your local police chief places you under arrest for trumped up charges and you ‘donate’ you house to him or the judge. Can’t wait to see what that assignment document reads like…Sad.
    I suspect that one had to pay the local police chief just to buy the house in the first place. Now that I think it of it, it really does sound like the USPTO.

  18. Josh Malone May 1, 2018 1:16 pm

    A patent is whatever the Supreme Court says it is. What do we do now? We need 10 million dollars to get a patent. We need 10 billion dollars to change the law.

  19. Poesito May 1, 2018 1:22 pm

    Luis@11: The U.S. has become the Great Banana Republic of the North. This patent mess is part and parcel of the general meandering of The Swamp.

  20. The Time Is Now To Act May 1, 2018 1:22 pm

    And, for anyone eager to play the SCOTUS casino in follow up writ, observe the narrowness of SAS at 5-4. If there was ever a 9-0, SAS was it.

  21. Gene Quinn May 1, 2018 1:30 pm

    xtian @3-

    You raise an interesting point about licensees. What havoc will this bring on licensee rights? I believe franchisees are required to tow a line of uniformity that can be very carefully controlled by the franchisor.

  22. Ternary May 1, 2018 2:16 pm

    Poesito @16. Depends how you look at it. Some will say that the patent system finally has reached a beneficial equal opportunity state. Inventions will still be conducted, but cannot be leveraged against competitors under protection of a monopoly type patent. Many people consider this to be a “level playing field.” That is: an independent inventor has the same rights and opportunities as a $60 Billion company and the winner is to be decided in the market place. May the best one win.

    The fact that the $60 Billion company comes out on top most of the time, proves that they usually have the best technology, as decided by the market place.

  23. Non Sequitur II May 1, 2018 2:48 pm

    Why can’t the right to exclude be considered a government franchise (i.e., positive grant of rights)? Obviously, a patent franchise does not grant the right to carryout a commercial activity unless one considers patent licensing a commercial activity. However, because dictionaries record definitions rather than decree them, I believe it is inappropriate to give a dictionary primacy over the Supreme Court. Nothing in Oil States suggests that the Supreme Court has redefined a patent as “a grant from the government to carry out specified commercial activities.” Rather than accuse the Supreme Court of altering the nature of patents, it is more logical to accuse the Supreme Court of redefining the word “franchise.”

  24. StrongPatents May 1, 2018 3:06 pm

    ternary@19: except that in the new paradigm, the independent inventor is no longer incentivized to even try to compete.
    Moving forward we will have far fewer ideas and advancements (as the playing field for new ideas and advancements is narrowed to a handful of large, incumbent players who only have to be “better” than a couple of other companies to maintain profits, as opposed to having to be better than every inventor with a great idea).

    In our new paradigm, the marketplace actually loses (as compared to a world where all of the best ideas see the light of day).

  25. Anon2 May 1, 2018 3:52 pm

    anon

    I seem to have been flagged for moderation at the other site… I had replied to one of your posts … it was really quite tame… and nothing personal. I hope this has nothing to do with my discussions with you regarding anonymity …

    I’m a little concerned I might be barred.. in any case I was not ignoring you.

  26. Anon May 1, 2018 3:53 pm

    Ternary – was your post in jest? Did you really want to leave out all of the non-innovation factors that so clearly do not place the two entities that you mention on a “level playing field?”

  27. Gene Quinn May 1, 2018 3:59 pm

    Anon2-

    Are some of your comments missing here? I just dug into our spam folder and found a few comments that didn’t belong there and approved them.

    -Gene

  28. Gene Quinn May 1, 2018 4:09 pm

    Nonsequitur @23

    You say: “Why can’t the right to exclude be considered a government franchise (i.e., positive grant of rights)?”

    Because, as explained, that is not what the word “franchise” means.

    You say: “Obviously, a patent franchise does not grant the right to carryout a commercial activity…”

    Correct, and that is exactly why a patent cannot be a franchise.

    You say: “because dictionaries record definitions rather than decree them, I believe it is inappropriate to give a dictionary primacy over the Supreme Court.”

    Nothing I’ve done has given a dictionary supremacy over the Supreme Court. The Supreme Court used a word, that word has a meaning. They say a patent is a franchise, which means it grants the right to engage in commercial activity, which is wrong. So it is really quite simple. The Supreme Court is wrong. They used the wrong word. Words matter. That is how the public and courts understand what the Supreme Court has decreed.

    You say: “Nothing in Oil States suggests that the Supreme Court has redefined a patent as ‘a grant from the government to carry out specified commercial activities.'”

    You are wrong. By rather ignorantly using a word that has a specific meaning out of proper context and in direct contradiction to the definition of a patent, the Supreme Court has specifically brought uncertainty and ambiguity to the meaning of what rights a patent conveys. That is precisely why Congress will have to overrule Oil States, which I have every confidence they will do.

    You say: “Rather than accuse the Supreme Court of altering the nature of patents, it is more logical to accuse the Supreme Court of redefining the word ‘franchise.'”

    So you are actually arguing that the Supreme Court is saying that all franchises are exclusive rights just like a patent? WOW. Talk about intellectually challenged.

    You can say whatever you want, but words have meanings and this decision is just another in a long line of Supreme Court decisions that conclusively prove that the Court is simply ignorant when it comes to patent law.

  29. Gene Quinn May 1, 2018 4:16 pm

    Greg-

    It is nice of you to go back over 160 years to say that a franchise is a property right, but franchises are not property rights. It is also interesting that you ignore the long line of cases, including McCormick:

    “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. United States v. Schurz, 102 U. S. 378; United States v. Am. Bell Telephone Co., 128 U.S. 315, 128 U. S. 363. It has become the property of the patentee, and as such is entitled to the same legal protection as other property.” (169 U.S. 606)

    So it would seem that the cases you cite about patents being merely a government franchise were, at least until a week ago, overruled and outdated. For reasons that make little sense, the Supreme Court has turned the clock back over 160 years.

  30. Greg DeLassus May 1, 2018 4:22 pm

    “The word franchise is defined as an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities.”

    The Court was not writing a popular press magazine article for a general audience. They were writing a legal opinion, for the benefit of lawyers and lower courts. I am not really sure, then, that a general purpose dictionary is the correct authority to consult for the definition of “franchise” as the Court was using the word in Oil States. Perhaps a *legal* dictionary would be a more appropriate authority for this purpose?

    When I pull Black’s Law Dictionary (4th ed.) off my shelf by my desk and look up “franchise,” the definition given is “[a] special privilege conferred by government on an individual or corporation, and which does not belong to citizens of country generally of common right.” That does not sound so far off from a definition of what a patent achieves in U.S. law—the patentee has a privilege to exclude others from making, using, selling, or importing a given technology, and this privilege is not common to the citizenry generally, but belongs uniquely to the patentee.

    Even better, one might look at how the *Court itself* uses the word “franchise” when trying to understand what the word means in the context of the Oil States decision. After all, (Towne v. Eisner, 245 U.S. 418, 425 (1918), Holmes, J.) “[a] word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used.”

    So, when we consult what the *Court itself* means by the word “franchise,” we find that “[t]he franchise which the patent grants, consists altogether in the right to exclude every one from making, using, or vending the thing patented, without the permission of the patentee.” Bloomer v. McQuewan, 55 U.S. 539, 549 (1853). In other words, what the Court means by franchise is “the right to exclude every one from making, using, or vending the thing patented.” Does *anyone* seriously argue with this? Far from making a category error as the article above contends, it would appear that the Court in Oil States has merely reconfirmed the fairly anodyne observation that the patent right consists in the right to prevent others from making, using, or selling the patented technology. What is the problem?

  31. Greg DeLassus May 1, 2018 4:28 pm

    @29 “It is also interesting that you ignore the long line of cases, including McCormick…”

    Just to be clear, I carry no brief for what the Court did with McCormick in Oil States. I think that you have the better reading of McCormick’s significance, and that Oil States’ treatment of McCormick was squirrely. I am only commenting on the meaning of “franchise” in the context of the Oil States decision. Franchises *are* property, so there is no inconsistency in Bloomer characterizing patents as “franchises” and McCormick characterizing them as “property,” just as there is no inconsistency in characterizing oranges as “fruits” and also as “foods.”

  32. Anon May 1, 2018 4:29 pm

    Anon2 @ 25,

    I have not taken any of your posts as hostile in any manner (and I would not believe that anyone else would either).

    That moderation flag you tripped is most likely the “count” moderation flag.

    Instead of actually moderating for content, the editors at the other site have installed a “per-post” count flag (on an unequal basis at that – meaning certain posters have a higher “count” before the count moderation flag kicks in).

    What this does in effect is punish those actually engaged in a dialogue and provides more impetus to the “style” of mindless drive-by monologues that plague that site.

    A couple of options for you:
    1) wait. The flag usually “re-sets” after 24 hours or so.
    2) have a back-up email (to increase the number of available posts before the count flag is tripped.

    I am enjoying the dialogues.

  33. Greg DeLassus May 1, 2018 4:34 pm

    N.B., the Black’s Law Dictionary definition does not say anything about “enabling a group to carry out specified commercial activities.” In other words, if we impute a specific *law dictionary* meaning to the Court’s use of “franchise,” rather than a definition taken from a general purpose dictionary, the aspect of the word that is asserted above to be wrong is simply not even present.

  34. Anon May 1, 2018 4:35 pm

    Greg,

    which does not belong to citizens of country generally of common right.

    Really? Do you want to ignore the entire Lockian basis of the US patent system*** just so that you can pretend that one species of property is “just about” the same as a different species?

    That’s guaranteed to do one thing: lose you credibility.

    *** see the basics on “inchoate right” and how that plays out, vis a vis another (more recent) Supreme Court case of Stanford v. Roche.

  35. Poesito May 1, 2018 4:57 pm

    Ternary@16: “Some will say …” and, “Many people consider …” do not constitute arguments but a hypothetical statement of opinion. Independent inventors compete with large entities for patents which has apparently led to their downfall. Your multibillion dollar companies have seen to it that independent inventors are not able to enter the playing field unless they have a financial death wish.

  36. EG May 1, 2018 5:55 pm

    “Oil States’ treatment of McCormick was squirrely. I am only commenting on the meaning of “franchise” in the context of the Oil States decision.”

    Greg,

    The majority’s treatment of McCormick in Oil States is not just “squirrely” but absurd as Gorsuch’s dissent clearly points. Both McCormick, as well as 35 USC 261, say patents are “property.” For the majority to say that patents are, instead, “franchises” is insulting and sheer sophistry. And you still wonder why the patent law bar (including me) have no respect for the Royal Nine (or at least the Imperious Seven)?

  37. Bemused May 1, 2018 6:52 pm

    Test comment (I keep getting sent to a Page Does Not Exist page)

  38. Anon May 1, 2018 6:59 pm

    EG,

    Your reply will not make an impact on Greg, who is attempting to switch one “flavor” of “property” for another.

    His Supreme Court case quotes fully indicate (as does his Black’s Law dictionary views) that “franchise” is still “property.”

    It is the distinguishing between the “flavors” that is important (leastwise, to supply a rebuttal to Greg’s position).

  39. Greg DeLassus May 1, 2018 7:18 pm

    Oranges are citrus. Citrus are fruits. Fruits are foods.

    From these premises we can further establish—by ordinary syllogisms—that oranges are fruits, or that citrus are foods, or that oranges are foods.

    As noted above, franchises are property. That is what Blackstone says. That is what the Supreme Court says. Really, we have seen no authority in this discussion tending to any conclusion other than that franchises are property.

    Now if—as Oil States mentioned—patents are franchises, and franchises are property, then it follows that patents are property. There is no contradiction here.

    I feel a bit strange defending the Supreme Court, because I am second to no man in contempt for the hash that they make of patent law. In this one instance, however, I think that the criticism is off base. The Court did not really say anything scandalous or untoward when it slotted patents into the category of “franchises.”

  40. Tesia Thomas May 1, 2018 7:31 pm

    EG,

    I think you’re not really seeing what SCOTUS said.
    SCOTUS said patents are PUBLIC franchises.
    Just saying ‘franchise’ is not enough.

    SCOTUS said patents aren’t private property but that’s what the sources you’ve quoted say.

    How can something be public franchise (which means property of the government) AND private property (which means not govt property)?

    Going to your analogy:

    Oranges are citrus. Oranges are fruits. Fruits are foods.
    becomes
    Patents are private property. Patents are public franchise. Patents are property (OF WHOM?).
    because that really says…
    Patents are citizen owned. Patents are government owned. Patents are property.

    Whose property? It cannot be both when the government finds it nice.

    And if it somehow is both just under different parts of the Constitution then…
    When patents are a government franchise, that applies to PTAB so why don’t these patents get sovereign immunity?
    Other government owned patents do like NASA/DoD/NIH…

    When patents are a private property with takings and due process then why doesn’t a Fed. Circuit ruling usurp a PTAB ruling and keep the patent alive/not invalidated?
    Because the PTAB is quite literally the government taking property away from a citizen since the citizen paid for it.

  41. Tesia Thomas May 1, 2018 7:31 pm

    I meant Greg not EG*

  42. Tesia Thomas May 1, 2018 7:44 pm

    Greg,

    So by your estimations franchise = property. Ok. Let me make this much simpler.



    A patent CANNOT be a both a public franchise AND a private franchise.

    But that’s the nonsense you’re saying.

  43. Tess May 1, 2018 7:54 pm

    And to go further with what I said…

    If SCOTUS decides patents are public franchise regardless of what the Constitution says in whichever part then inventors should not be paying for patents. No fees, not even attorneys.
    Furthermore, we should be classified as civil servants just like anyone else who makes and tends to state-owned property.

    AND!

    If SCOTUS decides that patents are private property then we need to get rid of the PTAB because private property can’t be taken away by a PTAB/adminstrative court.
    Because…the PTAB IS a government taking by the simple fact that every so called “judge” is a government employee!!

  44. Tesia Thomas May 1, 2018 8:14 pm

    I’m so grateful that the attorneys of Oil States made it and got to argue to get rid of PTAB but I feel that we couldn’t kicked PTAB out or at least made it much better for inventors with any decision.

    But, I don’t think the attorneys or supporters in briefings went far enough down the ‘rabbit hole’ of the ramifications if patents are public rights.
    You have to state your point, prove it, and demonstrate what weirdness would have to happen for the opposing side to be right.

    Someone needs to claim ‘sovereign immunity’ in the PTAB. But, the next time we get a shot at PTAB, we need to ask some questions about inventors.

    At the end of the day, the government decides what it will…it is our sovereign… but we want to have some semblance of a democracy and not communism right?
    So it is criminal to take a private citizen’s money to buy a state-owned property and then compel the private citizen to pay to defend the state’s property in a dumb process that the state waives for property that a private citizen didn’t pay for! (public inventors vs private inventors of state owned property)

  45. Tesia Thomas May 1, 2018 8:24 pm

    PTAB is IMO quite literally the government TAKING it’s own property but the only reason it doesn’t care is that it didn’t pay for it!

    It’s a net gain – gaining thousands in fees and taxes on legal costs. Plus taxing anyone who would want what the patent claims and commercializes it. Plus taxing the inventors income that pays for the patent.

    USPTO is swindling money from inventors big time.

    Patents as public franchises could have stopped this because I think it would mean the government has to pay for it’s own property…and not cherry pick which property it wants to pay for.

  46. Ternary May 1, 2018 10:27 pm

    Anon @26, Only partly in jest. It is amazing how rapidly our patent system has changed in the last 6 years. Many comments on this blog, including mine, somewhat assume that this all has been a mistake. A misguided pile-on of anti-independent inventors measures. That arguments, based on rational analysis and objective data can be used to convince opponents. That Congress and SCOTUS would come to their senses and turn back to a system that is well-documented in having benefited the US economy into its dominant position in technology. That no one with any common sense would deliberately destroy the golden system that many countries have tried, and still try, to emulate.

    But I am starting to believe (incorrectly I still hope, but with rapidly diminishing hope) that we have been going through an irreversible process. We will still have a patent system, but one like in Europe, basically useless for independent inventors. Europe is unable to change its system to benefit independent inventors, no matter what they try. There is almost no voice in Europe that says: hey guys, our patent system sucks as an economic engine. I believe we are now in the same situation. Who would have believed anyone saying that patents limit innovation? Well, we are there, with Congressional testimony to prove it.

  47. Pro Se May 1, 2018 10:48 pm

    EG…Just curious. Do you view trade secrets as public rights or private rights? Additionally, do you view 28 USC 1498 as being predicated on patents as public rights, private rights, other?

  48. Chris Whewell May 1, 2018 11:16 pm

    Did the 111th Congress have delegated authority to create a new forum in which that “exclusive right” of Clause 8 can be revoked, after the grant of a patent ? It looks like usurpation of the Judiciary’s tasks, a muddying of the separation of powers, not a good thing. I was unable to find anything in the Constitution that stated Congress had the authority to revoke rights. I sometimes wonder whether the IPR portion of the AIA is a disguised creature of a veiled ex post facto law….

    One view might be that there now exist two tiers of patent procurement for inventors, where formerly there was only one: 1) before the granting-wing of the PTO with the examining corps; and 2) before the revocation-wing of the PTO at an IPR. Since only the well-monied have access to the second tier, this second tier is effectively inaccessible to the vast majority of citizens, undermining promotion of the sciences and useful arts. I suspect any American would view a new law which effectively excludes most of the citizenry from participating in the overall patent rights perfection process is repugnant to the Constitution, and should perceive it as being void ab initio.

    Once granted, a patent must be presumed valid if the system (and its participants) is to retain integrity. The time for challenges to the document clearly needs to occur pre-grant.

    I don’t see where any court has the authority to proclaim a patent as being a franchise in view of case law clearly showing otherwise. Mr. Quinn is absolutely correct – a patent grants nothing except a right to exclude others and its on the owner to enforce. Isn’t the Franchisor typically charged with enforcement ? Will the Commerce Dept. get into the business of patent enforcement ?

    What are the implications of extending the concepts of Oil States to copyrights and trademarks ?

  49. Night Writer May 1, 2018 11:27 pm

    At the end of the day, the IPRs may be modified to improve them, but I suspect that they are here to stay for the foreseeable future.

    Probably the biggest improvement that could be made is to get Congress to make the APJs to be ALJ so that they are independent from the USPTO. Plus Congress could give more rights to the patent owner that would make it seem more like a district court bench trial.

    Frankly, I’d bet that we are not in our careers going to see the IPR go away.

  50. Lost In Norway May 2, 2018 5:24 am

    I expected PTAB to survive. What I didn’t expect was to get told that my property rights were a public franchise. I had hoped that they would have known better. So 7 judges who aren’t qualified to practice before the USPTO and aren’t inventors get to make decisions about patent law? Why? Oh yeah “highest court in the land”.

    And people wonder why I prefer the court system of the EPO? Qualified judges making qualified decisions on one of the most complicated types of law. I don’t always agree with them, but I never walk away from a decision going “the morons did WHAT?”.

  51. Night Writer May 2, 2018 6:34 am

    @48 Lost in Norway. I agree. I do lots of foreign prosecution and lots of prosecution at the EPO.

    “the morons did WHAT?” is basically my reaction to most CAFC decisions and SCOTUS decisions. Just think Obama made something like seven appointments to the CAFC and they were based on Google’s selection. Many have no science training at all.

  52. Night Writer May 2, 2018 6:51 am

    I know people think it sounds nutty, but I think at some point we are headed for a Constitutional crisis where the justices get impeached by the Congress or maybe even charged with treason. I think at this point they just make up whatever they want completely untethered to Constitution.

    It would take a president even more out there than Trump to push the Congress, but I think it could happen within the next 20 years. What we should remember is that the justices aren’t above the Constitution. The Constitution still provides the means to hold the justices accountable.

  53. Night Writer May 2, 2018 7:03 am

    @49 Lost in Norway

    You have to realize too that most of the CAFC now were appointed probably under an agreement to burn the patent system down. They were certainly selected for their hostility towards patents and a desire to “get those patents under control.” Probably before being appointed they were called and agreed in exchange for their appointment to “get patents under control.” Plus there is no doubt that Google paid large some of money to select the judges.

    The FBI should investigate how these appointments were. Certainly I was shocked that someone like Stoll who has a very bad reputation in the patent community to having been selected for the CAFC.

  54. Curious May 2, 2018 7:44 am

    I know people think it sounds nutty, but I think at some point we are headed for a Constitutional crisis where the justices get impeached by the Congress or maybe even charged with treason.
    Oh, come on, why do you frequently bring this up? Absent evidence of being bought off or some other high crime, a Supreme Court justice is not going to be impeached. It requires a 2/3rd majority to be impeached in the Senate. Unless the justice’s decisions are harming both parties, you aren’t going to reach that threshold.

    Patent decisions like Oil States don’t even merit passing mention on front page news. Patent law is too esoteric for most people to understand. SCOTUS could deem 90% of patents invalid in a single decision and it might get a rise out of a few people. However, even a step that extreme wouldn’t get anybody impeached.

    The Constitution still provides the means to hold the justices accountable.
    In U.S. history, only one justice has ever been impeached (but not convicted) and one resigned under the threat of impeachment. The Constitution is essentially toothless. Not going to happen.

    I know both you and Anon have been tilting at SCOTUS for a long time (albeit from different directions). However, SCOTUS isn’t going anyplace. SCOTUS is going to retain jurisdiction over patent appeals (sorry Anon) and nobody from SCOTUS is going to be impeached (sorry NW).

  55. EG May 2, 2018 8:30 am

    “Do you view trade secrets as public rights or private rights?” “[D]o you view 28 USC 1498 as being predicated on patents as public rights, private rights, other?”

    Pro Se,

    I view both as being predicated on being private PERSONAL property rights. But 28 USC 1498 is a very peculiar statute, as witnessed by the per curiam decision (Garjarsa and Dyk each filing concurring opinions, Plager filing a dissenting opinion) of the Federal Circuit in the 2006 Zoltek case as to whether this statute is based upon the federal government (or its authorized contractors) infringement being a “taking” under the 5th Amendment. The per curiam majority opinion says it is not a “taking,” but Plager’s dissenting opinion says it is. The issue of patents as property is further complicated in Zoltek by 28 USC 1498 being effectively a “waiver” of the federal government’s sovereign immunity.

    I frankly agree with Plager’s view such infringement has to be a “taking” under the 5th Amendment, and that all that 28 USC 1498 does is give the patent owner appropriate recourse for getting compensation for such a “taking,” given that the federal government’s sovereign immunity bars the patent owner from getting injunctive relief. The per curiam opinion also has this interesting response to Plager’s view: “I note that Judge Plager’s interesting discourse on takings jurisprudence completely fails to explain how taking of a property right could possibly have occurred here. Patent rights are creatures of federal statute. They do not exist in the abstract.” That may be true, but 35 USC 261 (i.e., the federal statute) also says they have the “attributes of personal property.” Whether “creatures of federal statute” or not, that statute says they are nonetheless property rights, that status as property rights being recognized for over 200 years by the courts, including SCOTUS. Indeed, Plager cites to the 1876 SCOTUS decision in Consolidated Fruit-Jar Co. v. Wright which says: “A patent for an invention is as much property as a patent for land”; that reading is consistent with how SCOTUS in McCormick Harvesting characterized patents rights. (And if you tell me that SCOTUS has mutually inconsistent statements in its decisions in its patent law jurisprudence on the status of patents as property, I couldn’t agree more.)

  56. Preparing for Launch May 2, 2018 8:42 am

    The S.Ct. should try reading the Constitution. “The Congress shall have the power … To Promote the progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive ***RIGHT*** to their respective Writings and Discoveries.” The Constitution doesn’t say “the exclusive government franchise.”

  57. Anon2 May 2, 2018 9:38 am

    Gene @27

    Thanks but I haven’t noticed my comments going missing here!

  58. American Cowboy May 2, 2018 10:09 am

    Greg at 13 says “the patent grants, consists altogether in the right to exclude every one from making, using, or vending the thing patented,”

    But Scotus redefined the franchise in eBay

  59. American Cowboy May 2, 2018 10:13 am

    Ternary at 45 says “It is amazing how rapidly our patent system has changed in the last 6 years”

    I think it has been going on longer than that, but I won’t quibble.

    Given the incumbents in CAFC and Scotus, I suggest that maybe patent system advocates should quit trying to fix the system by seeking favorable judicial opinions. Consider Oil States, which tried to get rid of IPR’s and had the reverse effect of giving them Scotus’s Constitutional blessing.

    Either wait for personnel changes on the courts or go to Congress for statutory amendments.

  60. Anon May 2, 2018 10:33 am

    Anon2 @ 54 – that sometimes happens with “cross-blog” chatter. Gene thought that your comments concerning communication attempts to “anon” at that other blog reflected processing here.

    EG @ 53 – could not concur more strongly about the Gordian Knot being created by the poor scrivening of the Supreme Court has they insist on keeping their fingers in the wax nose of patent law.

    Further, your post here is exactly the type of “distinguishing” that Greg DeLassus needs to pay attention to, as he continues to attempt to peddle his fallacy that one type of property is fully exchangeable with any other type of property, and that “Oil States is neither a change nor a source of concern – he could not be more wrong on either account. (to wit, Greg’s attempted use of common syllogisms is seriously flawed as he is not recognizing that syllogisms may be unilaterally but not bi-directionally “true” – just because “franchise” may be a form of “property” does NOT mean turning personal property into franchise property is without harm, or is even “permissible.”)

    Curious @ 52 – I chuckle at your seeming admonition, and yes, I do admit to “tilting” at the Supreme Court (but I liken myself as to the little engine that could rather than Don Quixote). I am more than sure that someone was similarly situated prior to Congress awakening after the anti-patent Supreme Court of the 1930s and 1940s (self christened with the phrase: “The only valid patent is one that has not yet appeared before us“) when Congress last acted in 1952 to reclaim its Constitutionally sanctioned authority to write patent law. Witness also the recent article over at PatentDocs: http://www.patentdocs.org/2018/04/iplac-offers-101-revision-that-attempts-to-harmonize-ipo-and-aipla-proposals.html#comments

    My “attack” though is indeed grounded, and grounded on several fronts, from both the legal ability (Congress indeed has a Constitutional power to apply jurisdiction stripping of those items of non-original jurisdiction – and I will note that EG recently added that patent appeals themselves were at a time outside of the purview of the Supreme Court), as well as the ethical responsibility of most all patent attorneys to speak up against a Court when that Court itself is damaging the Constitution (instead of faithfully employing it). I say “most all” instead of directly “all,” given the exception(al) nature of the State attorney oath for the Commonwealth of Massachussets. I have also provided at least three prongs of the Court not faithfully employing the Constitution and not heeding the limitations that itself (as a member of the Judicial Branch) falls UNDER – and not above – the Constitution.

    As for the phrase “Constitutional Crisis” – we are already there.

    The crisis exists even if it is not widely recognized. “And yet it moves.”

  61. Anon May 2, 2018 10:35 am

    American Cowboy – our posts passed each other in transit – I too feel that the surest route is through Congress, but I would have to say that I am skeptical that the current state of Congress will (or even can) rise to the necessary task.

    Still, the little engine that could keeps on a’chugging.

  62. PM May 2, 2018 12:37 pm

    Congress only has constitutional authority to codify an “exclusive Right”, created “by securing for limited Times to . . . Inventors the exclusive Right to their . . . Discoveries.” What is meant by the clear words “by securing”? Is there a case on that language specifically? Or how that language acts in concert with the language “for limited times”? I agree with Gene that title to property quiets.

    Congress has authority only to SECURE the exclusive right of the inventor. And how in the world can a right be secured if it is always susceptible to being taken away? When, exactly, is the patent owner presently secure in his exclusive right? Never, that’s when. And that goes against the plain meaning of “by securing”. And it changes the clear meaning of “for limited times” into “for constantly shifting times, or no time at all”. Congress has no authority to secure anything for THE STATE, but rather only to the inventor.

    Too much focus is placed on post-issuance disputes over whether or not there was a “discovery” in the first place. But these disputes don’t address the other language of the clause. There needs to be a time at which title quiets, after which validity becomes incontestable.

  63. Lost In Norway May 2, 2018 5:06 pm

    @53 Night Writer

    I really want to say that you are being paranoid… but I just can’t say that anymore. Now I want to know how much money the big companies paid to get some of these people into office. At least Michelle Lee was “easy” to get rid of.

  64. C. A. Reitzel May 2, 2018 11:30 pm

    @63 Lost in Norway

    I don’t think the Big Companies would even acknowledge that paying money to get some of these people into office is even problematic, unethical, corrupt, or immoral. They would call it “politics,” “business,” and/or “lobbying.”

    Lesson of the case – don’t go into business with the government. The government’s idea of a fair deal is: you tell/disclose to them everything new and unique that you are doing in your business/useful arts/science, and government (and public generally speaking) will give you a piece of paper that entitles you another chance to argue about what that paper means in 3-5 years.

    I think the broader fear is: any business that is in a regulated industry involves the government. Taking that argument one step further – that regulated business-government relationship is really a “public franchise” because it was granted by statute and therefore the proper forum to bring a complaint is with the governmental administrative agency that formed the regulated business-government relationship because the issue is really best decided by that particular agency under the agency’s administrative law. The intellectual property you thought you had is actually just a public right, more like government built road, or bridge, not a private farm or ranch.

    Why can the SEC appoint its own judges? It will be interesting to see how the court comes out on that issue. See Lucia v. SEC, 17-130. The situation looks very similar.

  65. C. A. Reitzel May 3, 2018 12:10 am

    @ All

    On the bright side, I guess this ruling means I can start telling people that I’m a “public franchise attorney.” I’m sure I will get a lot of puzzled looks.

  66. angry dude May 3, 2018 9:29 am

    It’s funny to read comments from patent attorneys here repeating exactly what I posted on this blog years ago – and with exact same “angry dude” attitude
    And I was accused of being an overly pessimistic loser without any clue whatsoever about the workings of the “still great” US patent system…

    Now it is your *legal obligation* as a patent attorney to tell your prospective clients that you are in a government franchise procurement business and that there are absolutely no set terms of that franchise other than the client has to pay $$$$$ upfront… and then some,…. and then some more .. until your client runs out of money… or runs away from this kind of “franchise”

    Boy…. it sucks to be a patent attorney these days….

  67. step back May 3, 2018 10:32 am

    PM @62

    You’ve got it exactly right.

    The whole thing is a con job.

    They promise to the “secure” your rights.
    They promise you “exclusive” rights.
    They promise you a presumption of validity.
    They encourage you to early-publish for the good of mankind.

    Then they pull the rug out by shamelessly admitting they lied the whole time. There is no property. There is no securitization. It is a revolvable at whim “franchise”. They even go so far as to insist that they had “always” said so.

    http://patentu.blogspot.com/2018/04/oil-states-and-despicable-toll-bridge.html

  68. Anon May 3, 2018 10:56 am

    angry dude,

    Past chastisements of you (leastwise from me) have had more to do with you being the “soundbyte” of the Efficient Infringer crowd and less actually being angry about anything.

    Being angry AND defeatist was – and remains – a problem.

    And yes, it “sucks” to be a patent attorney now, but perhaps NOT as you intended that comment. It “sucks” because some of us really care about our clients and about innovation and some of us understand the historical context (and repetition) of the anti-patentism going on, and some of us recognize that this is bad for us, bad for innovators, bad for innovation. The “Risk/Reward” expectation discussion sucks not because things are bad for us attorneys. Generally speaking (and personally), I and most attorneys have plenty of work and options in and out of patent law. Don’t make this into some type of “your livelihood is impacted and THAT is the reason this sucks for you” type of “blame the attorney” game.

    That does not mean though that we stop being “the little engine that could.”
    That does not mean though that we stop hammering out at the Court (and courts, and a particular administrative agency for getting things wrong).

    Yes, the first part – the anger part – is a commonality.

    What one DOES with that anger though – that makes all the difference.

  69. Night Writer May 3, 2018 12:26 pm

    angry dude >>>>And I was accused of being an overly pessimistic loser without any clue whatsoever about the workings of the “still great” US patent system…

    I have been posting very pessimistic posts for some years now. Probably going back at least eight years. I analogize it to anti-trust law. The big corporations are going to just keep pouring money into lobbying efforts to weaken patents and in face of the talent of K Street with the bank accounts of big tech, I don’t think we stand much of a chance. (I even predicted Alice about 3 years before it came out in the sense I said the SCOTUS would find some way to invalidate all the claims using 101 in a SJ motion.)

    By the way, there have been some articles in the popular press lamenting the demise of our anti-trust laws and saying that we need to start enforcing the laws again. Fat chance given the fact that just like in patent law the SCOTUS has re-written the anti-trust laws to make it almost impossible for the federal government to break up big corporations.

  70. Night Writer May 3, 2018 1:08 pm

    Actually, I started saying that Google had become a big player with lobbying money about 2 years before anyone else wrote about it.

  71. Chris Whewell May 4, 2018 11:10 am

    @ PM , couldn’t have said it better myself. In a plutocracy, everything is a franchise. IPR proceedings appear to be repugnant to the constitution inasmuch as they enable usurpation by the Executive of authority over questions of law which belong in the bailiwick of the Judiciary. Congress was only authorized to secure rights. There is no authority for Congress to create any law that results in removal of rights. Inventors, authors, artists, etc. by definition are creators of new subject matter, whereas a franchisee creates nothing and receives only privilege. This is clearly a furtherance of converting the Rights of The People, into privileges. Next on the list could be, Real Property, because the arguments are analogously applicable to real property and IP. By extension, copyrights and trademarks will also be considerable as franchise.

  72. angry dude May 4, 2018 8:43 pm

    Chris Whewell @71

    Dude,

    copyrights and trademarks *in theory* can be made into government franchises by the current ********* (I’ll leave the adjective up to you 🙂 scotus critters
    BUT not high-tech patents (which caused all this sh1t in the first place btw starting with Ebay decision)

    A single high-tech patent does not give you the right to manufacture anything at all. Period.

    This whole scam was propagated by google and a few other tech giants to pull all of the remaining teeth out of the already toothless us patent system

    to the morgue..
    kill the beast
    Amen

  73. Richard Tanzer May 6, 2018 3:17 pm

    “President Trump was supposed to be a champion of property rights.”
    Donald Trump says whatever he feels will be to his own advantage at the moment. Trump has no strategies or beliefs, and he champions no causes, other than his own wealth and self-engradizement.

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