Inventors, Startups and Investors Amicus Challenges Constitutionality of IPR

National and local inventor clubs across the U.S. along with early stage investors and small patent centric startups came together to support a very important case. Together we represent the core of the American job creation engine and the bedrock of our economic prosperity. We participated in an amicus brief in support of MCM Portfolio asking that the Supreme Court grant certiorari to MCM Portfolio v. HP and then find inter partes reviews (IPR) unconstitutional.

The following summary from our amicus brief outlines the negative effects created by IPRs, which were enacted under the America Invents Act of 2011 (AIA). Our brief further places the damage of IPRs in perspective by adding for context ten years of destruction caused by overzealous legislation and ill-advised court decisions in the errant quest to kill imaginary patent trolls. It illustrates how the current disorder of the patent system levies the most damage on those least able to handle it, inventors, early stage investors and small patent centric startups, and how that damage is harming the American economy.

[Supreme-Court]

What follows is the Summary of the Argument from the amicus brief filed by inventors, inventor clubs and investors:

The inter partes review (IPR) procedure Congress enacted through the Leahy-Smith America Invents Act was meant to address the threats posed by “patent trolls”—firms that hold up innovation through harassing litigation based upon patents of dubious validity—by providing a cost-efficient alternative to litigation to challenge those patents’ questionable validity. That streamlining goal was laudable. But Congress went too far in disrespecting patentholders’ property rights as a means to achieve those supposed efficiencies. IPR strips patentholders of essential protections they would enjoy if they were defending their patents in the federal judicial system, including a jury of their peers, a disinterested, life-appointed judge, and procedural limitations meant to limit their liability and permanently settle their legal rights.   In their place, Congress erected a heavily slanted administrative procedure designed to invalidate patents, even when those same patents would be validated in district court proceedings.

Amici agree with Petitioner that this procedure was beyond Congress’s power to impose, and its underpinning rationale—that patents are a matter of administrative largesse, rather than the constitutionally protected property right—is constitutionally infirm. Amici write separately because this case presents an issue of enormous significance with far-reaching consequences for inventors, investors, and small-business owners.

The institution of IPR review has made patents more expensive to obtain and defend, and has introduced uncertainty in patent rights that makes patents less valuable to their holders, less attractive to inventors, and less safe for investors. This devaluation of patent rights has measurably diminished the value of all patents—even those that will never encounter an IPR proceeding—threatening the livelihoods of inventors, the cause of innovation, and the health of the American economy as a whole.

The need to affirm the property interests at stake, recognized since before the Founding, provides compelling reason for the Court to consider the constitutionality of the IPR procedure.   And the ongoing nature of the harms this administrative scheme inflicts make it important for the Court to act sooner rather than later. The practical problems produced by Congress’s improper supplanting of federal district courts’ legitimate authority will only worsen over time. And Congress’s constitutionally infirm understanding of patent property rights is likely to taint further patent reform efforts already on the horizon. Accordingly, the Court should take this opportunity to address this important issue.