NYIPLA Urges SCOTUS to Clarify Constitutionality of PTAB Proceedings in MCM Portfolio LLC v. Hewlett-Packard Co.

US Supreme Court, Washington DC,

US Supreme Court, Washington DC,

On Tuesday, May 31, 2016, the New York Intellectual Property Law Association (“NYIPLA”) filed an amicus brief arguing that the Petition for a Writ of Certiorari should be granted in MCM Portfolio LLC v. Hewlett-Packard Co., No. 15-1330. This case, together with its companion case Cooper v. Lee, No. 15-955, raises important questions regarding the constitutionality under Article III and the Seventh Amendment of the inter partes review of patent validity by the U.S. Patent & Trademark Office’s Patent Trial and Appeal Board (“PTAB”). While the NYIPLA took no position as to whether inter partes review ultimately should be found to be constitutional, the Association argued that it strongly believes that certiorari should be granted so that this Court can address the significance of patent rights being “property” to determine the constitutionality of PTAB proceedings under the America Invents Act (“AIA”).

In the case below, the U.S. Court of Appeals for the Federal Circuit found that the inter partes review proceedings devised by Congress in Leahy-Smith America Invents Act were constitutional. In determining whether Congress’ decision to have determinations of patent validity decided by Article I tribunals was a violation of the separation of powers set out in the Constitution, the Federal Circuit determined that patent rights were “public rights” under the test devised by the Supreme Court in Stern v. Marshall, 564 U.S. 462 (2011), and therefore determinations of patent validity could be delegated by Congress to the PTAB.

In its brief, the NYIPLA argues that that the Federal Circuit reached its conclusion without considering more than a century of precedent by the Supreme Court recognizing that an issued patent is a property right, at least for purposes of determining if a “taking” has happened. James v. Campbell, 104 U.S. 356, 358 (1882); see also Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2427 (2015) (quoting with approval James). Since the Supreme Court has included property rights as the kind of rights that are usually considered private rights in the public/private rights analysis, Atlas Roofing Co. v. OSHRC, 430 U.S. 442, 458 (1977), the Federal Circuit’s conclusion that a patent is a public right rather than a private right is at a minimum questionable.

The brief also argues that this case and Cooper v. Lee are the appropriate vehicles for the Supreme Court to clarify this important issue. The NYIPLA believes that the popularity of IPRs, which have already led to the invalidation of over 10,000 issued patent claims, and the growing practice of filing IPR petitions in response to patent litigations filed in court, mean that any Constitutional issues or challenges should be dealt with as soon as possible to minimize harm to patent holders and to assure certainty in patent law for inventors, corporations and the public.

[Supreme-Court]

The following excerpt is taken from the brief:

This case presents an important constitutional question which the court below decided based on an incomplete analysis of this Court’s jurisprudence, and which is now appropriate for this Court to decide.   The essential underlying issue is whether the grant of a U.S. Patent by the U.S. Patent and Trademark Office is a “public right” or “private right” as explained by this Court in Stern v. Marshall, 564 U.S. 462, 485-86 (2011).   If it is a “public right,” then the new post-issuance Article I trial proceedings are likely constitutional. If it is a “private right,” then such proceedings are likely not.

In the case below, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit decided that a patent is a “public right,” and that these Article I trial proceedings are not unconstitutional. MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015). This decision was reached even though patent rights have a long history of being adjudicated in Article III courts. McCormick Harvesting Mach. Co. v. Aultman, 169 U.S. 606, 609 (1898) (“The only authority competent to set a patent aside . . . is vested in the courts of the United States.”); see also Markman v. Westview Instruments, Inc., 517 U.S. 370, 377 (1996) (discussing the availability of patent remedies in 1789).

Significantly, the Federal Circuit reached its conclusion without considering more than a century of precedent by this Court recognizing that an issued patent is a property right, at least for purposes of determining if a “taking” has happened. James v. Campbell, 104 U.S. 356, 358 (1882); see also Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2427 (2015) (quoting with approval James).

The Association respectfully submits that this Court should not wait to address the issues raised in this Petition. To date, although litigants continue to raise these challenges below, courts have resolved them with decisions that summarily follow MCM without further discussion. Thus, if this Petition is denied, the decision below will likely be left as the final word on the constitutionality of this increasingly important post-issuance administrative trial proceeding that has invalidated more than 10,000 previously-issued patent claims since it first became available in September 2012.

Although the Association does not advocate in this Amicus Brief which position this Court should adopt, it strongly believes that certiorari should be granted so that this Court can address the significance of patent rights being “property” to determine the constitutionality of PTAB proceedings under the America Invents Act.

 

Charles R. Macedo, as counsel of record, David P. Goldberg, Co-Chair of NYIPLA Amicus Briefs Committee and Robert J. Rando, Treasurer of the NYIPLA were authors on the brief. Irena Royzman and David P. Goldberg are Co-Chairs of the NYIPLA Amicus Briefs Committee, and Robert Isakson is the Committee’s Board Liaison. The Association thanks Trevor O’Neill, a summer law clerk, who assisted in the preparation of this amicus brief.

 

The Author

Charles R. Macedo

Charles R. Macedo is a Partner at Amster, Rothstein & Ebenstein LLP, where he advises and litigates in all areas of intellectual property law, including patent, trademark and copyright law, with a special emphasis in complex litigation. He also assists clients in obtaining, maintaining and enforcing patent and trademark portfolios. He has successfully recovered domain names registered to others using clients’ trademarks.
Mr. Macedo is also the author of the book, The Corporate Insider’s Guide to U.S. Patent Practice, originally published by Oxford University Press.

For more information or to contact Mr. Macedo, please visit his Firm Profile Page.

Charles R. Macedo

David Goldberg focuses on domestic and international trademark law. He helps clients protect their brands domestically by researching trademark availability, filing applications for trademark registration and maintaining those registrations. He also works in close collaboration with a network of experienced counsel who provide the same services in other countries around the globe.

CLICK HERE to view his firm profile page.

Charles R. Macedo

Robert J. Rando is the founder and lead counsel of The Rando Law Firm P.C. Mr. Rando is a Fellow of the Academy of Court-Appointed Masters and, since 2004, has enjoyed the privilege and honor of judicial appointment as a Special Master in numerous cases involving complex patent law issues. He is a published author and frequent lecturer at law schools and CLE programs on patent law and other IP and constitutional law issues. He is the current Treasurer for the New York Intellectual Property Law Association (NYIPLA) and a member of the NYIPLA Amicus and Legislative Action Committees. He is also the current Chair of the Federal Bar Association (FBA) Intellectual Property Law Section and serves on the FBA National Government Relations Committee.

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Discuss this

There are currently 6 Comments comments.

  1. Curious June 1, 2016 9:20 am

    I took the time to read all of the briefs posted on the other patent-blog website last night and this morning. All-in-all … a job well done.

    While betting on SCOTUS to grant Cert is a losing proposition, I think this has a good chance of prevailing. Not that I think that MCM will necessarily prevail (I hope they do), but it is difficult to gauge the extent of the anti-patent wing of SCOTUS. Either way, I suspect that this is too juicy of a topic for SCOTUS to pass on.

    I think that many of the briefs really hammered home the constitutional issues and poked a lot of holes in the Federal Circuit’s ‘public rights’ argument.

    I am hopeful … cautiously hopeful, but more hopeful than I have been in quite some time.

  2. Valuationguy June 1, 2016 9:46 am

    Despite your belief that it is a losing one…I would opine and put money on the SCOTUS accepting the case. Just the delay they have placed on Cooper v Lee (while awaiting the MCM Portfolio case) provides a good indication of how the wind is swinging on the Court to address all the various bad law issues that the AIA created.

    With all the analysis and briefing around the Cuozzo Speed….which had many amici’s pointing out MCM Portfolio and the potential constitutionality issue around IPRs…the Justices are likely to understand the linked problems around what Congress did.

  3. Edward Heller June 1, 2016 8:40 pm

    Charles, well written. The court will like it.

    I also agree with Curious and Valuation Guy. They are deferring Cooper pending the completion of the briefing of MCM. It does look like they are planning to take this case next year.

  4. EG June 2, 2016 8:07 am

    The view that patent rights are “public rights” rather than “private” property rights is utter nonsense. As Professor Adam Mossoff and others have correctly pointed out, patent have been characterized as “private” property rights before and after enactment of the U.S. Constitution. Even 35 USC 261 characterizes patent rights as “personal property” rights.

    But besides the “separation of powers” and 7th Amendment “jury trial” problems, IPRs are a huge 5th Amendment “due process” problem as those “property rights” are clearly treated differently in the IPR forum versus the court forum in terms of the standards for: (1) presumption of validity; and (2) claim construction, Indeed, Chief Justice Roberts clearly grasped this problem during oral argument in the Cuozzo Speed case.

  5. Ned Heller June 2, 2016 3:19 pm

    EG, just as Chief Judge Nies said, one cannot both have a right to a jury trial and not have a right to a jury trial on the very same issue.

  6. Eric Berend June 3, 2016 7:29 am

    @ 1., ‘Curious’: this is also the position I find myself in; cautiously hopeful, for the first time in quite awhile. Since much of the damaging make-work nonsense underpinning these “reformed” versions of patent prosecution due process stems from improper application of U.S. Constitutional prerogatives, it might – just might – be possible to roll back or obviate this ‘fruit of a poisoned tree’, via this approach. As ‘Eg’ notes above in 4., if this did not escape the comprehension of the Chief Justice, then perhaps there is hope to be had here, indeed.